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Maybe you’ve never heard of movie producer Bobby Bedi, but perhaps the title “Bandit Queen” rings a bell. “Bandit Queen,” co-produced by Bedi, offered an unflinching portrayal of a real-life female “bandit” who took up arms against exploitation of the poor. The film was screened at the Cannes Film Festival in 1994 and praised by critics the world over. But the real money came from selling videotapes and DVDs, right? Yes, that would be the story if Bedi were a Hollywood producer. But Bedi is a Bollywood producer. And in India, it’s the illegitimate sellers — the movie pirates — that dominate film distribution after opening night. That creates a real dilemma for Bedi and other Indian filmmakers: So long as pirates “earn” a high share of movie revenues, producers must focus on making relatively inexpensive, song-and-dance, escapist entertainment (the kind of movies that earned Bollywood its name but not so much artistic respect) or target much narrower audiences with subsidized art-house films. Bollywood producers want to make pictures that match the best story and production qualities of the United States and Europe. To finance this vision, the creators must receive not just the critical but also the monetary rewards of creativity. Better legal enforcement can help, but these days Bollywood is also betting on smarter technology. STOLEN DREAMS The Indian film industry is the largest in the world, with more than 1,000 films produced each year and increasing global popularity. Everywhere in Asia and the Middle East, Bollywood films — most famously from bustling Mumbai (formerly Bombay) but also from southern India’s movie industries — have conquered local audiences. Cinemagoers in Malaysia, Thailand, Japan, Singapore, and the United Arab Emirates sing along rapturously to the plangent songs and swoon at the flamboyant stars with as much abandon as they do at their own local screen icons. And wherever Indian expatriates have settled in Europe and North America, there too you can find a growing fondness for Bollywood. Yet for all its success and the sheer volume of its production, India’s cinema garners less than 1 percent of global film entertainment revenues today. Many Indian films are produced entirely at risk, with producers borrowing money at crippling rates to fulfill their creative dreams. Many are released and disappear without a trace. “It is not always because [the] films are bad,” says Bedi. “It is because [the filmmakers] only see a fraction of their dues. The rest is stolen from under their noses.” Lax copyright enforcement in India and in foreign markets means that pirates are major players in movie distribution. They make hasty copies of the first theatrical presentations and distribute illegal movie house prints, videotapes, and DVDs. Pirates sell 90 percent of all videos bought in India, as well as in many other countries. Thus, while Hollywood producers today earn half their revenues from the sale of DVDs, Bollywood producers earn about 4 percent from DVD and VHS sales. Indian film producers estimate that they lose about $700 million per year to these illegal copies. REALLY BIG NUMBERS This is not a simple tale of how lax copyright protection is decimating an industry. It’s more complex. The Indian film business is growing remarkably fast, says PricewaterhouseCoopers. The international accounting firm estimates total annual sales at $1.5 billion but predicts that figure will likely rise to $3 billion by 2010. India’s cinemas alone attracted 3.1 billion admissions in 2005, despite the country being the most underscreened of the larger film production territories. The total number of direct and indirect jobs generated by the industry stands at approximately 5.1 million. To understand how so much money can keep flowing, even as so much is stolen by pirates, you need to grasp the scale of the country’s demographics. In 2005, India’s population was 1.1 billion. Although at least 25 percent of the population lives below the poverty line, demographers estimate that the rural and urban middle class counts between 220 million and 300 million people and growing. Nearly two-thirds of the population is under the age of 30, and the 15-to-34 age group — the demographic driver of entertainment consumption around the world — is expected to increase by 30 percent, reaching 134 million by 2011. And yet there are only an estimated 117 million television-owning homes (as of 2006), so the total TV audience stands at about 450 million. Some 320 television stations are available to viewers regionally or nationally. About 71 million homes are connected through cable TV (although the growth rate for cable is a modest 5 percent per year). Video hardware penetration — mostly DVD players, although some VHS systems remain in use — is estimated at a mere 12 million to 14 million units. But the cost of DVD players has dropped dramatically in the past five years, so Indian film producers are now targeting DVD sales and rentals to the burgeoning middle class as a key revenue driver of the future. In short, there is enormous potential for growth. There is also a logistical nightmare. India is divided into nine distinct linguistic territories for purposes of movie distribution. The most lucrative ones center on the Hindi-speaking cities of Mumbai and New Delhi. Other important markets include the southern states of Tamil Nadu and Andhra Pradesh. It is extremely rare for films other than the prototypical star-driven Bollywood pictures to get distributed in all nine territories. For any film that does cross over into more than two or three markets, the logistical challenges of a distribution system still reliant on celluloid print are high. India’s road infrastructure is poor, making it exceedingly difficult to get film prints to theaters outside the main urban areas. Movie theaters are few and far between, and programming slots are difficult to obtain. As a consequence, theatrical runs are short (about four weeks) for any film other than a blockbuster or a Hollywood import. Each theatrical territory is divided into A, B, and C areas. The A’s are big cities, such as Mumbai, Bangalore, and Chennai; the B’s are midsize municipalities; the C’s are small towns and rural areas. The majority of Indian films go to market with very few prints. For example, 150 films in the Telugu language are made each