Arithmetic of piracy

    Harish Dayani reveals the numbers at play in film piracy.
    Harish Dayani
    Harish Dayani


    Harish Dayani, chief executive, Moser Baer Entertainment, reveals the numbers at play in film piracy and points out how revenue streams across the board are threatened

    The business environment today is vastly different and complex than had been in the past but the arguments offered when a film doesn’t perform well haven’t changed – ‘Film nahi chali hai, to wo film dhili thee.’ [If the film hasn’t worked, it wasn’t a good film] or ‘Kyun nahi chali? Wo theek tarah se promotion nahi kiya producer ne.’ [Why didn’t it run? The producer did not promote it properly]. It must be realised that this is not entirely true today and there are a whole lot of other factors at play. If a film doesn’t generate adequate revenue, it must be understood there is more than simply the quality of the film.

    Making a good or a bad film is an intrinsic part of the film industry. It happens in India and it happens in Hollywood. You make the film on the basis of what your beliefs are and you don’t go out and research the product to find out whether people like it or not. You make it on the basis of your own convictions. If your convictions are right on more number of occasions than wrong, you are called as a successful director- producer else a weaker producer or director. This is all fundamental to the business.

    A weak film released just some months back would start with probably 30-50% on a week end and if it was a bad film would significantly drop by Monday. However, a similar film today begins at 5-10% and in most cases is withdrawn from the theatres by Monday. There is obviously something wrong somewhere. Is there something which is holding people from even attempting to see that film? What is the problem? Why has the consumer behaviour changed towards cinema?

    To consume cinema, a consumer ought to have audio-visual equipment around him. It can be a theatre or he may consume cinema at home. For the latter, a consumer needs to have a television set at home and a VCD/DVD player. India has seen a dramatic change in the ownership of DVD/VCD players in the last 2 years and this has changed the viewership patterns.

    In 2007, from an approximate population of 110 crore, (or 20 crore homes), India had 11.5 crore homes with a TV set. Of these, 21% or 2.4 crore homes had either a VCD or a DVD player, and VCD player being dominant with 2 crore penetration.

    A VCD meant two discs but contained one movie. From a pirate’s point of view, this was expensive and cumbersome and a consumer got one movie by paying Rs30.

    In 2009, the whole picture has changed. VCD homes have dropped from 2 crore to 1 crore and DVD homes have jumped from 0.4 crore to 4.5 crore [11 times jump in two years]. Consequentially, the total population with VCD/DVD players has jumped to 5.5 million. India has become a DVD nation in two years. In the mean while, the population of TV homes has moved up from 11.5 crore to 13 crore.

    A DVD is one disc (half the price to a pirate) and with approximately 4-6 movies is a great value to consumers. This costs the pirate Rs8 which he sells to the consumer at Rs25. If you bargain you may get it at Rs16.

    Do the math all over again for the consumer: 1 VCD with 1 movie for Rs30-35. On the other hand, 1 DVD with 4-6 movies costs the pirate Rs8 and to consumer at Rs25. Hence, today a consumer can watch a movie on an average cost of Rs4.

    Now see the bombardment going around on all sides – You have the television homes which have become bigger, the DVD homes have become monstrous and the cost of a DVD to the consumer has become one-tenth. All this has happened in the last twenty four months – the implication – strong competition to theatres. And the outcome of this is a strong polarisation in the consumer mind: the must see movies in the theatre [that consumer is willing to pay for] and avoid in theatres [consumer doesn’t want to pay].

    The resistance of the audience to see films in theatres, as now they have cheaper options available to watch the film at home results in poor openings of 10-15%, and smaller films being washed out completely.

    Hence you can see how complex the problem is. On an average 80 crore DVDs are sold in the country annually. Each DVD is sold around Rs20. Thus the money generated by pirates is approximately to the tune of Rs1,500-1,600 crore. Each disc carries 4 movies on an average. That is 320 crore pirated films enter Indian homes each year. Even if you half that figure ie 160 crore pirated films are being watched by people that could go to movie theatres and spend Rs70-100 on an average for tickets.

    The loss to the film industry due to piracy is colossal and is compounded each day by the fact that approximately one million DVD players are being sold in the country every month.

    Today enforcement is extremely poor. The only way out is to first recognise that there is a problem and then unite and then fight collectively. We have to recognise that the business has come under a threat.

    Even if we curb piracy up to 10-15%, the upside will be a surge in revenues up to Rs 1,000 crore.

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