Economics Of Bollywood

We often judge a movie by its box office collection, calling it either a hit or a flop. But have you ever wondered what these numbers really mean, and do only these numbers determine whether a film is a hit or a flop? Today, we will explore the complex web of production, revenue, distribution, etc., which determines an economic success or failure.

First of all, we need to understand that Bollywood doesn't only earn through box office collection. It has various other revenue sources, such as international streaming, music rights, digital rights, and satellite rights. However, one of the important sources of all these is the OTT/digital rights. This is because these platforms pay high costs for acquiring the movie before it even release.

To understand this, let us take the example of a major blockbuster movie released recently named Dhurandhar 2: The Revenge. This movie is a box office hit film because even before its release, 66.66% (150 crore rupees) of the total film's budget (225 crore rupees) was covered through OTT rights. When this number is combined with satellite and music rights, the number becomes 245 crore rupees, which is 108.8% of the film budget. This essentially means that the film was financially secure even before its release, and any money made through the box office collection and other sources was just pure profit.

Furthermore, it is also important to note that Bollywood, as an industry, before the 2000's, got its funding from private financiers or the underworld at exorbitant interest rates. It was only in 2001 that it got recognised by the then-central government as an industry. This industry status meant that production houses could now get loans from banks and other corporate companies. However, these banks and corporations usually require a major celebrity to be attached to the project before approving a loan. This eventually made actors demand high fees.

This is actually a problem, because instead of spending money on scripts, sets, etc., which actually make a movie worth watching, most of the money is spent on actors. In addition to this, the producers are often known to aggravate the situation by spending money on fake reviews, fake audience and fake corporate booking, in order to create hype. This ultimately results in a credibility crisis.

The economics of Bollywood reveals that behind glamour lies a high-risk, evolving industry shaped by consumer behaviour and financial strategy