A lot of our readers wonder how a film that earns around Rs 60 crores, like an Action Jackson, is declared a ‘FLOP’ at the box office. On the other hand, a film like Hate Story 2 that earns just Rs 28 crores, is declared a ‘HIT’.
So how exactly are verdicts like HIT, Flop, Average, Super Hit or Blockbuster given to films?
There are a lot of points to consider before giving a theatrical verdict to a film.
1. The person who creates / packages the film is the called the ‘PRODUCER’. He / she may create the entire project like hiring the director, actors, script-writers, technicians etc.
Examples of leading producers: Rakesh Roshan (FilmKraft Productions), Karan Johar (Dharma Productions), Farhan Akhtar and Ritesh Sidhwani (Excel Entertainment), Sajid Nadiadwala (Nadiadwala Grandson Entertainment), Bhushan Kumar (T-Series) etc.
2. Once a film is ready for release, the producer may decide to sell the film to a ‘Corporate house’ or a ‘Individual distributor’. For example, Sajid Nadiadwala sold Salman Khan’s ‘Kick’ to UTV Motion Pictures; Excel Entertainment sold ‘Don 2’ to ‘Reliance Entertainment’. Producers always sell it at a price higher than the ‘Cost of Production’ (which is known in the trade as COP). This ensures that the creative producers are safe in terms of the business of the project. To give our readers another example, the COP of Jai Ho was very less, but the film was sold for a much higher price to ‘Eros International’, which was the reason why the film was a failure at the box office. That’s the reason why we hear that the producers (in this case Sohail Khan) made his money, but the distributors (Eros) lost.
Examples of leading distributors
- Yash Raj Films (Producers + Distributors)
- Anil Thadani (AA films worldwide) – Movies distributed include Hate Story 2, Yaariyaan, Humpty Sharma ki Dulhania, Hasee toh Phasee, Dirty Picture, Ek Villain.
- Eros Entertainment(Producers + Distributors) – Distributed films like Happy Ending, Jai Ho, Linga, Ram Leela, Tevar etc.
- Reliance Entertainment (Producers + Distributors) – Distributed Don2, Holiday, Singham, Bodyguard
- Viacom18 (Producers + Distributors) – Distributed Mary Kom
- Fox Star Studios (Producers + Distributors) – Distributed Bang Bang, My Name is Khan, Jolly LLB, City Lights
3. Once the distributor acquires the project at a premium, they might decide to sell different territories to sub-distributors. These sub-distributors then sell the film to theatre owners (exhibitors).
To understand the business of a film, we have to understand the cost involved at each step. Thus when we claim that a Tevar or Action Jackson have failed, even with reasonably good collections, the costs incurred at each step maybe higher.
Case Study of Arjun Kapoor’s Tevar
- Boney Kapoor (Producer) invests about Rs 30-35 crore into the film
- He then finds a buyer (Eros International) who buys the theatrical distribution rights for Rs 48 Crore.
- Eros International (Distributor) then invests around Rs 12 crore to market (promote) the film.
- Total costs of Tevar = Rs 60 crore
- Estimated total revenue from other sources like Music, Satellite rights and Overseas is Rs 18 crore approx.
- Total cost to recover from theatrical business is Rs 42 crore (Revenue from other sources i.e Rs 18 cr deducted from total costs of Rs 60 cr)
Now, the most important point. If a Distributor has to recover Rs 42 crore from theatrical business, then the film has to collect atleast around Rs 80-85 crore. The reason is, a share from the total collections also goes to the exhibitor (theatre owner). If Tevar collects around 50 crore at the box office, Eros International would only get around 25 crore.
Breakdown of Tevar (all figures are approximates to make it simple for our readers to understand)
- Money to recover = Rs 42 crore.
- Expected total collections from theatrical business = Rs 50 crore
- Distributors Share that Eros International would get (Total recovery) = Rs 25 crore
- Total Loss = Rs 17 crore
Reason for failure is the high price paid for Tevar by Eros International. If Boney Kapoor had sold the film for a lower price or released the film himself, Tevar would have been a success at the box office even if it collected around Rs 50 – 55 crore.
Finally, based on the costs and various other factors, we then give our box office verdicts to films. Taking the case study of Tevar, here is how much it had to collect to get different verdicts.
- For Tevar to be a All Time Blockbuster – Rs 175 crore or more.
- Blockbuster – Rs 140 crore or more
- Super Hit – Rs 110 crore or higher
- Hit – Rs 90 crore or higher
- Average – Rs 70 crore
- Flop – Anything less than Rs 60 crore
Note: There is no fixed formula for verdicts. In today’s times, trade analysts are a little more lenient when it comes to verdicts. With strict verdicts, Kick wouldn’t be a ‘Blockbuster’ as some distributors lost money (due to high costs). Bang Bang wouldn’t be a HIT and Happy New Year wouldn’t be a ‘Super Hit’.
Also, if a film does well in theatres, the distributor or producer may get a higher price through Satellite Rights, thus additional revenue is generated from other sources if it does well in theatres.
Every film that is released in theatres must be assessed this way to understand its business and final verdicts. Do share your thoughts in the comments section below. Questions can be posted too!