The term “Bollywood” conjures illustrations of ubiquitous stars. On the contrary, however, every movie produced in Mumbai is possible by an army of people toiling in the shadows – the extras, caterers, carpenters, tailors, people putting up movie billboards, people sitting in the ticket window at the local cinema hall.
India has been fighting the coronavirus outbreak since March 2020, which has also put a halt to Bollywood’s complex machinery, affecting over a million people (1) directly indirectly employed by the entertainment industry. Several are without work and wages, and the worst hit is daily wage workers.
According to the FICCI, Federation of Indian Chambers of Commerce and Industry, and Ernst & Young, in 2019, over 1833 movies were released in India (2). The country makes movies in over 28 languages, and over 200 of them are produced by the Hindi film industry, widely known as Bollywood.
The film industry had been shut down since mid-March 2020 when the producers’ guild decided to stop filming, and most theaters across the country were closed. As a result, Bollywood, which used to have the calendar tightly packed with release dates of new movies, has now postponed some of its biggest films indefinitely.
There is no possible means to predict when theaters will open, and more importantly when audiences will feel safe enough to enter again.
Notably, India has more than 9,527 movie screens, and a majority of them, over 6,327 screens, are single-screen cinema halls. And according to reports (3), some of them will be permanently closed in the post-pandemic world.
All of these make us wonder about the extent of damage the COVID-19 outbreak will inflict on Bollywood.
The Devastating Effects of COVID-19 on Bollywood
The second wave of coronavirus in India has turned several sectors of its economy upside down, including Bollywood, which is still reeling from the pandemic’s first wave effects.
At present, India is the epicenter of the world’s coronavirus pandemic, with the country accounting for over 3.7 million active cases with a total 246k death toll (as of May 2021). In early May, the WHO World Health Organization report stated that India accounted for over 46% of new cases recorded globally and 25% of deaths (4).
As the second-most populous country on earth, with more than 1.3 billion people, the ongoing crisis has overwhelmed India’s medical infrastructure, leading to a humanitarian disaster.
In recent months, even a host of Bollywood performers were tested positive, including names such as Alia Bhatt, Aamir Khan, Deepika Padukone, and Ranbir Kapoor. Unfortunately, there were also some fatalities among the elder corps of Bollywood, such as Bikramjeet Kanwarpal, known for Special Ops on Disney+ Hotstar, veteran composer Shravan Rathod, and iconic Pandit Rajan Mishra.
Even though cinema halls gradually started to open in October with limited seating and movie shoots resumed, the devastation caused by the second wave since March this year has brought everything to a halt. Even the wildly popular IPL, the Indian Premier League, had been suspended mid-season because of the pandemic and widespread criticism.
Nearly all film production is on hold following lockdowns in Maharashtra, home to India’s entertainment epicenter, Mumbai. While some shoots, mostly for tv shows utilizing indoor sets, temporarily shifted base to other places such as Daman, Silvassa, Goa (5), the severity of the second wave has brought things to a standstill.
Several major cities are also imposing lockdowns and curfews, including Delhi, the national capital, a popular shooting destination, but the pandemic’s worst-hit population center at present.
Since shoots are stalled, daily wage workers employed in several capacities in tv and film crews are hit especially hard. Last year, the producers’ guild had launched a relief fund for workers, which also witnessed Netflix contributing 1 million USD. Reportedly, the guild is again reaching out to raise funds. While the guild is yet to release numbers, there are estimates that over the past year and this year, they have raised about 2 million USD in the relief fund.
Attempts for Mass Vaccines
Meanwhile, as India embarks on a massive vaccination drive, over 245 million doses have been administered so far, some corporate organizations in the industry are stepping in to assist the government. For example, Yash Raj Films, the leading production banner, announced that it would pay for the vaccination of 30k members of the Federation of Western India Cine Employees. In addition, it sent a letter to Uddhav Thackeray, Maharashtra’s chief minister, to buy vaccines (6).
