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YRF takes the L&M ride with ‘Dhoom 3’

MUMBAI: A complete movie experience is not confined to the theatre alone now. Along with memories, audiences now take home a whole range of branded products, opening up a host of opportunities for film production houses.

Yash Raj Films (YRF), one of the largest film production houses, is among the first to jump on the licensing and merchandising (L&M) bandwagon in a big way. Having experimented with products for catalogue films like ‘Ta Ra Rum Pum’, ‘Dhoom 2’ and ‘Band Baaja Baarat’, YRF focused largely on establishing its L&M business in the country through the third instalment in its ‘Dhoom’ series.

The company learnt from its past mistakes and corrected them for three years to finally achieve success.

rohitYRF VP of licensing and merchandise Rohit Sobti tells TelevisionPost.com, “For its earlier films, YRF was the sole creator and distributor of products which backfired due to its lack of expertise in the field. We figured out the licensing model and worked on it for the past three years. We started taking small steps two years back to build on products for our catalogue films and kept experimenting.”

Working on this model, YRF found partners such as Wrangler (‘Dhoom 2’) and The Future Group (‘Ta Ra Rum Pum’). For ‘Dhoom 3’ too, YRF associated with over 20 partners to launch over 200 products across 25,000 outlets in India with a price range of Rs 69 to Rs 9,000. The production house signed minimum guarantee licensing deals with a number of companies including Mattel Toys, Bombay Dyeing, Gulf Oil, 99Games, Microsoft, Archies, PepsiCo and more for products ranging from games and toys to gadgets and apparels. They also launched an e-commerce store collating all the products on one platform.

Earning royalties between 5–20 per cent on products depending on categories, YRF gained a substantial sum from utility products like toys, jewellery, accessories, caps, sling bags, phone covers, bike helmets and Aamir Khan’s hat from the film. On the other hand, branded diaries and notebooks are categories which have not performed too well.

“We tested the market and the kind of products the audiences were receptive to, and then went on to develop products for ‘Dhoom 3’. The franchise was already popular, so this was a significant opportunity for us to heavily delve into L&M,” he added.

Diva'niGoing forward, YRF aims to take this further by launching a special console game alongside its mobile game. They will also expand their Bollywood-inspired fashion brand Diva’ni by launching a new store in Mumbai this year in addition to its Delhi store. By the end of 2015, it plans to launch 15 outlets of the brand across the country.

Apart from that, Sobti reveals that the company also has plans to develop theme parks and is on the lookout for a suitable partner for the venture. It is also in talks with other brands to represent them as a third party in the L&M business.

But while the production house seems to be plunging into L&M with a bang, the reality is that the business is growing at a snail’s pace. Although the market is opening up, it will still take around three years for the scene to develop as the audiences are still not accustomed to buying these products and also seem unaware of what they want to buy.

Licensing provides a great opportunity both in the form of products and services to connect with consumers and for extending their reach to new product categories, territories and distribution channels. Not only does it provide touch points for consumers to actually experience the brand in its glory, it also generates revenues in billions of dollars worldwide.

Though licensing business is in an embryonic stage, it still is a huge opportunity as India has a vibrant entertainment market and a captive consuming class that consumes the brands through TV, theatricals and events.

One of the most critical prerequisites is organised retail. The single largest differentiating factor in India and developed licensing market is retail and the opportunities it holds for exponential growth of the licensing business.

jiggy georgeProviding an industry perspective, Dream Theatre CEO and founder Jiggy George said, “As organised retail grows, so will the licensing and merchandising business. Organised retail ensures reach, a conducive environment to sell and less pirated products in the market. Currently, L&M seems more like a marketing exercise in Bollywood and is only thought of just before the launch of a movie. We need to move beyond that and see if we can incorporate it into the script.”

Currently, the L&M market comprises a small one per cent of the entire $180 billion industry and the licensing revenue ranges from Rs 250–500 crore in retail. Industry experts expect the number to increase by 20 per cent every year as retailers get more confident. YRF, for example, has five partners and aims to take this tally to 15–20 partners by year-end.

In spite of a rosy picture, one cannot rule out the losses piracy brings even in this business. While George claims this can be contained through distribution and right pricing, Sobti states YRF sent out 300 notices to various sites during the launch of ‘Dhoom 3’ as many of them were selling pirated copies of their Android game on the film.

However, theatrical releases have seen limited L&M success in India due to a small number of superhero films, unlike Hollywood which is driven largely by toys and apparel even with large franchises like ‘Superman’, ‘Batman’, ‘Spiderman’, ‘Hulk’ and more.

In India, the big opportunities for L&M can come in from children’s films or action films. There are also the franchise films like ‘Krrish 3’ and ‘Dhoom 3’ which help in keeping the memory and the brand alive. This is a good way to extend the lifecycle of a film which usually lasts for six weeks.

George added, “In India, the shelf life of films is not more than six weeks so creating products is tricky. You can’t do it for every movie. But as the players keep increasing in this space, the possibilities of growth too rise.”

‘Krrish 3’ too created customised products which were not elitist and were low on price points to attract a wide range of audiences but were largely skewed towards kids. These included a mass line of stationery products, figurines, kids T-shirts and more.

2013 saw only two films invest heavily in L&M through a wide range of products. This trend is expected to carry forward this year with YRF already planning extensive L&M strategies for three of its upcoming films including ‘Paani’ (releasing early 2015), ‘Fan’ (second half of 2015) and ‘Detective Byomkesh Bakshi’ (December 2014).