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RUEHBI/AMCONSUL MUMBAI PRIORITY 2980
RUEHCG/AMCONSUL CHENNAI PRIORITY 2216
RUEHCI/AMCONSUL KOLKATA PRIORITY 2003
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 8949
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 03 MUMBAI 000051 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV ETRD SCUL IN
SUBJECT: THE BOLLYWOOD-HOLLYWOOD PARTNERSHIP: GREAT POTENTIAL BUT 
SLOW TO FIND TRACTION 
 
MUMBAI 00000051  001.2 OF 003 
 
 
¶1. (U) Summary:  Hollywood film studios, amongst the world's 
highest revenue earners, are increasingly beginning to stake 
their claim in Bollywood, touted as the world's largest maker of 
movies.  Though not without challenges, major U.S. studios have 
started to try to capture a piece of this potentially lucrative 
market, in the world's second fastest growing economy.  U.S. 
studios ranging from Sony, Disney, and Warner Brothers have 
co-produced Hindi movies attracted by the growth potential and 
opportunities in Indian cinema.  While big budget Hollywood 
action films - dubbed in vernacular languages - have done 
relatively well in India, success has eluded Hollywood-Bollywood 
co-production partnerships so far.  The unpredictability and low 
success rate of Bollywood films makes the industry risky even 
for veteran industry stakeholders.  Instead, Indian industry 
representatives pointed to the potential of Hollywood-Bollywood 
collaborations in film marketing and distribution to widen 
overseas reach, outsourcing of sound editing to India, and 
sourcing production talent from the U.S.  These winning 
collaborations, although lacking in visibility and offering only 
a small piece of the Bollywood pie, will nonetheless enable 
Hollywood studios to achieve both topline and bottomline growth, 
at least until their understanding of Indian cinema and its 
audience grows.  End Summary. 
 
 
 
Bollywood's Allure Beckons Hollywood 
 
------------------------------------ 
 
 
 
¶2. (U)  The Indian film industry - popularized by its 
Hindi-language center in Mumbai, known as Bollywood, as well as 
films shot in dozens of regional languages -- is touted as 
world's largest, with over 3 billion viewers and 1,000 movies 
made annually (see septel).  Sanjeev Lamba, the CEO of Reliance 
Big Pictures which runs Anil Ambani's Reliance ADA group's movie 
business, noted that comparatively, revenues from Indian cinema, 
although growing, are still just a fraction of Hollywood's movie 
revenues.  However, he dubbed India cinema as "fiercely 
domestic" and explained that Hollywood films account for just 
three to six percent of the Indian film industry's total 
revenues.  Lamba admitted that Hollywood blockbuster releases -- 
like "2012" and "Avatar" -- which are dubbed in local Indian 
languages are rising in popularity in India, at times even 
competing with Bollywood films releases.  Many Indian producers 
now reschedule the release date for their films to avoid 
competing for market share with Hollywood films.  However, he 
noted that only specific categories of Hollywood films have 
far-reaching appeal in India.  They have to be action-oriented, 
dubbed in Hindi and other local languages, and visually 
impressive, he explained.  For example, the English and 
Hindi-dubbed versions of Hollywood's second highest box office 
earner "Avatar" garnered around USD 7 million at the Indian box 
office, while Bollywood's biggest all-time hit "3 Idiots" has 
thus far earned USD 42 million at the domestic box office. 
 
 
 
Hollywood's Entry Into Mainstream Hindi Cinema Challenging 
 
--------------------------------------------- ------------- 
 
 
 
¶3.  (U) Recognizing the limited potential of Hollywood movies in 
India, major Hollywood studios, including Warner Brothers, Sony 
and Disney, have joined hands with established Indian directors 
and production houses to co-produce Bollywood films.  Sony 
Pictures Entertainment signed a co-production agreement with 
Pritish Nandy Communications for three films, and another 
production and distribution agreement with Eros International 
for Hindi movies.  Warner Brothers has tied up with People Tree 
Films for the production and distribution of three movies.  Walt 
Disney co-produced an animation film with Yash Raj Films and 
acquired a majority holding in UTV Motion Pictures, one of newer 
but fast-emerging production houses in India.  International 
celebrities from Snoop Dog and Kylie Minogue have already made 
an appearance in Indian movies, and Slyvester Stallone will 
appear with Bollywood stars in an Indian production which will 
be shot at Hollywood's Universal Studios.  Unfortunately, all of 
the joint Hollywood-Bollywood productions released thus far have 
been unsuccessful at the box office, signaling that a successful 
entry into Bollywood is not easy. 
 
 
 
MUMBAI 00000051  002.2 OF 003 
 
 
 
¶4.  (U) Blaise Fernandes, the Managing Director of Warner 
Brothers India, noted that it is difficult to convince the 
larger Indian film production houses to partner with Hollywood. 
Siddharth Kapur, the CEO of UTV's motion pictures business, one 
of the newer but rapidly growing Indian film production studios, 
agreed, and noted that Bollywood production studios view 
Hollywood as a competitor.  The only reason they would seek a 
joint collaboration would be to de-risk the film project by 
jointly investing in its production, or to re-make Hollywood 
movies in Hindi.  Jawahar Sharma, the COO of Reliance Big 
Pictures, concurred, and added that greatest asset of U.S. 
studios are their script libraries, which they should use to 
attract the best available Indian talent to re-make movies in 
Hindi.  Sharma believes that U.S. studios need to re-orient 
their strategies, rescind control and empower local people if 
they want to succeed in India.  The Indian film-making process 
is not organized, and, unlike the professionalism in Hollywood, 
dealing with creative talent (directors and actors) in India 
requires tact and flexibility, he explained. 
 