Additionally, YRF’s Yash Chopra Foundation initiated a direct benefit transfer of 5k INR to senior citizens and women of the industry and distributed ration kits to workers for a family of four for an entire month via Youth Feed India, a non-profit organization.
The Walt Disney Company’s Indian arm and its Star network announced contributing over 6.8 million USD for local coronavirus relief efforts, adding the 3.8 million USD it contributed in 2020.
When we talk about the industry’s financial impact, experts estimate that 2021 could be even more dark compared to 2020.
As per an annual report by Ernst and Young (7), total revenue for the Indian media and entertainment industry, covering all sectors including movie, tv, digital, animation, music, print, gaming, among others, dropped by 24% in 2020 to 18.7 billion USD compared to 24.7 billion USD in 2019, taking revenues back to 2017 levels.
The tv industry witnessed a moderate fall in its total revenues, 9.3 billion USD from 10 billion USD in 2019. But, OTT platforms saw a boom, with video subscriptions skyrocketing to 575 million USD from 384 million USD. EY estimates that the figure could reach 763 million USD by the end of 2021.
However, the film business was the worst hit, with 2020 falling by over half to 1 billion USD, compared to 2.6 billion USD.
Even businesses revolving around the industry are not doing well. BookMyShow, for instance, recently laid off 200 employees as the pandemic slows recovery. Last year also the company had to let go 270 employees, making the company’s total team size close to 1000 out of 1,450.
The online ticketing platform has been facing a decline in revenues since March 2020. Last year, it witnessed its total income drop by over 6% and an over 62% increase in its net loss (8). Notably, BookMyShow has pivoted to virtual events to counter the decline.
The Rise of OTT
Presently, the cash flow is worse than last year for the industry. With cinemas shut for over a year now, a slew of releases went straight to digital, skipping theatrical releases as producers struggled to supplement revenue.
Notably, restrictions for public areas had gradually eased, and cinemas had started reopening from October.
The box office appeared to slowly recover, largely thanks to some South Indian hits like Tamil’s Master, which collected about 33 million USD, and Telugu’s Krack, which grossed about 8.15 million. Hollywood also pulled in the audience with Godzilla Vs. Kong, collecting 8.7 million USD in its two-week run when it released in late March, making India among Warner’s top-ten overseas territories.
The theatrical sector witnessed a ray of hope from October last year to early April 2021, when the second wave hit and cinemas started shutting down again until further notice. There are hopes in the Indian theatrical business that Hollywood titles and India’s big-ticket releases will bring back audiences.
“If the content is good, the audience will come back to theaters,” says Alok Tandon, CEO of Inox Leisure (9), India’s largest multiplex chain after PVR Cinemas.
In the short window when cinemas had reopened, mainstream Bollywood did not see any major performers since highly anticipated releases like Sooryavanshi, starring Akshay Kumar, and cricket drama 83 from Reliance have been on hold indefinitely (10, 11).
Notably, the pandemic has also led to the halt of digital releases. Toofan, starring Farhan Akhtar, heading straight to Amazon Prime, is currently on hold amid the pandemic.
More producers have started to create more digital content with the conventional cinema business under a cloud. However, the current pause in productions could also affect content pipelines for digital platforms if 2020’s figures are any indication.
As per Ernst and Young 2020 report, OTT platforms had spent over 138 million USD on creating over 1,200 hours of original content for about 2020 titles, excluding sports, and acquired movie rights, a drop of 27% from 190 million in 2019 for about 385 titles. The drop-in content spent in 2020 was due to a five-month halt in production.
Nonetheless, last year also witnessed OTT platforms increasing their acquisitions of movie titles, with Amazon Prime first off the block when it acquired several movies starting with Gulabo Sitabo. It led to a furious debate over disrupted release windows which has been ever more pronounced in 2021.
