LINGUISTIC DIVERSITY AND CHANGING TECHNOLOGY IN INDIA'S REGIONAL FILM MARKETS

Abstract

The Indian film market is unique compared to other major film producing countries. India is the most prolific producer of films and Indian films command a dominant share of the domestic market. However, these films earn meager export revenues. This pattern contradicts findings from research which show that media products produced by larger markets tend to dominate their domestic markets and are also popular when exported. This dissertation shows that when the linguistic diversity of Indian film production is taken into consideration, the patterns observed in the Indian film market conform to theoretical predictions. This dissertation applies the theoretical frameworks of the home market model, and market size theories from the economics literature, to examine the effect of market size on product quality and variety in Indian language film markets.

Time series data relating to the number of films produced, linguistic population size and gross domestic state product was assembled from multiple Indian language film markets from the coming of sound in 1931 to 2005. Cross sectional and panel estimation methods were used to analyze the relationships between market size and film production. As predicted by theory both cross sectional and panel models found that market size had a significant positive effect on the number of films produced in a language market. Anecdotal evidence also shows that films produced in larger Indian language markets have higher film production investment, greater variety of genre elements, and are exported more. These patterns provide further supplemental evidence for the predictions of the home market model.

In the second part of the dissertation, the contrary trend of persistent film admissions in the face of growing television penetration in India was examined. Research has shown that competing technologies such as television can have a positive or negative effect on film industry revenues depending on the types of services that are offered. For instance, premium services such as pay-cable and DBS along with home video have added revenues to the US film industry which have supported the production of expensive films that in turn have stimulated theatrical admissions. On the other hand, broadcast television has generally had a negative effect on theatrical admissions. This dissertation empirically examines the effect of television penetration in India, in the context of five major film producing countries such as US, UK, France, Germany and Japan.

Time series data from the introduction of television in each of these markets till 2005 relating to two measures of the annual number of theatrical admissions ─ aggregate admissions, and admissions per capita ─ and two additional measures, i.e., the annual number of films produced, and the number of screens was assembled. Regression models at the individual country level as well as at the group level were estimated. The empirical analysis reveals that statistically, India fits the international pattern when it comes to the significant negative effect of television penetration on aggregate and per capita admissions. As in other countries, as more Indian households acquired television sets, per capita admissions declined. Individual country regressions showed India was similar to the US and France where television penetration did not have a statistically significant effect on the number of films produced. This is different from the UK and Japan where television penetration had a significant negative effect on films produced. However television penetration had a negative but statistically non- significant effect on the number of screens in India unlike in the US where television penetration had a statistically significant negative effect on the number of screens. These results assume significance for policy because the major share of Indian film industry revenues (78%) comes from theatrical admissions. Television penetration thus poses a serious threat to Indian film industry revenues unless premium services can be used to add revenues.