Overseas film distributors rework terms to cut risks

Overseas distributors of Indian films are changing their business model to reduce risks of loss amid the West Asia war even as they continue to buy films from Indian producers, producers, overseas distributors and film trade analysts told ET.

"Broadly, business is still moving in the overseas markets including the Middle East, but the mood is more cautious rather than frozen," said Adi Tiwary, an Australia-based producer, consultant and a former international distribution partner.

To deal with the uncertainty in revenues, overseas distributors are increasingly opting for refundable advances, where the producer must repay the difference in case the film's net collection falls below the advance payment along with the distribution commission and expenses incurred in obtaining a film, experts said.


Historically, overseas distributors have been paying minimum guarantees (MGs), which are non-refundable, to producers to secure distribution rights for films expected to perform well in box-office.

They are also becoming more selective in buying films to deal with the uncertainty.

"Overseas distributors are focusing on films which do not have nationalist themes as they appeal to larger audiences," said a distributor requesting anonymity.

Gulf exposure

The Gulf countries, which are among the most impacted in the ongoing war, contribute 15-20% to the total overseas collections of most Hindi films, trade analysts said. But the share is at least 10% higher for most southern films, making them more vulnerable.

In fact, Malayalam films derive over 80% of their international business from the region, producers said. "Many South Indian films are pre-sold overseas on minimum guarantee deals. If uncertainty sustains in the Middle East, then distributors may push for refundable advances than MGs for upcoming southern films," said Suniel Wadhwa, cofounder and director at Karmic Films.

However, there is no change in release schedule for southern films, experts said.

"I think producers and overseas distributors are ready to take a hit," said Chennai-based entertainment sector analyst Ramesh Bala.

Market shift

Trade analysts said overseas distributors are now increasing focus on markets other than West Asia. "This is a sound strategy to make up for potential revenue losses from the Middle east region," said Girish Johar, producer and industry expert.

Also, distributors can release films in West Asia much later than other territories, a veteran distributor noted.