Ever since the Mahesh Babu-Samantha starrer Dookudu turned out to be a smash hit at the US box-office in 2011, the Telugu film industry has been extremely bullish about the US market for its films. After Dookudu turned out to be the first film to gross more the $1 million at the box-office, in the past eight years, nearly 50 Telugu films have crossed the milestone.
Among these films, Rangasthalam and Bharat Ane Nenu grossed around $3.4-3.5 million each, and others like Sye Raa Narasimha Reddy, Srimanthudu, Saaho and Mahanati have landed in the $2.5-2.9 million range. Not surprisingly, Baahubali 2 holds the record for the highest grossing film with a cumulative gross of just over $20 million from all its versions which released in North America. Prior to that, Baahubali : The Beginning stunned trade pundits in 2017 after it grossed more than $1 million from the premieres alone, a record at that point. The film went on to gross close to $6.5-7 million in its full theatrical run.
Leaving aside the Baahubali franchise, the data, so far, proves that the market for Telugu films has stagnated at around $3.5-4 million in recent years. Among all the south Indian film industries, Telugu films have consistently outranked their peers in markets abroad, especially in the US. The only exception to this trend are Rajinikanth’s films, which are patronised by a wider demographic of audience compared to the rest.
Competition with Hollywood and Bollywood
However, beyond all these numbers and records, there’s every reason to believe that the dream-run that Telugu films have enjoyed in the US market over the years has come to an end. The revenues, even for the biggest of films, have been below the estimated figures, and more importantly, some of the films couldn’t hit the break-even number, despite grossing close to $2 million.
“When it comes to allocation of screens, Telugu films are given third preference after Hollywood and Hindi films. If the release of a big film from Telugu clashes with that of a Hindi or English film, we lose out on prime locations and screens. Given the number of big budget Hollywood releases, especially in summer, it becomes quite a challenge to block the screens,” says a US-based distributor on the condition of anonymity.
A case in point being Chiranjeevi starrer Sye Raa Narasimha Reddy, the release of which coincided with that of Hrithik Roshan-YRF’s War and Joker in the same week. Sye Raa was released in more than 315 locations and it collected more than $800k from its premieres; however, from the next day onwards, War and Joker got the bulk of the screens.
Costs involved
Apart from figuring out the release dates and total number of screens, another significant challenge for distributors of Telugu films is the revenue sharing agreements that they need to strike with the theatre chains.
“Among the big theatre chains in the US, Cinemark gives a better deal to the distributors. There’s also AMC, which has a huge number of screens; however, the theatre chain keeps a bigger chunk of the revenue. Then, there are other significant expenses in the form of VPF (Virtual Print Fee) that the distributors need to shell out to each theatre on a weekly basis. The costs could run into thousands of dollars for VPF charges alone, and there are plenty of films which perform so badly that distributors don’t even recover the VPF charges,” says another distributor in the know.
He goes on to add, “Theatres need the content at least 3-4 days before the premieres are scheduled in their screens. It means that the distributors need to get the content from producers in Hyderabad, at least a week before the film is slated for release, so that it can be shipped to the respective locations on time. However, there’s almost always a delay in the whole process which adds a lot more pressure on the distributors to ensure that the film releases smoothly.”
The US market had turned into a golden goose for the Telugu film industry in the beginning of this decade; however, after the market stagnated, there has been a renewed debate about the costs involved to make moolah at the US box-office.
Ticket pricing and access
There’s a general consensus among the US-based distributors that the popularity of MoviePass, a subscription-based movie ticketing service, was instrumental in bringing the crowds in droves to theatres. Considering that the ticket pricing for most of the big budgeted films is around $20-25 (a select few films had even higher ticket pricing for their premieres and big screens) before it’s brought down to $12 or even $15 after few days, MoviePass turned out to be a huge blessing for the movie-goers.
Moreover, several multiplex chains introduced offers (for instance - buy 1 & get 1 ticket or AMC Discount Tuesdays among many others) to boost their revenues.
However, after MoviePass discontinued their service and multiplexes added more conditions to avail their offers, there's been a huge impact on the market for Telugu films. The audience, which had already gotten used to buying tickets at discounted prices, gradually shied away from having to shell out more money for the tickets.
