What is difference between share and gross in movie collections?

Answer 1

Numbers are very misleading. When a producer announces his movie grosses 100 crores, many people presume "collections - budget = profits". This is far from it. Like any other business, the film trade has 'layers' of middle men between the filmmaker and end consumer, who are all inalienable parts of the business.

One of the most common terms we hear used in the trade is "gross", "nett" and "share". If you understand these three terms, you would understand the basics of film trade. Most of the times, what you read in the papers is the "gross collections". Gross is nothing but number of tickets sold x ticket price. It's the total amount generated by a movie at ticket counters.

Most states levy an "entertainment tax" on movies. States like Maharashtra, Gujrat, Punjab and others northern states charge in the range of 50%. There is a variation. Uttar Pradesh charges 60%, while West Bengal charges 30%, its 25% at Kerala. Kannada films in Karnataka are tax-free while non-Kannada films pay 70% tax! Tamil films in Tamil Nadu are tax-free while non-Tamil films pay 25%. Andhra Pradesh charges only 12%, one of the least in India. On an average, across India it's assumed to be 40%.Nett Collections : After the entertainment tax is deducted, what is left is the "nett". This is the actual money that's left in the hands of the theatre owner. He deducts his rent from the nett and forwards the remaining money to the distributor. This is called the "distributor's share" or "share" in trade parlance. This is really the money from which the movie's budget is recovered.

Theatre Rentals : There are two types of agreement a distributor can enter with an exhibitor (theatre owner or multiplex chain). For single screens it's usually, a flat weekly rental. The exhibitor retains the money till his weekly rent is recovered. Anything that is collected afterwards goes to the distributors. Their revenues are not linked to the boxoffice performance of a film. On the other hand, multiplexes charge a percentage of the nett collections. Hence their prosperity is linked to the boxoffice performance of the movies they release. Most multiplex retain 45% in the first week, forwarding the remaining 55% to the distributor.

In the second the mutiplex's share is 50% or 55% (depending on terms) forwarding balance to the distributors. From the third-fourth week onwards, the multiplex retains as much as 60-70% of the collections of a film, as the audience drops. The whole tiff between Hindi film producers and multiplexes were because, producers felt multiplexes charge too much rent and leave very little to themselves. Multiplexes argue their pricing is fair, as customers pay premium price over a single-screen because of their amenities, which cost a lot to maintain.