Bollywood producers call 'cut' on multiplex releases

Bollywood actors and producers Shah Rukh Khan (L) and Aamir Khan pose for photographers after a news conference in Mumbai April 7, 2009.

MUMBAI (Reuters) - Bollywood producers insisting on a greater share of box-office revenues are refusing to release new movies in multiplexes, piling on woes in an industry that is already battling a slowdown.

Producers in the world's most prolific movie industry are demanding a 50 percent share in box-office revenues, with multiplex owners favouring a performance-linked model based on a film's budget and star power.

"We value the contribution of multiplexes, but there is a need to re-examine the revenue-sharing model," said actor and producer Aamir Khan at a news conference.

"There is a new order today, and every sector has to earn its fair share. Until that happens, the industry can't be healthy."

Marketing and distribution of all new Bollywood films has been suspended, with analysts estimating revenue losses of about 2.5-3 billion rupees ($50-$60 million) in the April-June quarter.

Multiplexes, which make up about 350 screens of a total of 13,500 screens, are largely concentrated in cities and big towns in India, and have also encouraged the production of low-budget films that are a departure from song-and-dance extravaganzas.

India's filmed entertainment sector, estimated at about $2.2 billion, is forecast to grow by more than 9 percent every year over the next five years, according to consultancy KPMG.

Box-offfice revenues are still less than 10 percent of Hollywood's because of low ticket prices, and standoffs such as this are inevitable in an evolving market, said Rajesh Jain, head of KPMG India's entertainment practice.

"We are mature when it comes to movie-making, but still evolving on the distribution side," he said.

"What we're seeing is the pull and push of competitive pressures," he said.

Multiplex owners have said the standoff comes at a time when no big releases were planned anyway, but the industry is already battling tighter credit and smaller budgets.

"It is like a pipeline: we make films and they (multiplexes) reach them to the people. Now, there is a bit of rust in that pipeline," said actor and producer Shah Rukh Khan.

"We are stopping, albeit very sadly, to repair it and we are sorry for the interruption."

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