Film production as a business is rife with risk, but is there a way to reduce them? Director-producer Karan Johar broke down the economics of mounting a film, and opened up about the work that goes into collating data on excel sheets before the script comes alive on the big (and sometimes small) screen.
In an interview with The Week, Johar, who runs Dharma Productions, listed how the financial success of a film is entirely dependent on the budget it’s being mounted on. The director of some of the biggest blockbusters of the last 20 years, Johar said that the recovery model is basically divided in four verticals.
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“There is recovery from satellite, which is at an all time low right now because digital is the big thing. Then there is digital recovery, which is a large part of your pie. Then there’s a music component, if you have brand value for music and your film is musical enough. Fourth is your estimated box office potential, worldwide. The lowest possible number as per the genre. You put a number to all this… That’s the best model, which sometimes doesn’t work when you go way beyond your budget. Ideally, your budget should equal these four components.”
Before the film is released and manages to clock in numbers, it’s usually arrived in cinemas with a marketing fanfare, which now includes memes, Instagram reels and even GIFs. None of this matters, Johar says, if the film isn’t good. “Nothing can salvage a bad film and nothing can stop a good film. This (marketing) is all vanilla icing, but if your cake isn’t solid then nothing matters.”
OTT or theatrical?
Karan Johar, who also produces films for streaming platforms, says it’s “more profitable” if one can afford to make their own film for theatrical distribution instead of commissioned OTT projects. “With theatrical films, they (streaming platforms) have a right to watch the film, read the script, choose if they want it post the theatrical release. Then there are films made specifically for the streaming services, then you’ll have to listen to their pointers.
“Going to streamers after making a theatrical film is more profitable. When you make a digital film, you get a percentage of the profit. That’s assured, but the numbers aren’t that large. Digital is a volume game. You’ve to make 10 things to really make money. If I just make one show a year or a film, then it’s not that much.”
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How is a film success on OTT?
Karan Johar explained that each platform has its own kind of audience, but their highest numbers come from ‘licensed films’, that “released in theaters, created havoc, and then come to their service and did hugely well.” The filmmaker said that streaming platforms have realised that the “real big business” is in showcasing theatrical films rather than originals.
It’s a burning question, as most new films on any streaming platform lands at number 1 position immediately after their debut. But there’s a catch, Johar explained, as an important metric that remains secret is the “drop-off rate.”
“You can have a large subscription, but if the product isn’t good, the drop-offs can be very high. Everybody might tune in and then you’ll read ‘Number 1 (show or a film on a platform)’ but what you don’t know what the drop-off rate is — people may leave a film at just 20 percent, but it’s considered a view.
“Sometimes films can have lesser views but high drop-offs. That means people have watched it till the end, many have seen it till 80-90 percent, which is high. But if you leave a film after 20 percent of it, that’s low, even if it’s the number one film watched. So this is the metrics.”
The filmmaker added that on OTT, crime and love stories work very well, as there is a huge audience for the genre. “People love to watch love stories at home, crime, investigative thrillers but the tentpole massive productions are still for the celluloid,” he added.
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Karan Johar breaks down economics of cinema, reveals the business model he follows, says OTT platforms prefer ‘licensed films’ over originals – The Indian Express
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