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Karan Johar has been heading Dharma Productions for almost two decades now, and while one might have strong opinions about the kind of films that are made under the banner, they’ve come to define an entire era in Hindi cinema. The fate of a Dharma film at the box office is watched closely because trade analysts consider these to be the films that set a benchmark for what is working in the industry at any given point. In a recent chat, Karan Johar broke down the mathematics of creating a financially viable film that does not leave the production house in the red.
Karan explained that to be safe on a film, they have to make sure that the mathematics of the money received from the digital rights, music rights and the ‘perceived average theatrical’ should equal the cost of production and publicity. Hypothetically, he said, if he invests Rs 75 crore in a movie, and spends another Rs 15 crore on promotions, he has to check certain boxes before making the film. “If I’m getting Rs 40 crore from digital and I’m getting Rs 20 crore from satellite and I’m getting Rs 15 crore from music, then I’m already at Rs 75 crore. My cost is Rs 90 crore. So I’m presuming my film will do around Rs 40 crore (in the theatres). If I do Rs 40 crore, then 55 percent of that comes home theatrically. So then, I’m like okay, I can make this movie. This is your intelligent mind, doing this calculation but if you have to take a chance, you have to take a chance,” he said on the Masters’ Union podcast.
Talking about taking risks, Karan explained it with another example. He sad that if he is making a film that needs to do Rs 80 crore nett box office, then it is a risk-taking venture in today’s climate. “That’s the time you are taking a risk because in this climate you don’t know what will work and what won’t but this simple mathematics, I always do for a filmmaker,” he added.
Karan also explained how a hit film could be in the red while a flop film could be perceived as being a hit. Giving the example of his own film Student of the Year, Karan said that he went overbudget on it, and even though it was seen as a hit, it did not fully recover costs. “Sometimes there are movies that do really well in terms of perception but they haven’t done well economically,” he said.
Karan recalled that Student of the Year did a business of over Rs 70 crore at the box office and had done really well overseas as well, but, he said, “I had spent like crazy on that film. We were down Rs 15-20 crore on that film.” But he had faith that Alia Bhatt, Varun Dhawan and Sidharth Malhotra were going to be stars and at that time, Dharma had signed them on three-film contracts. He added that soon after Student of the Year, they made Hasee Toh Phasee, 2 States, Humpty Sharma Ki Dulhania with the three actors. “They were at subsidised numbers because that was as our contract so eventually that shortfall actually got covered,” he said.
Karan explained that a film could be seen as flop and “still make money because you managed to keep your cost in control.” He elaborated, “Suppose I make my film in Rs 50 crore because it’s a smaller film, but my digital and satellite rights are Rs 60 crore, so even if it bombs I have made the money even before it hits the cinemas, and a lot of times that has known to happen. And you could make a massive movie and it could do a massive number but you spent so much money that you haven’t been able to recover your cost.”
He again stressed that this was the case with Student of the Year. It was a hit film that lost money. “I made a hit film and lost money,” he said. He quoted late filmmaker Yash Chopra, and said, “A film never fails, a budget does.”
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