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Hollywood versus Bollywood; Star Power is common but big difference in structure

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Hollywood versus Bollywood; Star Power is common but big difference in structure

In an interesting report, released recently by a leading law firm Nishith Desai Associates, while both industries - Hollywood and Bollywood are 'Star centric', huge differences lies in basic structure. The Hollywood concept of 'Studios', that participate in the full chain - and hence impact production and marketing - is very different from Indian 'studios'.

Hollywood is primarily organized around mega- corporations and major studios like Disney, Columbia. Paramount, Universal and Warner Bros. One key difference being regards the function of studios, the studios in Hollywood participates in the full value chain of the film industries. From financing to production, their participation moves further to distributing the films as well. In addition to studios, there exist independent production firms and individuals engaging in filmmaking and distribution of Hollywood films.

As understood in Hollywood, the concept of 'studios' in Bollywood is rather different. A 'Studio' in Bollywood means a firm that simply rents a production facility and space to filmmakers for indoors and outdoors sets, make up rooms, trolleys, shooting lights, power connections, cat walks and so on.

Both the industries are star-centric, says the report. It was found that 'Stars' exercise considerable influence on the industry through their bargaining power.

Study found marked differences in the content produced in the two industries; Bollywood is primarily organized around individual personalities leading to significant idiosyncratic variations from one film to another. Hollywood films offer tremendous variations in their themes reflecting current trends and creating new ones. The trends which tend to change every year. If we compare that to Bollywood films offer limited variety with most films with themes like family values, religion, social issues or romantic drama. Also, one striking observation of the study said that Bollywood films have a higher degree of fantasy as compared to Hollywood films.

In the area of funding, almost all Hollywood movies are pre-funded by a variety of sources such as in-house studio funds, joint ventures, investor equity and bank loans. Most Hollywood films do not get into production unless the majority part of the budget is fully pre financed and guaranteed.

The report cites that in Bollywood, business practices are predominantly based on relationships. Lack of written contracts, and structured business processes has made this sector relatively unorganized therefore deterring overseas investors, financial institutions and banks from investing in this industry.

However, the liberalization by the government for 100% foreign investment in Indian companies involved in film financing, production, distribution, marketing and associated activities offers some hope, but along with that come questions regards to the professionalism of Bollywood. "If we adopt proper business and legal practices in this industry, automatically Bollywood will witness a rise in the funding from both overseas investors, banks and financial institutions. However, the onus lies on the Bollywood, it has to be professional and profitable enough to be able to attract such funding," says Ashni Parekh, Lawyer-Media and Entertainment, Nishith Desai Associates.

In Hollywood, completion guarantors and insurance companies play a critical role in managing risk. In Bollywood even though insurance is becoming a common practice, it still has a long way to go.


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