Well, if you are in India, you can look forward to movies getting released next week. Producers and multiplex owners are scheduled to end their 9-week rift over revenue-sharing. The path of movie releases would thus be paved and the pipeline would start getting cleared soon. I believe by Diwali (mid October), things would be back on track in terms of the schedule of film releases.

Looking at the agreement between the two parties, it seems to have gone more the producers’ way. They have been able to get the 50% revenue share they had been fighting for. While this share reduces in the coming weeks, most films do much of their business in the first week. What you get in the next few weeks is considered bonus.

A look at the revenue sharing agreement that the news channels reveal:

Films that generate < Rs 17.5 crore (~US$ 3.7mn): Producer’s share would be 50%, 42.5%, 37.5%, 30% for Week 1, Week 2, Week 3, Week 4 onwards respectively.

Films that generate > Rs 17.5 crore: Producer’s share would be 52.5%, 45%, 37.5%, 30% for Week 1, Week 2, Week 3, Week 4 onwards respectively.

So, there is an inherent incentive for the producers (and distributers) to make their films perform well at the box office.

Why did the multiplex owners blink before the producers? I think it was because the former were losing more than the latter. The period of contention the producers chose was very strategic in nature. The months of April and May generally see fewer releases (as compared to other periods of the year) limiting the losses on the producer’s end.

The multiplex business model involves more of fixed costs. These particular months (April, May) with few releases (with almost no big budget movies) are the most difficult for them for the costs don’t change a lot but the revenue fall is drastic. The remnant revenues is important for them to keep operating till the movie flow increases. Also, the uncertainty involved in the movie business (not being sure how many movies will be successful in a year) also makes any kind of revenue important for the whole business.

In any case, it is good news for movie-goers and the hope is that any future issues will be resolved without having to resort to such drastic steps.

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