Hollywood outsourcing to Bollywood

August 30, 2009

When Steven Spielberg’s cash strapped DreamWorks Studios received a lifeline of $825 million as part of a 50:50 joint-venture with India’s Anil Ambani founded Reliance Big Entertainment (RBE), the reaction in India was, “’Wow! India has more money than Spielberg!”

Hindustan Times’ Business paper, Mint, carried a piece by Sukumar Ranganathan, wherein the editor of Mint wrote, given India’s love of anything foreign, the deal is not surprising and very soon, we might even see a Brad Pitt and Angelina Jolie dancing at the sangeet (a pre-wedding song-and-dance sequence) ceremony of an Indian businessman’s daughter/son, the way Bollywood actors are routinely called upon to do.
hollywood Outsourcing to Bollywood
While that’s carrying one’s imagination a tad too far, in a truly globalized world, anything is possible, even the most unthinkable, such as two most unlikely partners going to bed together, the way Spielberg and Ambani have. Bollywood movies are already big grossers in the West, and Indian audiences are also opening up to the Hollywood masala fare that’s screened in multiplexes here. As film marketer Vikramjit Roy says, “We may not be as big as Hong Kong or Japan yet, but in terms of admission we are big and getting bigger. There are about 75 Hollywood releases every year.” Thus in a manner, sets the stage for a collaboration of this nature.

As per the Ambani deal of the $825 million, RBE’s parent company Reliance-Anil Dhirubhai Ambani Group (R-ADAG) will provide $325 million as equity infusion while The Walt Disney Company will table $175 million in distribution advance. Rest of the funding will come from the global financial services firm JP Morgan Chase & Co as debt. Under this deal, Spielberg would be able to make five to six films per year. The first production is scheduled to start by 2009 fag end, ready for release in 2010.

Incidentally, $2 billion Indian movie sector Bollywood churns out the largest number of movies in the world (over 900 per annum) and is growing at 9% compound annual growth rate (CAGR) with several projects in the pipeline involving Hollywood stars George Clooney, Julia Roberts and Brad Pitt, among others. Recently, actor Shahrukh Khan’s Red Chilies Entertainment and director Karan Johar’s Dharma Production had inked $20 million marketing and distribution deals with Danny Boyle’s Oscar winning Slumdog Millionaire’s Fox Star Studios, a joint venture between Twentieth Century Fox and the U.S.-based News Corporation’s Indian subsidiary, Star India.

Fact is that earlier, the outsourcing trend was one way. The most work Indian companies did for Hollywood studios was some back-end rotoscoping and compositing. For instance, for “Spiderman 3,” Tata Elxsi VCL cut out studio stunt shots of Spiderman and sent them back to California, where they were expertly blended into urban landscapes

But the Ambani deal is in a different league altogether. Over the past few months, the Bollywood was also hit serious by the global economic crisis, but with this news has pumped new adrenaline rush into the industry.


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