A few dollars less for Indian films coming to America

President Donald Trump's decision to impose a 100% tariff on films made outside the United States is set to deal a heavy blow to the US revenues of Indian films and their distributors, industry experts said.

Distributors may be forced to raise ticket prices in the US to pass on part of the tariff, which could dent footfalls and erode their revenue share estimates, they said. "To the best of my knowledge, Hollywood derives 60% of its revenues from the rest of the world. This shows the irony of the situation. I think this tariff is likely to impact the last mile consumer a lot," said Pranab Kapadia, director at overseas distribution firm Moviegoers Entertainment.

"The impact of tariff is high ticket prices, which will lower the revenue share of distributors of Indian films, thereby hurting the overall box office potential of Indian films," he added.

Kapadia is known for distributing films of Karan Johar's production house Dharma Productions in the overseas markets.

According to distributors and producers, Hindi films earn 40-60% of their total overseas collection from the US markets. In fact, this year's biggest Hindi blockbuster Saiyaara collected more than $6 million, or about Rs 53 crore, from the North American market itself, making it the third biggest grosser Indian film in the US.

A key concern among distributors is the short window films have in theatres before they get released on streaming platforms. This may make many viewers wait for the OTT release rather than pay much more for watching the film in a theatre, they said.

"Today, there is such a short window between a film which gets released in theatres and then its showcasing on streaming platforms. In this context, a tariff of 100% makes it even more challenging for distributors to bring footfalls in theatres, especially when they must resort to hiking ticket prices to compensate for the tariff," a veteran distributor said on the condition of anonymity.

Producers of mid-and-small-sized films may choose to release their films only on streaming platforms in the US as it may be economically unviable to release them in theatres with high-ticket prices.

"A 100% tariff could wipe out 40% of Indian films' US revenues, but the deeper worry is the audience fallout. With ticket prices soaring to $20, many diaspora families may abandon theatres," said Suniel Wadhwa, cofounder and director of Karmic Films. "This is not just a tariff. It is a cultural barrier. Cinema is India's strongest soft power export to the world," he added.

Big tent-pole Hindi films may still get released in the US markets with high ticket prices.

The importance of the US market for Indian films can be gauged from the size of the Indian diaspora. According to the data from Pew Research Centre, the population of the Indian diaspora in the US is about 5.2 million, reflecting strong business potential for Indian producers especially when seen in the light of revenues in dollar denomination.

Some producers said they are yet not clear about the implications of the tariff.

"I am not clear about what the tariff announcement means. I will have to see the final order to understand the future implications of this tariff," said Shobu Yarlagadda, who produced Telugu film Baahubali and its sequel, which were a smash hit not only in India but also in the US and elsewhere.

On the whole, producers believe that the tariff has the potential to not only wipe out the box-office potential of Indian films in the US markets but also can force Indian producers to reassess and recalibrate the ways in which they make, distribute and market their films, especially big tentpole ones.