Nanban Distribution Rights

Nanban Business is currently the hot topic in Tamil Industry. Distributors are negotiating hard on key areas like NAC (North Arcot Chenglepet) and Coimbatore as reported earlier. There are 4 key reasons quoted from the distributors' side for the business not reaching a closure yet,

• Gemini Circuit's recent release as producer and distributor (Mayakkam Enna and Rajapattai) were received with luke warm response at the box office. Distributors are pushing the production house to compensate for some losses incurred with these movies.

• Another reason that the distributor quoted is that the previous Diwali releases like Velayutham and 7aum Arivu which were bought for 40 Crores and 50+ Crores respectively did not break-even in some key areas (For example, 7aum Arivu was bought for 7 Crores in Coimbatore area barely recovered the investments. Nanban rights for this area is expected to be in the same ball park as 7aum Arivu)

• Thirdly, the power of unknown is crucial in generating the hype for a movie. Since, distributors know exactly what to expect from this faithful remake of 3 Idiots, they are also playing down the upside potential of the movie.

• Finally, with increase in entertainment tax from 15% to 30%, distributors are expected to get 10 Crores less nett collections assuming a gross of 70 Crore gross collection. Every body in the value chain is in denial mode and not making necessary adjustments. By the end of the day, producers need to face the reality by reducing the production cost by roughly 15% (hint, hint...actor's salary constitutes the biggest chunk of production cost)

As of yesterday, the deal was not inked leading to some tense moments among all the parties involved. Since the release date has been announced, agreement is expected to be reached very soon.