THE CHANGING

SCENARIO OF SUPPLY
CHAIN MANAGEMENT
IN BOLLYWOOD:
DIGITAL CINEMA

INDEX
TITILE PAGE
ABSTRACT
LITERATURE REVIEW
OBJECTIVES
METHODOLOGY
INTRODUCTION
FINDINGS AND DISCUSSIONS
LESSONGS FROM BOLLYWOOD
CONCLUSION
REFERENCES

ABSTRACT

The purpose of this project is to introduce the Supply Chain and

its Management for the much loved Movie Industry in India. The

scope of the project is limited to what happens after the finished

product (movie) has been readied i.e. once the actual production is
over.
Film distribution is the process of making a movie available for
viewing by an audience. This is normally the task of a
professional film distributor, who would determine the marketing
strategy for the film, the media by which a film is to be exhibited
or made available for viewing, and who may set the release
date and other matters. The film may be exhibited directly to the
public either through a movie theater or television, or personal
home viewing (including DVD-Video or Blu-ray Disc, video-ondemand, download,
television
programs through broadcast
syndication etc.

LITERATURE REVIEW
Ever since the turn of the Nineteenth century, celluloid film has
been regarded as the soul of the movie industry. It has been used

as the medium for recording, storing and projecting images. For

more than 100 years this medium of entertainment has given us its
capability of producing screen images of great beauty and
expressive power. However, the supply chain management of
distributing and exhibiting a motion picture has changed a little
since the Lumiere brothers presented the first motion picture to an
audience in 1895. Now, a new system could displace film as the
medium of choice for film studios and cinemas completely. The
new system is the result of the trends and issues that are
affecting the movie industry globally. An example of the issues is
the considerations for new revenues for the theatres. In the US,
theatres are generally open from noon onward. When open, on
average, only 11% of the seats are filled.
India has roughly 11,000 screens out of which around 800 screens
are multiplex screens. However, the revenue share is highly
skewed in favour of multiplexes which generate around 50% of
overall theatrical revenues.:
Of the 11,394 screens in the country, 800-odd are part of multiplex
chains. They sell tickets at anywhere between Rs 120-150 against
the all-India average of Rs 30-50. Overall, theatre revenues
accounted for 76 per cent (or Rs 9,700 crore) of the Rs 12,600
crore that Indian films made in 2008. Multiplexes bring in 55-60
per cent of a films theatre revenues, while the remainder comes
from the 10,500-odd single screens.
Hence, the producers-distributors want a bigger share of revenueshare pie from the multiplexes now. Now, its a known fact the
Mumbai territory brings in the highest amount of revenues for
industry. But in Maharasthra, due to Government waiver,
multiplex chains save all of the 45% entertainment tax which
goes into their pockets only. From the rest of 55% money, the
revenues used to be split in the ratio of 48% for first week, 40%
for second week and less than 35% for third week.[These ratios
are valid all across India, not just for Maharashtra]. The reason for

the standoff was that producers-distributors now wanted 50-50

revenue share for all the weeks.
In an analysis done on 18th April 2009, IndianTelevision tried to
gauge the financial impact of a long running standoff on both the
parties. It estimated a loss of Rs. 850-900 million for the industry
in case the strike lasted for over a month. Well.. the losses should
turn out to be biggger now.
In a further analysis on 30th May 2009, they tried to analyse both
parties stands, jotting down pros and cons of their currents stands
and ramifications of any potential reconciliation efforts. From the
movie industry front, folks were more or less united with Aamir
Khan even going upto the extent of asking his fans to avoid his
own movie Raakh, which was being released in single screen
theatres.
But now, finally, the issue has been settled. The final agreement
with multiplex owners will give producers a 50% share of box
office takings in the first week, 42.5% in the second and 37.5% in
the third, with the final week yielding 30%. The settlement also
allows for a 2.5% swing either way in the event the films make
above Rs17.5 crore or less than Rs10 crore. In case of the latter,
the films are released with at least 500 prints. (source: Mint)
Some people have been left over voicing over three other equally
important concerns of the industry. First of these issues is
Accounts settlement. Ideally, the producer should get his share of
money within a week or two of the ticket sales, but multiplex
chains usually take 2-3 months sometimes taking upto 7-8 months
for settlements. So, even though as the Indian Media and
Entertainment industry tries to scale up to global standards, the
business practices still confirm to Unorganized sector behaviour.
The other issue is control over release strategy of movies. Since
each print usually costs Rs. 60,000 to the distributor, Distributors

