The economics of Kabali: What happens if Thalaivar's movie flops?

Will it be Lingaa Part 2, if the movie doesn’t perform well?
The economics of Kabali: What happens if Thalaivar's movie flops?
The economics of Kabali: What happens if Thalaivar's movie flops?
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A hardcore Rajinikanth fan would tell you that is impossible that a Rajini film flops.

But they said the same ahead of Baba and Lingaa, and yet, the movies did not do as well, incurring huge losses to the distributors who then ran to Rajini to save them from their financial misfortune.

Tamil movies make money from different avenues. The biggest chunk of the profits come from theatrical rights sold for Tamil Nadu. Apart from that, dubbing rights are sold for other languages like Telugu and Hindi, Tamil rights in other states in India, and for international markets like US, Europe, Middle East and South East Asia.

Further, TV rights will also bring in money after the release of the movie. Finally, money could be made from marketing deals with corporate brands and other miscellaneous channels like merchandise.

How well a movie performs in Tamil Nadu is what decides whether a movie is a hit of a flop, and other revenue streams are merely additional. The theatrical rights for Tamil Nadu are sold in 7 zones, like Chennai, Chengalpettu, North Arcot, South Arcot etc.

For Kabali, producer Kalaippuli S. Thanu has tried to leverage every aspect of the business and kept costs low.

Usually, theatrical rights for international markets are sold together as one block to a major international studio. But for Kabali, Thanu is said to have had different deals for the US, UK and Malaysia markets. Given the hype in the West and Malaysia, this could have brought in extra moolah for Thanu.

In India, the rights have been sold to Eros for Hindi, Rockline Venkatesh for Karnataka, Shanmuga films for the Telugu states and actor Mohanlal for Kerala, all for reported whopping amounts.

Further, from Air Asia to Muthoot FinCorp, branding partnership deals have been struck. “Everyone except Harpic has come in,” says an industry insider, laughing out loud.

The producers claim that the movie has done a business of Rs. 200 crores already, and will touch Rs. 500 crores in total business. With no costs for VFX, several newcomers in the projects and a comparatively short shoot schedule, the movie’s budget could not have crossed Rs. 80 crores, say industry observer. “From 8-year-olds to 80-year-olds, everyone wants to watch the movies. So the movie is most likely making a profit already,” says Hansraj Saxena, an industry observer.  

But all that money is for the producer, who has sold the rights to the various distributors – bulk of it from Tamil Nadu. For example, Thanu has reportedly sold the rights of Chengalpettu region to AGS Cinemas for Rs. 13 crores, according to sources. Now AGS will have to make that money back from the market through ticket sales.

So what happens if the movie flops?

Rajinikanth had learnt his lessons from Lingaa, which is why, according to industry sources, he had told Kalaippuli S Thanu to not sell the movie to different buyers across zones in Tamil Nadu, and to release the movie directly in theatres. Because in Lingaa, the distributors bought the movie from the producers at a high cost, and when the movie bombed, distributors lost their money and they knocked on Rajinikanth’s doors. Rajini then had to cover some of their losses.

But industry insiders say that Thanu went ahead and sold the rights for Kabali to different distributors in Tamil Nadu anyway, stating that he had a close relationship with these distributors and assured them of success. Even so, it is the distributors who are taking the risk.

So, if the movie flops, this could be Lingaa controversy, part 2. With Thanu having got his money, distributors will be hung out to dry. Thanu will could simply move out of the picture, and the distributors will land at Rajinkanth’s doors yet again.

Compiled from industry sources with inputs from Digital Native

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