The situation has upset cinema owners counting on Salman Khan’s mass appeal to bring in the audience. However, considering the situation, cinemas were hardly open across India, leaving the movie to bow on OTT, as experts warn that India could be hit with the pandemic’s third wave at some point.
The downfall of Single-Screen Cinemas
While the pandemic has benefited streaming giants, it came at a heavy price for cinemas, especially when India has always been an under-screened market with only about 9k screens.
According to estimates, the number has dropped further as over 1,500 single-screen cinema halls had to shut down over the last year amid the coronavirus crisis. While there is no official data, about 500 to 600 single-cinemas have been shut.
But, it is also worth highlighting that South Indian single screens did well with local titles when they opened (13).
Even a publicly listed multiplex chain such as Inox had to take a hit in FY 2020. Its total revenue fell sharply to 16.1 million USD from 260 million USD in the previous financial year. Regardless, Inox still has a strong balance sheet considering its mix of holding individuals and companies, reduced to about 47% from 52%.
Its financial restructuring also witnessed a huge cost-cutting, with monthly expenses falling from over 11.5 million USD to 1.63 million USD last year. Notably, the costs had gone up from about 3.4 million USD to 4 million USD when cinemas were reopened (14).
The Future of Bollywood
Several in the entertainment industry fear the acceleration of a shift in audience’s viewing patterns the most amid the coronavirus crisis.
There are doubts that consumers will make prudent choices about the type of content they wish to see in the theatre.
For example, a larger-than-life celebrity film is more likely to draw a crowd than a dialogue-based drama or comedy, which people often prefer to watch at home. The change has already been in process in huge markets like the United States and has also started to make its way in India.
Since going to see a movie in a theatre is a community or family occasion across India, we may witness the entertainment industry staging a strong comeback in the theatres as the pandemic tide recedes.
However, what the pandemic may have altered forever is an entrenched practice that movies progress from one medium to another, from theatres to digital to tv, with fixed exhibition windows and gaps.
With cinemas still half-empty and increasingly strained because of the state-imposed lockdowns in several parts of India, many producers are looking to release their movies directly to OTT (15).
The days when every movie, without exception, would first go to the box office may never come back. We have witnessed these practices in the United States, and now we have started to witness the same in India.
Over the last year, we witnessed several movies intended for theatrical release premiered on OTT as producers ran out of patience. While there were mixed performances of these films, several producers were determined to hold back movies and wait for the situation to improve.
There was still a window of hope for the return of theatrical revenue, especially in early 2021 as audiences trickled in and some South Indian and Hollywood releases performed better than expectations. However, these movies may have to explore an OTT release as the promise of returning to normalcy is nowhere in sight.
Even movies under production will increase costs because of the COVID-19 related SOPs, regulatory restrictions, and lengthening timelines.
Another factor influencing the trend is OTT platforms’ hunger for capacity and content. There are more than 45 OTT services in India battling for consumers. And quality content has become necessary to drive consumers to the platform and convert them from free to paying subscribers.
And since the industry’s production capacity is limited, several OTT players with huge budgets for originals increasing their production capacity may affect films and drive costs and budgets higher.
The pressure to release capital and increasing costs may push producers to explore all possible release windows in the short and medium term (16).
Nonetheless, we have strong hopes that Bollywood will adapt and rejuvenate.
Even the box office will have a robust future in India. As per a Deloitte study (17), over 83% of Indians watch video content on their phones, making the cinema experience unique. There were also predictions that cinema would demise when TVs were introduced, again when DVDs rolled out. However, these predictions were wrong each time.
The movie industry that emerges post-pandemic will be necessarily changed. Perhaps the movies too. How can anyone film a spectacular song sequence with 200 dancers in the background until things return to normalcy? The stories and the way they tell them will change.
While we can’t predict the exact loss of Bollywood, every day, over 200 aspirants come to Mumbai with a hope to break into show business. That is why it is also called Mayanagri, The City of Illusions.
Even as Bollywood struggles to survive, we believe that a happy ending is possible.