Dreams To Reality

While the world is dancing to the beats of AR Rahman’s ‘Jai Ho’, the dynamics of the Indian film industry are radically changing. Nidhi Kaushik speaks with Kishore Lulla, the kingpin of Eros International to find out more
In 2008, with a growth of 12.4 per cent over the previous year, the Indian Media & Entertainment (M&E) industry stood at INR 584bn. As one of the fastest growing industries in the world, it witnessed significant developments like the entry of DTH players, regionalisation, internationalisation, digitisation and deregulation. According to the media and entertainment industry report released by KPMG and FICCI in 2009, the industry is expected grow at a CAGR of 12.5 per cent to reach INR 1052bn by 2013.
As the stage is set, India’s M&E industry is ready for the next act and the foreign media companies and investors want to play a significant role in this highly lucrative sector.
Listed in the Alternative Investment Market (AIM) of the LSE, Eros International has been a pioneer in creating a global platform for Indian films. Commanding the largest market share of over 35 per cent and market leader for over three decades, Eros is one of the only companies that has evolved from a Bollywood film distributor into an integrated studio that operates on a vertically integrated studio model, by producing, acquiring and distributing films globally across all platforms including motion pictures, home entertainment, music, television, new media and animation.
Source: Eros International Plc
Just like there are no sad endings in a Bollywood movie, “there are no bad times in life,” says Kishore Lulla, Chairman and CEO of Eros International. It is really no surprise that even in these times of economic slowdown, liquidity crunch and plunging profits, Eros International recorded a turnover of US$156.7m in 2008-09, 39 per cent higher than the previous year. Highlighting one of the main reasons behind Eros’ ongoing growth story, Kishore says: “Eros has a cutting edge because the company has years of valuable experience of this industry as well as an understanding of the consumer demand.


“In a way the recession has had a positive impact by creating entry barriers for competition, especially for companies who thought that they could gain a quick entry to this attractive industry by raising money from the markets.”

Despite being one of the largest film industries in the world, Indian movies were not featured internationally until recently. Today, even non-Indian audiences around the world have developed a taste and liking to the typical Bollywood masala movie. Eros International had 70 new releases (24 global) in 2008-09, including Om Shanti Om and Slumdog Millionaire. “Slumdog Millionaire’s success cannot be quantified, but it has given a major boost to our international distribution demand,” Kishore says.
Driven by domestic as well as international demand, the Indian film industry is projected to grow at the CAGR of 9.1 per cent and is expected to be worth INR 168.6bn by 2013. With Bollywood movies like Love Aaj Kal, Kambakth Ishq and Aladin being premiered at international film festivals like the Cannes, means more revenue is being generated thanks to an increased awareness and demand, not only for new movies, but for old Bollywood films as well.
“The fact that our buyers have increased by more than 100 in number over the last two years, definitely shows that the world is taking Bollywood seriously,” Kishore says.

Kishore believes that the consumer should be given a choice of what they want, when they want and how they want. “We are an integrated Indian studio and have a clear and strong focus on our core competencies, i.e. distribution and network and concentrating on expanding the same on platforms such as theatrical, television and digital,” he explains. “We are also looking at increasing diversified streams of revenue from owning content, distribution and expansion in multiple territories, formats and client base.”
Source: Eros International Plc
With over 60 per cent of the group’s turnover coming from India, giving a boost to its distribution network, Eros set up its own distribution offices throughout India including in Mumbai, Delhi, Punjab, Eastern circuit and Tamil Nadu, which account for over 80 per cent of the theatrical business activity from India.
Due to Eros’ existing and increasing global presence, along with the experience and local knowledge of the market, Lionsgate entered into a joint venture with the company for the distribution of Lionsgate English and other language content in the original as well as the dubbed language versions within South Asia. This includes all distribution formats such as cinemas, home entertainment, television and new media.
“The key is to use each other’s strengths to provide the consumer with a wide array of products to suit their individual choice,” Kishore explains. “Eros is the preferred local partner for companies that want to enter the Indian market as it is more cost effective, especially in the current economic scenario.”
Taking a step further, Eros has also made a conscious shift to co-producing movies rather than just acquiring them. “We are creatively tying up and co-producing movies with various Indian producers including Shahrukh Khan and Sajid Nadiadwala,” he adds.