usually want to release movies only in select locations so as to

maximize their revenues.
Another issue that has been affecting the industry for years is the
piracy. Some of this piracy involves high-quality bootleg copies of
major films, but the majority of the theft of is made by very lowtech means. Better anti-piracy technology as well as earlier
worldwide theatrical releases would greatly reduce this loss,
estimated to exceed two billion American dollars per year. Among
other current and future trends predicted for the motion picture
industry competition from Netflix, HDTV, pay per view (PPV),
DVD, Video Stores More screens, fewer numbers of seats per
screen More prints per film More expensive motion pictures
Digital postproduction 3D-Stereoscopic Images Industry
Awareness
of
need
for
better
quality
control
All of these have been the contributing factors to develop a new
system for the industry. The new system is known variously as
Digital Cinema (D-Cinema). This system is slowly replacing the
conventional 35mm film and projectors with computers
workstations and high-resolution electronic video projectors. The
D-Cinema system will ultimately influence and changed the
management of the supply chain within the movie industry. One
could agree that, by distributing digital files it would theoretically
yield great benefits in terms of image clarity and quality, lower
cost, greater security, and more flexibility in the cinema. Changing
the Supply Chain Management of the Movie Industry. Digital
Cinema in its purest form is the process of mastering a motion
picture in digital form, distributing the digital files to theatres by
the means of digital fixed media (DVD), satellite, or over
broadband connections, and displaying the motion picture using a
digital projector. The Digital Cinema system appears to offer the
movie industry its significant benefits on reduction for
distribution cost Increase revenues for exhibitors Improve
audience satisfaction.

OBJECTIVE

Project involves analyzing:

The role of various stakeholders in Movies Supply chain.
How movies get distributed to different cinema halls.
How new technologies and innovative methods are helping
Distributors in supply chain management.
Channel Conflicts present in Bollywood supply chain
management
Piracy as the biggest hurdle to the film industry

METHODOLOGY
Secondary Research:
Data was collected through research papers, case studies on
Bollywood movies like Bahubaali and articles on supply chain in
film industry. Industry analysis was carried out to understand the
market as whole before deciding the scope of research.
We addressed questions regarding who buys and distributes the
rights of a film and how are they bought.
Under industry analysis, various topics were explored, such as:
Emerging technologies
Channel conflict in film industry,
Cycle of movie distribution
Uncertainty and contractual hazard in film industry

 Piracy in film industry

INTRODUCTION
Before indulging into the discussion of supply chain management
in film industry, here are some facts and figures about its current
state:

$138 billion Estimated size of Indian Bollywood Industry

World 1st Number of films produced in a year.
2.6 Billion number of tickets sold in a year.
1200 Single Screen.
11000 Multiplex Screen
Cinema Hall Distribution In India

Supply Chain Management for movies

Entities responsible for the management of movies release are:
Producer: Who invest money in Film?
Distributor: Who buy rights from producer to distribute prints
to the exhibitors?
Can buy rights for:
Few territories
All territories
Exhibitors: Who show movies to customer i.e. Cinema Halls
Customers: People like us who watch movies

Flow Chart

FINDINGS AND DISCUSSION

1.Change in Technology
Traditionally, the movie industry relied upon physical film prints
on celluloid film that were copied and distributed to theaters.
These prints can cost anywhere from a few thousand US dollars
and up for each print, not to mention the cost of distribution,
collection, and storage.

Celluloid

Film

Digital Hard Drives

More recently, the industry migrated to digital distribution of
movies on computer hard drives. A typical movie can consume
from 80 to 300 or more gigabytes depending upon if the content is
a 3D movie, 4K to 16K (Ultra High Definition) or an IMAX film.
While distribution of hard drives makes for a more compact
delivery method, essentially the same issues exist as with the
distribution of cellulose film.
Physical distribution of any media format requires, quite
obviously, time for shippingthe implication is that either movies
must be distributed early enough to allow arrival at distant
locations or that the movie cant open on the same day at all
locations. Secondly, since the physical media can only be

produced in finite numbers, the audience excitement surrounding

opening day will have died down by the time copies of a film
arrive in second tier theaters or theaters in outlying areas. This has
a direct impact on the gross monetary intake the film can
potentially generate.