Another key issue is that of access to cinema halls. Unlike India where big and medium-budget films release in cinema halls close to one’s homes, people often end up driving for at least 20-30 miles to watch a regional film, be it Telugu or Tamil. And in the US, going to the movies is usually a family event or a group activity (and people rarely watch films more than once in theatres, unlike India where repeat viewing is still a common phenomenon); however, the catch is, the more the number of theatres, the higher the costs in terms of VPF and other expenses.
Impact of online reviews
Moreover, in a lot of cities, the per screen average drops a lot after the opening weekend, which in turn incurs losses in the long run. Today, for any film irrespective of its budget and star cast, the bulk of the revenue comes from the premieres on Thursday night, and if for some reason, the premieres are cancelled or if the film is not screened on time, then the distributors are at the mercy of reviews online and word of mouth.
“Unlike Australia or Gulf, where tickets for Telugu films aren’t as expensive as they are in the US, people here are quite dependent on reviews for every film. If the buzz from the premieres is good and the film gets ratings 3 or above then the film stands a chance to make good money; however, if the ratings are below 3, the films don’t have a good run beyond the first weekend. The US market isn’t like India where some films go on to become commercial hits despite not so favourable reviews. There are always a few exceptions, especially when certain stars like Mahesh Babu, Samantha, Nani, and Vijay Deverakonda among a few others, who have an immense fan following, have their films up for release,” says another distributor.
The biggest fear that distributors have is buying the rights of a film which ends up getting ‘A’ certificate.
“Indian people in US don't generally prefer watching films with ‘A’ certificate. The only exception to this trend in recent times was Arjun Reddy, which had a terrific buzz and rave reviews about Vijay’s performance. On the other hand, if a film is deemed to be entertaining like F2, it has a good chance to surprise everyone with its theatrical run,” says another veteran distributor.
In the past few years, there have been a select few surprise hits like F2 (which collected close to $2.1 million), Geetha Govindam ($2.4 million), Arjun Reddy ($1.7 million), Bhale Bhale Magadivoy ($1.4 million), and Pelli Choopulu ($1.2 million) to name a few. However, in the current market scenario where the overseas rights have shot through the roof owing to previous records and box-office numbers and other costs escalating, many distributors opine that it’s time that the producers understand how the market scenario has changed in the past couple of years.
Emergence of OTT platforms
“The producers of big budget films are aware of the changes that the US market for Telugu films have undergone; however, there’s still a debate over what’s a good price for overseas rights for mid-range films. There is at least 30% revenue drop from last year that is evident from recent movie grosses,” Sundeep, who distributes films under Nirvana Cinemas banner, says, adding that if a film manages to entertain the audience, then it’s a big draw for the audience, irrespective of the genre.
Beyond the discounted ticket pricing and offers, and whether a film manages to click or not, the single biggest disruption for the US market for Telugu films has come in the form of streaming platforms like Amazon Prime and Netflix. Of late, several big budget films have landed on Amazon Prime within 45 days after their date of release, including the likes of Prabhas’s Saaho and Nani’s Gang Leader. This, the distributors says, has changed the game completely.
“The moment people get to know that Amazon or Netflix has acquired the digital rights, they tend to wait to watch it after a month on TV. Not too many movies made money for distributors this year in the US. The only way that this business will sustain is when producers have an agreement that the streaming platforms will wait for at least 8 weeks before streaming a film, or the selling price of US rights needs to be reduced. The moment a film is sold for a high price, it’s a huge burden on the distributor to make sure that he recovers the money,” Sundeep adds.
The business model for Bollywood films in the US is in stark contrast to that of Telugu films. When it comes to Hindi films, most of the big production houses like Yash Raj Films, Dharma Productions have their own distribution offices in the US which strike deals with the theatre chains. However, for Telugu or Tamil films, an individual or a distribution company has to buy the rights from a producer back in India (often at high prices for big budget films) and then release the film.
The irony is that, despite the alarming signs of stagnation and downturn in the market, there’s always a new production house or a cash-rich distributor willing to shell out big money, without understanding the economics behind it. And as one distributor says, “Some people do it for the sake of pride and some just want a share of the pie, hoping that someday they’ll crack the game. Whatever it is, there’ll be someone or the other who’ll come forward to fall for the bait.”
Hemanth Kumar C R is a Hyderabad based film journalist. He writes about Telugu cinema on most days, and when he doesn’t, one can find him talking about Game Of Thrones, chai, books, and digging into all things related to history.