Why do the producers in Bollywood never face the losses when the movie flops?
Firstly, ‘Bollywood’ is a very big umbrella term, which covers most movies made in Mumbai. So what happens to one kind of movie producer is not necessarily what happens to another movie producer. You must have heard the terms ‘A grade’ ‘B grade’ and ‘C grade’ for movies. These grades are not just about the budget of the movie, they are also about the content, look, starcast and the distribution scale. How the ‘A’ grade industry works is very different from ‘B’ grade and so on.
Let’s talk about ‘A’ grade movies. And your question is right in this context. The producer of an A grade movie almost never loses the money these days (unless in case of a legal dispute, misappropriation of funds, fall out with the studio or a breach of contract) because ALMOST ALL A GRADE MOVIES ARE INVESTMENT PROJECTS. When a studio takes on a film under their banner, the viability of the project is studied by their in-house experts and after considering all factors, if they come to the conclusion that this film will recover money invested in it with some additional profits THEN AND ONLY THEN a project is given the green light. How do they determine this feasibility? That is another long answer that’s beyond the scope of this write up. But basically it depends on the returns that the lead actor can generate on the box office, combined with script, music and the director’s credibility. A-grade movies are pre-sold. They have their recoveries in place via satellite & home video rights, music rights, and of course the world wide distribution. They also cover some of the costs through in-film product placement etc.
Now, coming to B grade movies. These movies do lose money from time to time and if the producer doesn’t have a decent deal with his distributors and exhibitors, he / she can lose money.
C grade movies, on the other hand, make money more often than B grade industry because just like the A grade movies they have their audience expectations in check and they cater exactly to that audience. They keep their budgets under control and they deliver their films in a timely manner.
But once again I must reiterate that it’s a fallacy that a producer never loses money. Even an A-grade producer will lose money if the content is really poor and rejected completely by the audience. Another thing to take into account is the brand value of a producer. You may produce a movie and recover all your costs but still, if the movie isn’t generally liked by people – the dent in your brand image will make sure you won’t get the same amount of money to make your next film. Now that’s a big loss,
*The question was by Kunvar Aishwary and its reply was first published on Quora