South India cinema continues to build on its strengths
Key highlights:
Largest film-producing region in India
Accounting for over three-fourths of the total industry revenues (INR13 billion), domestic
theatrical rights continue their dominance
Revenues from cable and satellite (C&S) rights estimated at INR3 billion, is an emerging
revenue stream
Significant untapped potential in the international market
Immense talent, a disciplined approach from script to screen and technological advancement
are the key strengths of this industry
Mumbai, 17 November, 2009: South Indian films have always occupied a prominent place in Indian cinema. Presently South Indian films (Telugu, Tamil, Malayalam and Kannada) account for the largest share in the total number of films released per year in the country. Ernst & Young, jointly with Federation of Indian Chambers of Commerce & Industry (FICCI), chaired by Padma Shri Dr. Kamal Haasan, provide a detailed analysis of the South Indian film industry in their report, Indian entertainment down South - From script to screen. The report provides granularity regarding the
value chain, the evolving film-making process, emerging trends and key challenges within the South Indian film industry, while analyzing each of the four language segments in detail. The report will be launched at the first ever Media and Entertainment Business Conclave 2009 in Chennai on 18 November, 2009.
According to Farokh Balsara, National Sector Leader, Media and Entertainment Practice, Ernst & Young, "The South Indian film industry has undergone a transformation over the years. It has shifted gears, thereby changing business models and creating new opportunities. While the vibrant industry continues to build on its strengths, there is immense potential for the South Indian film industry to further enhance its reach and revenues."
South Indian film industry
The report focuses on the Tamil, Telugu, Malyalam and Kananda film industries. Detailing out the market size and share, it can be observed that the aggregate market size of the total South Indian film industry is estimated to be around INR17.3 billion. In terms of overall revenues, the Telugu and Tamil segments account for approximately 45% each, while the Malayalam segment accounts for 8% and Kannada segment for 2%. In terms of number of films produced each year, the Telugu film industry is the largest, producing over 230 movies each year. The report also states the dominance of domestic theatrical revenues in the South Indian film industry. More than three-fourths of the industry revenues come from domestic theatrical rights and the region houses over 50% of the total operational screens in India. "South Indian cinema is known for its larger-than-life spectacle of films. They have a strong local connect and mass appeal, making them ideal for large screen theatre-viewing. This is one of the primary factors leading to its dominant share." Mr. Balsara added.
Interestingly, revenues from C&S television rights come next, accounting for almost 17% of the industry revenues. Medium and small budget South Indian films depend significantly on sale of C&S television rights and can make the difference of a profit or loss situation for the film.
The report also mentions the untapped potential in the international market for South Indian films. Currently, the share of international theatrical rights in the total industry is just about 5%. With new players, a more organized distribution system and better marketing of films in international territories, this revenue stream holds potential for growth.
"Built on the strong pillars of immense technical talent, high levels of discipline, shorter timelines, cost consciousness and technological advancement, the South Indian film industry certainly holds a strong growth potential in the years to come" elaborated Mr. Balsara.
Some of the challenges highlighted in the report include: Lack of transparency and leakages in theatrical revenues, surge in the cost structure of the industry with a huge increase in talent and shooting costs, huge gap between movies produced vis-à-vis released and limited exploitation of non-theatrical rights.
The report is a culmination of extensive primary and secondary research over the last few months. Findings from detailed discussions with over forty producers, distributors, exhibitors, financers and industry associations, combined with industry insights of Ernst & Young's Media and Entertainment team, are presented in this report.
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