Due to the fast paced internationalisation of Indian media, catalogue exploitation and regional content distribution have also been the two key competitive advantages for the company. Maintaining its competitive edge, Eros is building on its core competency of Indian content and distribution by expanding and penetrating into regional Indian languages like Tamil, Punjabi and Marathi, where it has identified a profitable niche. A Marathi film, Me Shivaji Raje Bhosale Boltoy released by Eros in April 2009 went on to become the highest grossing Marathi film in history at over US$4m.

With the widespread availability of portable music there has been a paradigm shift in the way that music is accessed worldwide.
“Music catalogue and publishing is a key focus for the company” Kishore explains, “which includes physical and digital distribution as a record company as well as signing up artists and managing their publishing.
“The internationalisation as well as the crossover potential of Indian movies impacts other segments too. For example, the Pussycat Dolls version of A.R.Rehman’s ‘Jai Ho’ from Slumdog Millionaire was a hit song having an international appeal.”
Even though worldwide statistics show a declining growth for the music industry, Kishore is going with his instincts, irrespective of the market. “Experience has taught me to always listen to yourself, especially if my team believes that it can be done. We believe that this is the right time for Eros to grow in the music industry.”
And to show he means business, Eros released 11 music titles in the past year, which were monetised through ringtones, iTunes and other revenue streams.
Driving its digital and television syndication model globally, the company continues to acquire music and other catalogues to augment its strong library. Eros also has a talent hunt joint venture with Universal in India, which is gaining momentum and the company has signed a sub-publishing deal with EMI for South America too. “We are also looking at acquiring a music company this year and have shortlisted four to five companies,” he reveals.
The television sector holds the largest chunk of India’s M&E industry, so Eros is currently dubbing or sub-titling content in 24 different languages and also has new and ongoing TV syndication deals with Star, Sony, INX, Viacom, Sahara, B4U and Zee, including the launch of Ayngaran TV in Europe. The revenues from TV syndication grew 94 per cent and amounted to US$64m in 2008-09.

Digitisation has played a major role in changing the landscape of the Indian M&E industry. Eros has leveraged its new media and home entertainment platform, with video on demand (VOD) deals with Comcast, Cablevision and other cable platforms, IPTV, mobile deals, DTH and internet platforms. VOD is the key growth driver in this segment leading to a 69 per cent growth for Eros, amounting to US$46.2m.


As there has been a significant shift in advertising, from broadcasting to the internet, Eros’ partner channels with all major platforms, including MSN, Yahoo and AOL on YouTube have gained popularity and crossed over 100 million video views leading to a strong growth in advertising revenues for the company. Leveraging cross media synergies and attracting a whole set of new consumers, Eros has taken a major lead in providing tailor-made content to consumers by establishing distribution across various new media platforms around the world.


It’s no surprise then that Kishore is confident in a rosy future. “Eros is poised to take the lead in further consolidating its market position in the current economic climate, given the company’s size, scale and liquidity. We have a declining CAPEX and debt and with a three-year track record on AIM since 2006, Eros is now exploring plans to not only shift to the main list of the London Stock Exchange, but is also planning for a listing in India.”


Eros made the Bollywood dream of becoming a global phenomenon a reality by placing Bollywood on the global centre stage, but there is a lot more to look forward to.


“Watch this space”, says Kishore, “there is a lot that’s going to happen here in the near future. The whole ecosystem will change. The next five years is boom time for the industry and with cross pollination, good products are coming up so one can look forward to many more films like Slumdog Millionaire in the future.” He pauses and adds: “or maybe something even better.”


Jai Ho to that.

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