Business Thoughts: How the cinema consumer is changing

Does the box office rule? Yes and No. Yes, because in terms of absolute numbers, it is still the largest contributor to a film's revenue. No, because its percentage contribution over the last five years has dipped sharply as it faces growing competition since fans choose to consume entertainment via other platforms like television, mobile and the internet. As for music, home video as well as overseas, each is a story in itself.

Each one has myriad reasons for its changing fortunes as new ones take their place and increase their presence. While big brother, box office, retains its number one position, satellite and the fast-growing digital rights market come next, giving an opportunity for many new players to garner a share in the growing Bollywood pie.

Take overseas, for example. The year 2006 was a dream year for Hindi cinema. Six movies -Kabhie Alvida Naa Kehna, Dhoom 2, Don, Lage Raho Munnabhai, Rang De Basanti and Fanaa crossed the $2-million mark at the US box office. In 2010, only one film grossed more than $2 million at the US box office. While the US market slipped, overseas revenues increased because of new markets (50 markets today) as well as new platforms largely aided by the internet and television.

Similarly, with music, while physical sales slumped, the popularity of the digital format rose but the spoils were now shared by many. When the Copyright Bill comes into force, this industry will see many changes - that will change the fortunes of many. Simply put, the reduction that we see on the graph is because the music companies can no longer afford to buy rights for the amounts they used to earlier and therefore their contribution to the pie has dipped. A chunk of the revenue now comes from Radio and TV.

Satellite, the biggest growth story today, boasts of a number that is mind boggling compared with five years ago. With over 400 channels today and a large number of those, including the children's channels, buying movies, satellite rights go a long way in helping a producer bankroll the cost of production of his/her movie. In fact, the future looks even brighter as more general entertainment channels as well as movie channels get ready for launch.

We have attempted to capture the changing trends via a graphic, which shows at a glance how the cinema consumer is changing. The future of entertainment possibly lies in mobile, remote and iPad - mediums that enable consumers to pick whatever they want, whenever they want, and wherever they want.