Analyst’s prescription for Bollywood: Focus on star power & content

• Bollywood needs to take a leaf out of Hollywood’s script and focus on content and VFX.
• Occupancy levels are still nowhere near pre-Covid levels as Bollywood number of films releasing are fewer and reliance on Big Budget films has increased.
• Box office collections in Q2 will determine whether earnings of listed multiplex stocks will be upgraded or not.

The pandemic is well and truly behind us but footfalls at movie theatres are still nowhere near pre-Covid levels. While the easiest explanation is that web series are giving tough competition to the moviemakers but that is not the entire story. In Bollywood parlance, “picture abhi baaki hai”. Karan Taurani of Elara Capital has a prescription for Bollywood if it wants to bring the audiences back to theatres so that occupancy levels revert to pre-Covid levels.

No remakes, please, is the first big piece of advice he has for Bollywood. In a report, he says VFX-driven films, franchise- & IP-based films) and original stories (no remake) would be the key solution for defining success of Hindi content toward pre-Covid levels. The formula that Hollywood is using is clearly working - IP and franchise-led films are the order of the day as they are innovating. One just needs to look at Tom Cruise’s Mission Impossible franchise and the Top Gun sequel had industry pundits billing him as the saviour of Hollywood.

Bollywood is taking steps in the same direction and Taurani cites the examples of Rocky Aur Rani (original story), Gadar 2 (franchise), OMG 2 (franchise) and Jawan (original story). However, the key ingredient in all these movies is big star power. Like it or not, the ageing Khans, Ajay Devgn and Akshay Kumar are not going anywhere near the sunset.

Another problem is also that the pandemic has possibly affected the pipeline of movies hitting theatres. Prior to the pandemic, Bollywood saw 18 releases (FY19) every quarter which is now down to 14 films (FY23). This has also increased Bollywood’s dependence on big budget films like Pathaan.

Adds Taurani, “These films doing well on a consistent basis will remain a key monitorable as they will command a large chunk of box office until we trend reverse into small and medium budget films or higher frequency therein.” While big may be beautiful, the risks are higher for these expensive films. Bollywood cannot afford to let them bomb, which also means that the films have to have good content not just star power.

The jury will be out on listed multiplex stocks as the second quarter of the financial year, which started in July, will determine if the companies will see an earnings upgrade or not.