2.Piracy in Film Industry

One major problem in Indian film industry is of piracy. It's
prevalent all over the world, but in India, a film-crazy nation, it
takes
on
a
whole
new
persona
of
its
own.
In India, the Hindi and the Tamil movie industry have hegemony
over the rest when it comes to numbers. The fact that these
industries also churn out a massive number of movies every year,
most of which are targeted to lower middle class income groups,
or as the producers like to call it, the masses, make the piracy
scene even more intriguing.
India does not make too many films that are visual extravaganzas
as people would prefer to check them out later as soon as a cam
print is released. This way, they save a whole lot of money.
But with the rise of the multiplex culture in the country and a
growing young earning class, most of the urban youth now has
access to most films. About 4-5 years ago, the scene was different.
Only the metros would get access to the blockbusters while tier-II
and tier-III towns would usually have to wait three or six months
before they could get any chances to screen the films. And this
resulted in a higher demand for pirated copies. The main reason
was that back then they used physical prints while today the
theaters mainly use digital prints which cost about 1/5 th of their
reel counterparts. So, yes, it is true that the frequency of
camcorder piracy in India has gone down. There has been a 16%

drop in the entire Asia Pacific region from last year. In India, as
opposed to 44 cases of camcorder piracy, there were 40 this year.
One of the major breakthroughs this year was the arrest and
subsequent shutdown of piracy teams like Yamraaj and
NickkkDoN, both from Indore. Earlier they were mostly pirating
Indian films, but now, with the arrival of multiplexes, they are
pirating
Hollywood
films
too.
Who is camcorder piracy movement hurting the most?
It's mainly the two extreme ends of the movie budget spectrum
that are hurting the most.
Small-time Bollywood filmmakers
Some known names in the regional cinema business
They are struggling against it because unlike studios behind
mainstream Bollywood titles, they are not exactly in a position to
dictate terms with the distributors. On the other end, Hollywood
films, for which India is one of the biggest international markets,
also lose big money due to camcorder piracy. But they lose more
money when they actually release blu-ray prints, because that's
when the torrent sites come into play, almost annihilating the
home-video business for these films. But that's a whole other
story.
For now, the biggest winner in India (if the fight against
camcorder piracy is won) will be regional cinema studios and
small time indie filmmakersbecause unlike mainstream
Bollywood or international studios, they have much to lose from
pirates
SOLUTION: In Order to sole the dual problem of Shipping and
Piracy, a new technology has come called Satellite Content
Delivery.

Satellite Content Delivery

Satellite distribution has an inherent benefit over other electronic

delivery methods of being a send once, receive by many system,
called multi-casting. Satellite also provides ubiquitous coverage
as long as line of sight to the geostationary satellites above the
earths equator is visible, coverage is available. Just like direct to
home (DTH) satellite television, the content is uplinked to the
satellite and multicast to the intended receivers. This eliminates
the variances in quality and availability of terrestrial bandwidth
such as DSL, cable or fiber for theaters in different areas, ensuring
a single, uniform system for reliable and timely delivery of the
content. When combined as part of a comprehensive solution,
such as the Enterprise Package Delivery (EPD) system, satellite
distribution is ideal for the delivery of multi-gigabyte movie
content.

EPD (Enterprise Package Delivery)

A content distribution service, which provides a reliable, means of
transferring digital packages as files from a sender to a virtually
limitless number of receivers simultaneously. The EPD sender
accepts content from a provider, manages the multicast groups,

initiates the file transfer, and controls the transfer operation. Each
EPD receiver joins the multicast group, receives the file sent by
the sender, notifies the local receiver application of arriving
content, and typically provides reception status to the sender. The
EPD sender can be programmed to deliver content at scheduled
times, scheduled data rates, and to selected groups, individual
receivers, or all receivers.
The EPD system ensures that each receiver, in this case the
theaters, receives all of the movie content and is able to store the
content in a secure server. In order to ensure delivery, the EPD
system for theaters relies on acknowledgments which are sent
back via the satellite return channel. Content is stored securely in
encrypted files on a local server until it is ready for viewing, plus
movies can be automatically purged after a predefined period of
timethereby eliminating the possibility of piracy. Various
methods to protect the content are available including key
distribution via the satellite link to unlock the content for single or
multiple screenings.
On occasion last minute changes dictate the editing of a film, for
example, due to a ratings body a film may be rejected for certain
audiences. Satellite with EPD can drastically reduce the costs
associated with these last minute changes and can even preempt
transmissions already in progress.
Although the size of any given movie content file is enormous, the
multicast capability of the satellite makes it very economical to
deliver. Coupled with the ability to distribute this content on offpeak hours (e.g. at night) when utilization of the satellite
bandwidth may be lower and thus less expensive, satellite
becomes an unbeatable value proposition for distribution.

Innovative Solution Of movie Distribution

VOD
VOD is the prime thorn in the side of movie theaters, which

view on-demand as a means for distributors to bypass big

screens altogether. While this has yet to involve any giant
releases, small and mid-range films have increasingly proven
that debuting on VOD shortly ahead of a theatrical release, or
day-and-date on VOD and in theaters simultaneously, is a
profitable strategy.
Bit
Torrent
Bit Torrent has long been the bane of the movie industry, as
the peer-to-peer file-sharing platform has been ground zero
for online piracy. However, Bit Torrent is now also making
inroads into legitimate distribution via Bit Torrent Bundles, a
service that allows artists and companies to create DIY
online-distribution campaigns that reach a global audience.