year in Andhra Pradesh, but only about one-third of those films will go out with more than two or three prints. A film released with 35 prints is considered big; a film released with 200 prints is expected to be a blockbuster. By comparison, a typical Hollywood movie will be released with 2,500 prints. Because a celluloid print can be screened in only one theater at a time, the scarcity of prints is a major constraint. Most distributors serve A, B, and C markets sequentially rather than simultaneously. And moviegoers in B and C markets watch films with ever-more-degraded visual quality. Those two factors are boons for movie pirates: Millions of viewers will be eager to see a new movie long before the official print can possibly reach their local theaters. And those same millions are already accustomed to the kind of scratchy, blurry visuals common to bootleg copies. BEDI’S BET Increasingly, people such as Bobby Bedi are fighting back. Like many of his fellow filmmakers, Bedi began with an entrepreneurial dream and a willingness to take risks. In 1989 he left the security of a big corporation to produce a low-budget film. The movie, with the ornate literary title of “In Which Annie Gives It Those Ones,” was a labor of love for young director Pradip Prishen and girlfriend (and future novelist) Arundhati Roy. The film, a bittersweet tale of Roy’s architectural student days, was made for a mere $20,000. Bedi got most of his financing for his second project, “Electric Moon,” from the U.K. television broadcaster Channel 4. The 1992 film would be first in the history of Indian cinema to be shot using synchronized sound. To this day, most Indian film dialogue is dubbed by the actors in the studio after filming. Channel 4 then recruited Bedi to take over the troubled production of “Goddess of Flowers.” He and a Channel 4 producer rewrote the script and worked with director Shekhar Kapur on location in India. The result was the critically acclaimed “Bandit Queen.” And Bedi was established as a maverick Bollywood producer with a strong creative vision and an international sensibility. Today, Bedi is placing his biggest bet on the future of Bollywood with a proposed movie version of “The Mahabharata,” a Sanskrit epic poem of some 75,000 verses. Bedi seeks to make not only several feature films but also a TV series, comic books, video games, and even a “Vedic experience” theme park. To achieve this vision, he will have to maximize intellectual property value by realizing substantial returns from his copyrighted works and by creating national and international trademarked brands. The intellectual property laws of India are not the problem. Although there’s always room for improvement, the system on paper is sound. But in practice, anti-piracy enforcement tends to be localized, sporadic, and only intermittently effective. Consider the example of Tamil Nadu: For a while the first minister of that state, a celebrated screen star herself, made aggressive enforcement, prosecution, and sentencing for piracy a priority, and progress was visible. But her successor did not keep up that commitment, so the movie pirates just flooded back into business. That is why Indian film producers, including some of the country’s biggest production houses, are now pressing the national and local governments to commit to sustained anti-piracy efforts. They want an independent enforcement body focusing exclusively on movies, music, software, books, and counterfeiting. The government is now engaged in a formal consultation process with the film industry. ENTER THE DIGERATI Indian film producers are also asking India’s burgeoning information technology community to help them protect their IP rights and earn more revenue. To duel the movie pirates, the Bollywood “digerati” are exploring ways to replace celluloid prints with digital files, satellites, and servers and to distribute films directly to Indian homes through digital broadcast, cable, cellular, and broadband. Digital cinema has the potential to surmount the geographic, infrastructure, and economic challenges that have been holding the filmmakers back. At first, digital files would be delivered to theaters via private security firms, and theater servers would download the films using specific decryption keys. The servers would have no other connections that would permit unauthorized copies to be made. Without the cost of multiple celluloid prints, even movies without the biggest stars could, as they say in Hollywood, open wide. Moreover, in contrast to celluloid prints, digital files do not visually degrade over time. Thus, moviegoers in B and C markets would for the first time see pristine, crisp images. The pirates’ products would not seem so tempting. An even more advanced vision calls for digital cinema to be sent to the theater servers via satellite transmission. Given India’s combination of bad roads and top-notch technological expertise, it’s not a surprise that this concept is being embraced in India faster than anywhere else in the world. It is the best way to replace sequential with simultaneous releases in A, B, and C markets. And when it is fully implemented, the logistical nightmare of traditional celluloid print will be over, and millions of filmgoers will finally be in reach for Indian filmmakers. Not too distant on the digital frontier are movies sent to people’s homes through digital television, cellular phones, and the Internet. Bedi, for instance, has produced some audiovisual content — short narratives — specifically for the mobile phone. With a burgeoning fan base around the world and a host of younger filmmakers eager to expand the parameters of their art, Bollywood is facing a period of exciting and momentous change. But all that promise could be cut off if stronger legal enforcement and innovative technology don’t come together to better protect the rights of the creative community.
Bertrand Moullier is a senior research associate and Michael P. Ryan is director at George Washington University Law School’s Creative and Innovative Economy Center. Through his London-based firm, Narval Media, Moullier advises companies, governments, and other organizations regarding competition strategies in the film and television industries. Ryan is the author of Knowledge Diplomacy: Global Competition and the Politics of Intellectual Property .

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