Lenin famously said there are decades when nothing happens and there are weeks when decades happen. Reforms unthinkable in normal times get through in times of crisis. Post release of the Hema committee report, Mollywood is in a flux and these are the weeks where some radical reforms are possible and what follows is a blueprint for a financial reboot of Mollywood.
Problems with the upfront payment model
The latest instance of a hero returning money to the producer/distributor of a flopped movie was Vijay Devarakonda for the Telugu movie ‘Family Star’. It collected only 70% of the production cost of Rs.50 Crore. The biggest cost of most of the movies is star remuneration and as it is paid before movie release, the only hope of the producer of a movie which flops is on the magnanimity of the star to return a part of his/her compensation. A shift to revenue sharing model can solve this problem. For example, on signing up for a movie, its hero can be paid 10% of his current rate upfront and balance as share of revenues from the box office. Hence, someone charging Rs 5 Crore may be paid Rs 50 lakhs upfront and the remaining as share of revenues, percentage of which is agreed upfront. This makes the star a stakeholder in the movie’s success and he will turn in his best performance for it. What’s more, in the pre and post release promotions of the movie too he will be an active participant. Revenue sharing model can be extended to the director, story/script writer, cinematographer, composer, etc. too with a higher upfront payment of upto 50% – not from a cost angle, but to make them stakeholders in the success of a movie and thus put in their best work.
When was the last time you saw a Mohanlal movie where he was more of an actor and less of a macho superstar? Part of the reason could be producers hesitant to experiment with novel scripts under the upfront payment model. Revenue sharing reduces the cost of failure to the producer and thus he is willing to experiment in script and casting. The way a producer looks at the script brought to him under the upfront payment model and revenue sharing model will be totally different – there will be a bias for mass content in the former while it will be much less in the latter. Script writer too thinks this way as he has to get the project funded by the producer.
Upfront payment is also the reason for movies where superstar heroes are the producers. Script and casting of which movie will have a higher impact of superstar egos and prejudices – the one produced by hero himself or someone else?
How ticket pricing impacts movies
If revenue sharing could reduce cost of failures, what can multiply gains from successes? A shift from fixed pricing of tickets to flexi-cum-dynamic pricing (FDP) may do it. Currently, most of the theatres follow a fixed pricing model – all movies have the same price tag. But when you pay higher price for higher quality for clothes, food, books and many such goods and services, why a single ticket price for movies with wide variation in quality? Should a flop Santosh Pandit movie have the same price tag of a blockbuster Rajamouli movie? Currently ticket price is fixed and hence the only way for a movie to collect more is if more people watch it. And this influences what kind of movies get financed by producers, who will bend towards formulas and mass market themes. With FDP, revenues could increase when same number of viewers pay more for each ticket and this will embolden producers to back experimentation in content and casting. One more innovation is dynamic pricing of tickets – where you auction tickets where demand is high and later on reduces prices as demand goes down after the initial days/weeks. Thus first day first show could be priced at Rs 500 while the 30th day’s ticket maybe available at Rs 100 – and this makes movies more affordable to later viewers. This system is easy to implement with some tweaks to online booking software
Equal pay for equal work?
If you want to get a complex surgery done, will you go for any surgeon or the best surgeon you can afford; and if you are the accused in a murder, will you go for any criminal advocate or the best criminal advocate you can afford? Likewise, a producer spending crores will go for the script and cast which will pull in highest viewership and revenues. Just as a certain combination of ingredients of varying proportions cooked with skill makes a dish delicious, so is a movie. So the producers are right in rejecting the call for equal pay for (un)equal work. But there maybe cases where outstanding performance by women are rewarded at a lesser rate than equally good work by men. How to solve that? With revenue sharing and flexi pricing of tickets, production will be less risky and hence number of producers will increase. More competition will lead to more risk taking and experimentation and we may get more movies where content is the king. This will lead to fairer remuneration and more opportunities for women in all areas of movies.
(The writer is an ex-banker and currently teaches economics & finance.)
