Numbers are very misleading. When a producer(Ex Dookudu Producer) announces his movie grosses 100 crores,many people presume "collections - budget = profits". This is far from it. Like any
other business, the film trade has 'layers' of middle men between the filmmaker and end
consumer, who are all inalienable parts of the business.
One of the most common terms we hear used in the trade is "gross", "nett" and "share".
If you understand these three terms, you would understand the basics of film trade. Most
of the times, what you read in the papers is the "gross collections". Gross is nothing
but number of tickets sold x ticket price. It's the total amount generated by a movie at
ticket counters.
other business, the film trade has 'layers' of middle men between the filmmaker and end
consumer, who are all inalienable parts of the business.
One of the most common terms we hear used in the trade is "gross", "nett" and "share".
If you understand these three terms, you would understand the basics of film trade. Most
of the times, what you read in the papers is the "gross collections". Gross is nothing
but number of tickets sold x ticket price. It's the total amount generated by a movie at
ticket counters.
Most states levy an "entertainment tax" on movies. States like Maharashtra, Gujrat,
Punjab and others northern states charge in the range of 50%. There is a variation.
Uttar Pradesh charges 60%, while West Bengal charges 30%, its 25% at Kerala. Kannada
films in Karnataka are tax-free while non-Kannada films pay 70% tax! Tamil films in
Tamil Nadu are tax-free while non-Tamil films pay 25%. Andhra Pradesh charges only 12%,
one of the least in India. On an average, across India it's assumed to be 40%.
Nett Collections : After the entertainment tax is deducted, what is left is the "nett".
This is the actual money that's left in the hands of the theatre owner. He deducts his
rent from the nett and forwards the remaining money to the distributor. This is called
the "distributor's share" or "share" in trade parlance. This is really the money from
which the movie's budget is recovered.
Theatre Rentals : There are two types of agreement a distributor can enter with an
exhibitor (theatre owner or multiplex chain). For single screens it's usually, a flat
weekly rental. The exhibitor retains the money till his weekly rent is recovered.
Anything that is collected afterwards goes to the distributors. Their revenues are not
linked to the boxoffice performance of a film. On the other hand, multiplexes charge a
percentage of the nett collections. Hence their prosperity is linked to the boxoffice
performance of the movies they release. Most multiplex retain 45% in the first week,
forwarding the remaining 55% to the distributor.
In the second the mutiplex's share is 50% or 55% (depending on terms) forwarding
balance to the distributors. From the third-fourth week onwards, the multiplex retains
as much as 60-70% of the collections of a film, as the audience drops. The whole tiff
between Hindi film producers and multiplexes were because, producers felt multiplexes
charge too much rent and leave very little to themselves. Multiplexes argue their
pricing is fair, as customers pay premium price over a single-screen because of their
amenities, which cost a lot to maintain.
Uttar Pradesh charges 60%, while West Bengal charges 30%, its 25% at Kerala. Kannada
films in Karnataka are tax-free while non-Kannada films pay 70% tax! Tamil films in
Tamil Nadu are tax-free while non-Tamil films pay 25%. Andhra Pradesh charges only 12%,
one of the least in India. On an average, across India it's assumed to be 40%.
Nett Collections : After the entertainment tax is deducted, what is left is the "nett".
This is the actual money that's left in the hands of the theatre owner. He deducts his
rent from the nett and forwards the remaining money to the distributor. This is called
the "distributor's share" or "share" in trade parlance. This is really the money from
which the movie's budget is recovered.
Theatre Rentals : There are two types of agreement a distributor can enter with an
exhibitor (theatre owner or multiplex chain). For single screens it's usually, a flat
weekly rental. The exhibitor retains the money till his weekly rent is recovered.
Anything that is collected afterwards goes to the distributors. Their revenues are not
linked to the boxoffice performance of a film. On the other hand, multiplexes charge a
percentage of the nett collections. Hence their prosperity is linked to the boxoffice
performance of the movies they release. Most multiplex retain 45% in the first week,
forwarding the remaining 55% to the distributor.
In the second the mutiplex's share is 50% or 55% (depending on terms) forwarding
balance to the distributors. From the third-fourth week onwards, the multiplex retains
as much as 60-70% of the collections of a film, as the audience drops. The whole tiff
between Hindi film producers and multiplexes were because, producers felt multiplexes
charge too much rent and leave very little to themselves. Multiplexes argue their
pricing is fair, as customers pay premium price over a single-screen because of their
amenities, which cost a lot to maintain.