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Disney eyes bigger picture with Bollywood link

Milind Shelte | India Today | Getty Images

To promote last week's release of Khoobsurat, a Bollywood film produced by Disney's Indian subsidiary, actress Sonam Kapoor traveled to Disneyland Paris to have her photograph taken with Mickey Mouse in front of the park's famed magic castle.

The involvement of the US studio's best-known cartoon character was a calculated move: Khoobsurat is the first Hindi-language film for many years to be officially branded as a Disney movie in India – marking a new stage in the US group's faltering attempts to expand in the country's crowded local market.

Set in modern-day Rajasthan, Khoobsurat has all the trappings of a classic Bollywood offering: pretty middle-class girl meets handsome upper-crust prince, with true love to follow despite family objections and his engagement to another woman, all set against a backdrop of foot-tapping song-and-dance routines. "Our film is a classic romantic-comedy," said Ms Kapoor last week.

For its backers, however, pushing the film as "Disney's Khoobsurat" is a step in a wider strategy as it tries to align its brand with the tastes of India's finicky film goers, amid a broader push into major emerging economies.

India churns out many more films than Hollywood, selling an estimated 3 billion tickets each year. And while revenues in the country remain modest, at about $1.5 billion in 2013 compared with the US which rakes in roughly$10 billion annually, the prospect of rapid future growth has tempted major US-based studios including Viacom and Fox into India.

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But these foreign players face an obvious problem: Indians'traditional resistance to Hollywood products, which take less than a tenth of the local box office. Disney's staple of children's animation also performs poorly in a market dominated by Hindi-language blockbusters.

"It is the only major country in the world where Hollywood hasn't overwhelmed the local cinema," said Rachel Dwyer, a British academic who studies Bollywood. "And there is a real question of whether Disney will be seen to have Indian values or not."

Disney has pursued a strategy of "localization" to get round this problem, the group's international head Andy Bird said last year. In 2012, it spent $454 million to buy out UTV, a prominent Indian media group,picking up a successful film studio as well as various television channels.

Its plan to make mostly local Bollywood films has worked well, producing a string of hits under UTV's brand. But the company faced a second dilemma over how to raise its profile beyond India's educated, urban elite –hence the move to tag more productions as Disney films, beginning with Khoobsurat.

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Disney's brand values mesh nicely with India's mainstream films, which tend to be chaste, non-violent and family-oriented. Nonetheless, local analysts remain doubtful about whether the film will succeed at the box office.

"They have been the most successful studio in the market," says Smitha Jha, head of entertainment at PwC, the professional services firm, in India. "But adding the Disney label won't make a difference. In terms of consumption habits in India, it is a very local taste."

The company faces other challenges too. Disney's charismatic local studio head Ronnie Screwvala left the company last year, prompting an exodus of talent.

"Almost the entire creative team at UTV studios has collapsed,"said the head of an Indian film group. "It looks like Disney may have to start from scratch."

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Making a success of its film business matters for a further reason: Disney's lack of obvious alternative avenues to raise its local profile. The company is investing $3.5 billion to build its first theme park in China, but admits it is unlikely to set one up in India in the foreseeable future, held back by the country's poor infrastructure.

The group's television channels remain relatively niche too,piling on the pressure for the film arm to deliver a fairy-tale commercial performance.

"India is clearly their next big bet after China, but it will be along road to win people over here," says one executive at a Bollywood production company. "And Disney must be looking at what they got when they bought UTV, and what they paid for it, and wondering if it was worth of it."

Disney refused to comment.