Merchandise Business: New revenue stream for Bollywood, but yet to take off

Bollywood is keen to pursue merchandising in India in a big way, as it has not been fully tapped and sees it as a significant revenue contributor going ahead. In Hollywood, merchandising is huge for filmmakers, worth billions of dollars (with popular films like ‘The Avengers’ and ‘The Dark Knight Rises’ helping retail sales of merchandise).

Indian Film Producers Focus on Merchandise

merchandising in bollywood
The good news is that there are more strategic alliances between filmmakers and merchandising partners, but the problem is that, when compared against the merchandise industry globally, the sales in India pales in comparison.

Unlike the West, however, Hindi film merchandise forms a meagre part of the overall revenues. Big studios are now keen to replicate some of its success here in India.

Here are some recent instances of film merchandise: Baahubali, Bajirao Mastani, Bajrangi Bhaijaan locket; exclusive range of ethnic wear (inspired by patriotic movies). Yash Raj Films has its own e-commerce store to sell merchandise. Collectible dolls and bikes, biking accessories (inspired by Dhoom).

Challenges Faced

Merchandise of franchise movies sell more due to the awareness factor. Star Wars, for instance, sells billions in merchandise (more than from box-office revenues).

In India, the shelf life of film-inspired merchandise is about eight to 10 weeks, between the pre-release, release and post release period.

There are very few examples of successful film merchandising, one good example is that of the ‘Chhota Bheem’ character. Here are the main challenges faced, when it comes to film merchandising in India.

  • Very few film producers have looked at merchandise seriously.
  • Licensing and merchandising (L&M) is seen more as a promotional tool rather than long term revenue earner
  • Brand longevity is an issue for Indian movies, with film-inspired merchandise typically having a life of about 10-12 weeks. The sales start a couple of weeks before its release, and go on for a few weeks after the films release.
  • The main challenge is to keep the buzz alive long after the movie is gone.
  • In India, filmmakers think about L&M much later, whereas it should be planned in the script stage itself.

Shrinking Revenue Streams

Another reason producers are looking at this income stream is because Bollywood’s earnings from other sources have remained stagnant or are declining.

Income from overseas releases have largely remained flat over the years. In fact, Home videos, an important category in the country until a decade back, has been declining steadily in India and is projected to vanish. Piracy and absence of players like Netflix (very successful in the US) have resulted in the rapid decline of this segment.

Only domestic theatrical releases have seen a steady increase over the years. Besides the increase in the number of multiplexes across the country, higher ticket prices in metropolitan cities have also added significantly to the revenue stream. Besides domestic theatrical releases, cable and satellite rights today are the second biggest source of revenues for Bollywood movies and is expected to remain so going forward.

A Hollywood movie, on the other hand, has many more opportunities to make money. Any new release goes through almost a similar ‘money-making’ process – it first gets released in the cinema halls, then moves to pay-per-view release, then to premium cable, then home video, before being beamed on basic cable and free-to-air.

However in India, Bollywood has much fewer options to capture revenues at various stages.

Typical revenue streams for bollywood movies

With Dhoom 3, Yash Raj Films (YRF) partnered with 20 marketers to launch over 200 merchandise items to add to their revenue stream. Products such as Barbie Katrina Kaif dolls to Aamir Khan Hot Wheel bikes, mobile games, sling bags were sold.

What’s Popular with School Boys & Girls?

Spiderman and Chhota Bheem bags were quite popular, until the Avengers arrived on the scene. Avengers team, solo superheroes and their action avatars are currently quite popular and seems to have taken the market by storm. Iron Man, with his shining heart, in particular is quite popular with the kids.

The favourite of Girls, however, has not changed, its still the Barbie.

You can find Avengers and Barbies on t-shirts, masks, bags, water bottles, tiffins, pencil boxes, and more.

Bollywood to Focus on Merchandising

With most recent movies easily grossing more than 200 crores in the domestic market, and a couple of recent releases grossing more than 300 crores, production houses are keen to create a buzz around their new releases. In the future, you’ll see film studios partnering with more and more marketers to launch many more merchandise items in India. Besides merchandising, the digital mobile category is also set to grow quite rapidly (from hello tunes to video clips), with growth in the usage of smartphones.

Check out all the Avengers items that they are selling