Engage Pakistani Businessmen, Investors and Banks

Pakistani investors in large, and banks in particular, have to be made aware, and entice into investing in the film making and cinema business.  Without their active involvement, and investment, Revival of Cinema would only remain as fiction.

Primary interest of investors in any investment decision remains the security of their investment and corresponding return.  Investors in Pakistan will have to be informed and educated about the attractive ROI in the film industry.

According to research report prepared by Dr Sridhar Sundaram and Dr H James Williams for the Dove Foundation, an average G-rated movie (rated okay for viewing for General audience by MPAA), had an average return on investment of 94.5%[9].  Same research reports ROI of 72.6% and 43.6% on PG and PG-13 MPAA rated movies, respectively.  This particular research only takes into account the revenues generated through box office, TV rights and video rentals; additional revenues generated in recent times through websites, mobile rights, music rights, merchandizing, gaming, etc. make these numbers further attractive.

Our Vision Document should spell out what practical and solid steps should be taken to engage investors and banks?

Learning from other countries that have revived cinema and film making

A few countries have recently made major strides in reviving their cinema and film making industries.  These include Canada, New Zealand, Singapore, South Africa and countries in Eastern Europe, such as Czech Republic and Hungary.

Learning from Indian examples, for example, declaring filmmaking and cinema as industry thus making corporate and banking investments possible and giving tax advantages, must be specifically studied and recommendations made.

Our Vision Document should list down specific example of actions taken by each of these countries and suggest the actions that should be taken by all stakeholders in Pakistan.

Our Vision Document should also include the organizations that provide funding for film making in foreign countries, thus, advantage can be taken from such available funding.

Piracy

According to a study conducted by Business Software Alliance, a Washington DC based organization, 83% of the software sold in Pakistan is pirated[10].

Some studies put worldwide losses due to piracy exceeding USD 40 billion.  Motion Picture Association estimates losses to the movie industry at USD 6.1 billion globally[11].

Though technological advances have been made such as Blu-ray, ‘cap code marking’, etc.; piracy remains the most deadly threat in the development of soft industries like film making and exhibiting.

Pakistan will require revising, and even more importantly, implementing; anti-piracy laws in order to ensure Revival of Cinema and filmmaking.

Our Vision Document should study the anti-piracy laws in region and elsewhere, compare these with the existing laws in Pakistan, and suggest changes to the Government for implementation.

 

Revival of Music

[9] http://www.dove.org/research/DoveFoundationROI-Study2005.pdf
[10] http://www.bsa.or.jp/file/PiracyStudy_E.pdf
[11] http://www.mpaa.org/inter_asia.asp

Music and dance plays vital role in the success of movies in sub-continent.  Importance of music in sub-continent is very different to that of Hollywood or anywhere else in the world and unique to sub-continent.  Importance of music in sub-continent movie scenario can be highlighted from the perspective that most of the times music is produced before the production of movie has started[12].  Another point to ponder is that a lot of movie-stars didn’t succeed in their career because they were not good dancers while there are a host of other stars who were casted in a movie just because of their dance performance.

From lyrics to choreography, from item numbers and romantic duets to sad rhymes; music in movies in sub-continent act both as the primary promotion tool to the real traffic-generator for cine-goers.

Music forms a substantial revenue stream emanating from film making business.  According to Vijay Lazarus, then-President of Indian Music Industry, estimated value of Bollywood music in 2004 was INR 18 billion (approx USD 400 million), despite being heavily affected by piracy[13].

Revival of movie music, in all spheres, will be vital to revival of cinema in Pakistan and must be addressed in detail in the Vision document.

Highlighting impact of film on human psyche and society

Pakistani populace faces a major dearth of entertainment outlets.  This dearth does cause negative impact on the human psyche in more than one ways: tense mood, stressed family relationship and an overall negative impact on the efficiency of individuals.  Such impacts create an atmosphere of negative thinking and a lifestyle bereaved of hope.

Movies are essentially great inspirational sagas of human history.

Our Vision Document, citing researches, should show the positive impact of films on human psyche.  Possibly, statistical correlation can also be made to demonstrate that nations that are frequent visitors to cinemas have higher GDP growth and a better HDI in comparison to the nations that don’t.

Business Plan

A comprehensive business plan would be required that identifies and evaluates the cost-benefit aspects of:

For production purpose

  1. Availability of green field land and/or existing production floors, which can be acquired/leased for converting into film studios that help in professional production set-up

  1. Designing of studios, to meet initial requirements and keeping room for future expansions

  1. What equipment would be required?

1. Suppliers
2. Comparison
3. Costing
4. Study of second hand equipment, sets and material in US

  1. Identifying organizations that can help with donations on building production facilities, with donations, in cash or in kind
    [12] http://www.indianchild.com/bollywood-music-bollywood-movies.htm
    [13] http://www.indiamusicinfo.com/news/2004/10/06/news1.html

  1. Operational cost study, taking cues from mid-size Indian productions

For exhibition purpose

  1. Study existing infrastructure

1. Existing number of complexes, screens, locations, geographic concentration, etc.
2. Existing players; SWOT of top players
3. Land size, facilities available, number of seats available, average number of seats per complex, average number of seats per screen, etc.
4. Comparison of existing scenario in Pakistan versus India and other countries (screens per capita, etc.).
5. Special studies to be made to under operation and feasibilities of business models like cinema parlors in India, with limited seating capacities
6. Study to understand the business model of mobile cinema, built on 20/40-ft trailers and displayed at public parks, etc.

  1. Study existing business basics

1. Average traffic, revenue, capacity utilization. Variance in capacity utilization because of good and bad movie titles
2. Average ticket price, average consumption per visitor, possibly with break-ups between various activities
3. Revenue sharing with distributors: high, low and average
4. Existing HR structures and if possible, comparison with HR structures in India and other countries
5. Promotion: current expenses, ways and practices. Expense sharing with distributors, media partnerships
6. Estimated current market size
7. Estimate upside potential
8. Potential of existing players to expand
9. Other potential players

  1. Study existing laws (if there are any specifics) and what alterations in law can be sought from Government to induce investments from physical infrastructure perspectives, for example, import laws and duties, entertainment tax, etc.

  1. Dig existing public-private partnerships (where land has been provided by Government, Defense Organizations and construction/operation is done by private partners)

  1. Identify international architects and technology consultants, seek and compare proposals from them

1. Identify cinema-equipment related exhibitions/ magazines
2. Study infrastructure and technology advancement (for example, digital in developing countries, such as India and in developed countries
3. Study possibilities of leapfrogging to new technologies

  1. Identify and establish contacts with international franchises/chain operators (such as AMC, Regal Entertainment Group, BIG Cinema, etc.) for possible partnerships. Weigh advantages and disadvantages

  1. Formulate strategy and business plan, with options of doing self versus in partnership/franchise

1. Listing of number of sites, screens, seats, other fun-related amenities, by geographic locations, etc.
2. Identification of land and/or existing infrastructure where selected areas can be earmarked/leased/acquired. Availability of green field land and/or floors in existing buildings such as shopping and office plazas, which can be acquired/leased for converting into miniplexes (2-7 screens), multiplexes (8-15 screens) and megaplexes (16+ screens). Can top floors be built on existing buildings to meet the purpose?
3. Identifying possibilities of public-private partnerships with Government, local Governments, Defense organizations, etc.
4. Estimated construction costs and timelines
5. HR requirement and training, if necessary
6. Revenue forecast
7. Operational cost forecast
8. Cash flow statement
9. Financial indicators calculation (IRR, payback)

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