Finances

Bollywood films are multi-million dollar productions, with the most expensive productions costing up to ₹ 1 billion (about US$20 million). The science-fiction film Ra.One was made on a budget of ₹ 1.35 billion (about $27 million), making it the most expensive Bollywood film of all time. Sets, costumes, special effects and cinematography were less than world-class, with some notable exceptions, until the mid-to-late 1990s. As Western films and television are more widely distributed in India, there is increased pressure for Bollywood films to reach the same production levels (particularly in action and special effects). Recent Bollywood films, like Krrish (2006), have employed international technicians such as Hong Kong-based action choreographer Tony Ching. The increasing accessibility of professional action and special effects, coupled with rising film budgets, have seen an increase in action and science-fiction films.

Since overseas scenes are attractive at the box office, Mumbai film crews are filming in Australia, Canada, New Zealand, the United Kingdom, the United States, Europe and elsewhere. Indian producers have also obtained funding for big-budget films shot in India, such as Lagaan and Devdas.

Funding for Bollywood films often comes from private distributors and a few large studios. Although Indian banks and financial institutions had been forbidden from lending to film studios, the ban has been lifted. Finances are not regulated; some funding comes from illegitimate sources such as the Mumbai underworld, which is known to influence several prominent film personalities. Mumbai organised-crime hitmen shot Rakesh Roshan, a film director and father of star Hrithik Roshan, in January 2000. In 2001, the Central Bureau of Investigation seized all prints of Chori Chori Chupke Chupke after the film was found to be funded by members of the Mumbai underworld.

Another problem facing Bollywood is widespread copyright infringement of its films. Often, bootleg DVD copies of movies are available before they are released in cinemas. Manufacturing of bootleg DVD, VCD, and VHS copies of the latest movie titles is an established small-scale industry in parts of south and southeast Asia. The Federation of Indian Chambers of Commerce and Industry (FICCI) estimates that the Bollywood industry loses $100 million annually from unlicensed home videos and DVDs. In addition to the homegrown market, demand for these copies is large amongst portions of the Indian diaspora. Bootleg copies are the only way people in Pakistan can watch Bollywood movies, since the Pakistani government has banned their sale, distribution and telecast. Films are frequently broadcast without compensation by small cable-TV companies in India and other parts of South Asia. Small convenience stores, run by members of the Indian diaspora in the US and the UK, regularly stock tapes and DVDs of dubious provenance; consumer copying adds to the problem. The availability of illegal copies of movies on the Internet also contributes to industry losses.

Satellite TV, television and imported foreign films are making inroads into the domestic Indian entertainment market. In the past, most Bollywood films could make money; now, fewer do. Most Bollywood producers make money, however, recouping their investments from many sources of revenue (including the sale of ancillary rights). There are increasing returns from theatres in Western countries like the United Kingdom, Canada, and the United States, where Bollywood is slowly being noticed. As more Indians migrate to these countries, they form a growing market for upscale Indian films. In 2002, Bollywood sold 3.6 billion tickets and had a total revenue (including theatre tickets, DVDs and television) of $1.3 billion; Hollywood films sold 2.6 billion tickets, and had a total revenue of $51 billion.