 
 
¶5.  (U) Aashish Singh, Vice President of Yash Raj Studios which 
is the one of the oldest production houses in India, believes 
Hollywood studios have little to offer besides finance.  Since 
2000, when the Indian government made the film industry eligible 
for mainstream credit, established Indian directors and 
production houses are able to access credit from banks, venture 
and equity capital, and investment from high networth 
individuals who are ready and willing to fund Bollywood movies 
despite the low guarantee for success.  Fernandes pointed out 
that due to high industry salaries for stars, there is no price 
differential -- and therefore no incentive -- for an Indian 
actor to work for a foreign, rather than a local, studio. 
Sharma proposed that U.S. studios showcase themselves as the 
"gateway to Hollywood" in order to entice Indian directors and 
actors to participate in productions. 
 
 
 
Riskier Partnerships with New Entrants Could Pay Off 
 
--------------------------------------------- -------- 
 
 
 
¶6. (U) Singh admitted that U.S. studios would have an easier 
time partnering with the smaller, independent film producers 
making small-budget art films and crossover movies who still 
have difficulty finding financiers to back their movies.  Sujata 
Nag of the India-based Motion Pictures Distribution Association 
(MPDA) concurred, and pointed out that these non-commercial 
films may earn less than big budget films at the box office, 
but, if successful, can earn a significantly higher return on 
investment.  UTV Motion Pictures was successful last year, as it 
backed several smaller and relatively unknown Indian producers 
whose films were successful.  However, the big Hollywood studios 
have concentrated on making their mark in Indian cinema through 
tie-ups with established producers and directors, and have not 
been willing to "risk" investing in production from new talent 
without big stars in its cast, she complained. 
 
 
 
Thrust Areas for a Winning Hollywood-Bollywood Partnership 
 
--------------------------------------------- -------------- 
 
 
 
¶7. (U) Interlocutors noted that other less risky and profitable 
opportunities for Hollywood-Bollywood partnerships include 
shooting and editing movies in India to reduce production costs. 
 However, the numerous clearances (and bribes) needed for 
shooting a scene in India makes even Indian producers reluctant 
to shoot in the country.  Many of the key outdoor scenes in 
Bollywood movies are shot overseas, in Australia, New Zealand, 
Switzerland and the U.S.  Editing is also much cheaper in India, 
and editing technicians are as skilled as those working in 
Hollywood, industry representatives claim.  However, Warner 
Brothers' Fernandes pointed out that Hollywood directors prefer 
to outsource the editing of only small chunks of the movie for 
fear of losing control of the editing process. 
 
 
 
 
MUMBAI 00000051  003.2 OF 003 
 
 
¶8. (U) Kapur noted that Hollywood offers valuable production 
talent, especially for special effects, make-up and improving 
the overall quality of Indian film production.  Recognizing 
this, UTV is sourcing the entire production crew from the U.S. 
for one of its movies.  He hopes that the pre-production 
techniques used by the U.S. technicians would drive down 
production costs.  However, he acknowledged that sourcing U.S. 
talent is feasible due to the economic recession; otherwise 
their fees would be too expensive. 
 
 
 
¶9. (U) International marketing and distribution is another key 
area where Hollywood studios can provide their own resources, 
expertise and knowledge of international markets to establish a 
wider reach for Bollywood films.  Fox Searchlight will secure 
the widest international release of a Bollywood movie "My Name 
Is Khan" after buying the global marketing and distribution 
rights for the film.  Kapur acknowledged that increasing the 
overseas reach of Bollywood films would greatly drive up the 
industry's revenues.  However, he noted that mainstream 
multiplexes in the U.S. are not willing to exhibit Indian movies 
due to the differences between Western and Indian film genre and 
audience appeal. 
 
 
 
Comment: 
 
 
 
¶10. (U) Partnering with established Indian production houses has 
been Hollywood's main investment strategy to create visibility 
and gain a foothold in Indian cinema.  However, U.S. studios 
have to still find a good working model for partnering with 
Bollywood.  Western and Indian audiences have huge divergences 
in tastes, when it comes to films.  Diversifying the production 
pipeline to include a mix of small, medium and big-budget films 
by renowned and new talent for mainstream and world cinema 
audiences may help them achieve success in this unpredictable 
market where even the best Bollywood studios and stars have been 
known to falter.  Alongside Hollywood's Indian aspirations, some 
of the modern and more ambitious Indian film companies are also 
beginning to test the Hollywood waters (reftel).  A successful 
Bollywood-Hollywood debut in Hollywood films could provide 
answers for successfully marrying the two industries in Indian 
cinema as well.  Until then, Hollywood will have to be content 
with a small but steadily rising share of the Indian market 
through their Hollywood film releases, and the selective 
introduce of technical and production skills where needed.  End 
Comment. 
FOLMSBEE