This was the front-page story in both the Financial Times and the Wall Street Journal on Wednesday, June 18. This demonstrates the scale and the importance of this story.
Very briefly, the story suggests that Reliance Entertainment, a unit of Reliance ADA (Anil Dhirubhai Ambani) Group will provide Mr. Spielberg and company with $500-600 million in equity enabling them to end their contentious battle with Viacom.
Both WSJ and FT did a decent job describing the story from the US angle. Both articles also referred to investments made by Reliance Entertainment at Cannes Film Festival (see our article on May 24, titled “Bollywood provides cash to George Clooney, Brad Pitt, Tom Hanks and Jim Carrey”).
Both articles describe Reliance as an unusual and ambitious partner, an Indian firm, with large businesses in Telecommunications, Financial Services and Entertainment, that wants to build a media empire. Besides this simple statement, the press coverage has been devoted to the benefits of this deal for Spielberg and Dreamworks.
The WSJ article goes farther than the FT in linking this deal to the ambitions of Indian Corporate Sector to build globally dominant companies. It says of India “The country has now produced global players in software, steel, autos and is building a growing powerhouse in telecommunications”. It goes on to discuss the growing global appeal of Bollywood, a topic in which our readers are well-versed.
The deal by Reliance ADA, if completed, would be the first global foray by a Bollywood company and it is a big one. Clearly, Reliance expects to make a substantial financial return from this venture. Reliance can also bring a lot to Dreamworks.
- Reliance Entertainment owns Adlabs, one of the largest entertainment companies in India, which tremendous market share and expertise in film processing, production, exhibition & digital
- Bollywood has demonstrated its capability to make stunning films on the grand scale of Cecil B. DeMille but at a fraction of the Hollywood costs. The visual grandeur of the 2007 historical romance “Jodhaa Akbar” is to be seen to be believed. Yet, it costs less than $15mm. The action film “Krrish” blew away Superman III at 1/20th of the cost.
- With Adlabs, Reliance Entertainment could provide world class facilities to Dreamworks at a fraction of US costs and increase margins for both partners.
- Reliance Entertainment also owns one of the largest chains of multiplexes in India thus providing India distribution to Dreamworks.
think the main interests of Reliance are far more strategic and long-term. We view
this deal as a critical step for Reliance ADA in its quest to be a
globally dominant entertainment company.
- During the past fifteen years, Bollywood has come a very long way in upgrading the visual and technical aspects of its films, a fact that has led this blog to launch our comparative series of “Bollywood interpretations and Hollywood originals”.
- The recent hits such as “Don”, “Dhoom 2” and “Race” demonstrate Bollywood’s capabilities for making superb action films.
- But there is one critical space in which Bollywood simply does not compare with Hollywood. That is the very high end special effects genre.
- Bollywood does not have the capability to make gigantic special effect films like “The Lords of the Ring” series. Bollywood can not, in our opinion, make films like “The Hunt of Red October” which was dependent on high-end underwater special effects. Recall the run of Red October through the underwater canyons trying to evade the Soviet torpedo. Absolutely superb stuff that is currently beyond Bollywood’s capabilities.
With Dreamworks, Reliance will have the opportunity to learn these techniques from the master himself, Steven Spielberg and make a lot of money in the process.
By 2020, the global Indian community is expected to be the largest consuming population on earth and Indians are more passionate about entertainment than anything else. India also has the ability to integrate and transform external content in to uniquely Indian forms thus creating dominant franchises.
Just look what India has done with Cricket.
- First India integrated Cricket in to its culture making it an Indian sport and expanding its reach through out India.
- The size of the Indian market made the Indian Cricket Board the biggest financial success in International Cricket.
- Then India fused cricket with Bollywood producing a fast, rambunctious sport-entertainment experience that was ideal for prime time television.
- The new Indian league IPL and the new Twenty20 format has drawn the world’s best cricket talent in to India. Within one year, IPL has become one of the richest sports entities in the world.
- India is now expanding Cricket’s popularity across India and the world at a pace and a scale never imagined by old England.
- India and Brazil are doing a deal in which India will help Brazil build a Cricket team and, in turn, Brazil will help improve India’s soccer team. China has embarked a massive program to become a major force in Cricket.
The Dreamworks deal will teach Reliance (& Bollywood in general)
- how to make films that appeal to the American/European audiences and
- how to make films like “Lord of the Rings” that appeal to the techno-savvy crowd.
These are the two demographic groups Bollywood does not have today.
India has over 300 million children, a number larger than the entire US population. Within a dozen years, a large number of these children, thanks to amazingly innovative education NGOs like Pratham (http://www.pratham.org – a must follow NGO if you have an interest in education) will speak English.
This will make India the largest English speaking country in the world. All global entertainment will to have respect this buying power and make its content appealing to Indian English tastes. By this time, thanks to deals like Reliance-Dreamworks, Bollywood will have integrated the best of Hollywood capabilities in to uniquely Indo-Global content.
We believe that, in 2020, merely a dozen years from now, the Reliance-Dreamworks deal, in completed, will be seen as a master stroke that made Bollywood the champion of global entertainment, Indian style.
Click on the links below to read the WSJ and FT articles.
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