Business/ Surviving the odds

Director of Shemaroo, Hiren Gada talks of how the home video business managed to stay afloat despite the rapidly changing landscape of enterainment and technology

By Ankita R. Kanabar
The world of home viewing has gone through a sea change with the advent of technology. One such name that has survived the rapidly changing world of entertainment is Shemaroo Entertainment, which is now one of the leading names in home video business.
Ask Hiren Gada, the second generation family member and director of Shemaroo, about the challenges the industry faced and he’ll attribute it to two factors — piracy and digitisation. “What happened four to five years back is that factors like piracy began to affect the business. There was a trend around that time where DVDs were sold at low MRPs by one of the players in the market. Thus, the overall royalty recovery went down as the margin shrunk and volumes didn’t go up that much. But in the last two years, we increased the prices for some premium films. For instance, we released The Dirty Picture at Rs.399 and Bhaag Milkha Bhaag at Rs.299. This is how it was when home viewing business enjoyed a good run,” he says.
The scenario for home video business looks better now, although the phase of low MRPs seems to have left a lasting mark on the business. “Margins have improved, but the volumes have shrunk as certain distribution players and partners have gone out of business. Just recently, a store like Music World shut down, affecting volumes and business on a larger level,” adds Gada.
Interestingly, the costs to acquire the rights to release the DVD of a film have increased magnificently. Now, it also involves risks, especially, to acquire rights of unreleased films. Hence, all eyes are now on the performance of a film at the box-office, before buying the home video rights. There are exceptions though. For instance, Shemaroo has recently inked a deal with Viacom18 — it’s a package deal for 23 films under Viacom18, including films like Bhaag Milkha Bhaag, Bombay Talkies and Madras Cafe. This particular deal also includes few unreleased films like Mary Kom and Gabbar.
It is just one of the many business models being followed in the industry to strike a deal for home video rights. Gada elaborates the different models, “There’s a model, where we take the entire risk — loss or gain, it remains mine in entirety. Another model works on a distribution-commission basis. So whatever net amount is earned on the sale, I take my share and then pass back the rest to the producer. The third model would somewhere be a combination of the two with minimum guarantee. After recovering the minimum guarantee, expenses, our commission and everything, the remaining is shared between us and the producer.”
The home video company derives the net amount after deducting the VAT (value added tax) and the distributor’s share, which includes the likes of Crossword or Landmark. “If the price of a DVD is Rs. 400, and the distributor takes 10 per cent of it as his margin which comes up to Rs.40, I would sell him the DVD at Rs.360,” adds Gada.
The question though is: Are the sales of DVDs encouraging enough, especially at a time when satellite rights of a movie for television screening is at its peak? Optimistic about home video business, Gada says, “The rush to telecast movies on television may to an extent affect the initial phase, but not later. For instance, a film like Amar Akbar Anthony is telecast anywhere between 10-15 times a year. Does that mean we don’t sell the DVDs? We do, because the television market is different from home viewing market.”
In fact, he feels that DVDs are still consumed by people, and that the satellite broadcast of movies may affect the box-office, since it’ll encourage people to stay away from the theatre and watch the film on television. But understanding the need of the hour, which is digitisation Shemaroo has also partnered with mobile companies like Airtel, sites like Youtube, and has also launched non-film products, for example, Shilpa Shetty’s yoga DVD, or Bipasha Basu’s fitness DVD.

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