3. Channel Conflict
Lack of clarity over when the movie will be released on the nontheatrical media may lead to conflicts and tensions between
distributors / exhibitors and the producers.

Cycle of Movie Distribution

Now the trend has changed and most of movies got released on
non theatrical media( TV , Online ) within 2 to 3 months .
Eg. Bajrangi bhaijaan and Bahubali
Real situation examples of Channel Conflicts:
Conflict over Baahubali stalled release of Prithviraj,
Dileep movies:
September 2015 was supposed to be a big month for
Malayalam cinema with Prithvirajs Ennu Ninde Moideen,
Jeethu Josephs Dileep starrer Life of Josutty and Asif
Alis Kohinoor slated for release.
But none of the movies were released in theatres across the
state following a conflict between the Kerala Distributors
Association and Film Exhibitors Association. The friction
between the associations became a full-blown battle in July
when the Film Exhibitors Federation headed by Liberty
Basheer decided to not allow the release of Telugu
movie Baahubali till the case on piracy of 'Premam' movie
was solved. This resulted in Baahubali getting released only
in 100 odd theatres, though distributors had planned to
release the movie in around 200 theatres. Terming the Film
Exhibitors Federations move to stall the movies wide
release Baahubalis distributors in Kerala protested against
this. Liberty Basheer meanwhile had been demanding that
some movies should first be exclusively screened in theatres
owned by members of the Federation. The war of words
resulted in the Film Exhibitors Federation imposing a ban on
Century Films. As a mark of protest against the ban,
Distributors Association decided to boycott members of the
Film Exhibitors Federation, and stall release of new movies
in their theatres.
A dispute in Bollywood over revenue: movie producers and
distributors have been refusing to release movies to big
theater chains until they get a guarantee of 50 percent of the

revenue from ticket sales on all movies for the first four
weeks of their run
Multiplex vs Distributors: In early 2009, a dispute arose
between multiple Bollywood film producers/distributors and
multiplex owners, with the former stopping the release of
several of their films till their demands were met. The dispute
hinged on the producers demands for a greater share in the
revenue collections made by the multiplexes. The multiplex
owners on the other hand claimed that the producers and
their lobbyists were ganging up against them unfairly, stirring
apparent antitrust issues.

LESSONS FROM BOLLYWOOD

Suddenly, Bollywood is not just all about entertainment. More and
more business schools are incorporating popular cinema in their
syllabi. It is a more interesting way of looking at management
issues such as leadership and recruitment
The taste of students is changing and visuals have a greater impact
in todays times and Not surprisingly, the idea is being welcomed
by both management experts and students. Clearly, whats
triggered the B-Schools interest in cinema is the wide spectrum of

subjects that Bollywood today deals with. Directors stress that

their subjects are well researched and often reflect real-life
situations.
'Lagaan' is a case study in reputed management institutions across
the world. When Bhuvan, played by Aamir Khan, in Lagaan spots
a spinning talent in the handicapped and so-called untouchable
Kachra and recruits him in the playing eleven, it may have been
just another dramatic scene for an average cine-goer but it was a
lesson worth teaching at a management school. The way Bhuvan
goes about recruiting his team members is a perfect corporate
lesson. He identifies hidden talents when others see none, and
thats precisely what companies expect from their recruitment
managers.
The message, however, is not the only reason a film is studied.
Krrish is the subject of a case study at IIM, Indore, because of the
way the film was packaged and marketed. In fact, Krrish became
the first movie to be studied internationally, with the Harvard
Business School and the University of Hong Kong collaborating
with IIM, Indore, on a case study. IIM, Indore, has already
incorporated the film in its curriculum.
The use of Bollywood films as case studies may be new in India
but in the US, films such as The Lion King and Jurassic Park have
for long been a part of management studies

CONCLUSION
Satellite distribution, coupled with EPD systems, provides the
ideal solution for studios and theaters to cut costs, reduce piracy,
and generate addition revenues.
Industry wide Agreement on Timelines for Monetization from
New Media : Industry as a whole will benefit by agreeing on a
minimum amount of time before which producers will not start

monetization return on movies through online , TV and satellite

and home video sources .

REFERENCES
White Paper , Hughes Digital Cinema and Content Delivery
Analyzing the Effect of Digital Technology on Channel Strategy, Department of Marketing, Griffith
University
www.howstuffworks.com
www.wikipedia.com
www.eros.com

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