Had you been in India in the weeks leading up to the opening of Ra.One, a London-set science-fiction epic billed as Bollywood's most expensive film yet, you could hardly have escaped its lead character. Played by Hindi cinema's golden boy Shah Rukh Khan (known as SRK), he was everywhere: on TV, in newspapers, on billboards, online, emblazoned on India's Formula 1 cars - even under your arm, thanks to Ra.One deodorant.

This was the $26m (€20m) production that would show that kid-friendly special-effects films need no longer be Hollywood's moneymaking licence, a 3D superhero film that would save big-screen entertainment from its small-screen foes. "Local cinema is dying the world over. If we do not evolve we will lose the Indian audience for Indian cinema," SRK told India's The Economic Times.

Given such hype and ambition, this was always going to be Mission: Impossible even for a superstar who, for much of the planet, is bigger than Tom Cruise. Opening on 3,100 screens across India and 904 prints overseas, the film raced to record the highest single-day gross for an Indian film, $4.9m (€3.7m) on 27 October. But since then, mediocre reviews have caught up. The film is currently the fourth highest-grossing Bollywood film worldwide, generating a respectable $20m. Avatar made more money than that in India alone.

Not that the two Mumbai-based production houses behind Ra.One - Eros International, which distributed the film and SRK's own Red Chillies Entertainment, which also did the special effects - are unduly worried. Using a pre-sales strategy common on star-driven Bollywood films, their backs were already covered before the film hit the multiplexes as a result of lucrative satellite, music and product merchandising deals.

"Even before the film opened, we have recovered at least 60%-70% or even more of the cost of the making of the film," says Kamal Jain, chief financial officer of Eros International. "We try to do this with all of our releases and as a standard anything from 40%-80% of our films are funded before they even hit the box office."

Komal Nahta, editor of Indian trade journal Film Information, estimates that Eros stands to make a profit of $5m-$6m, which roughly equates to the subsidy the film received from the UK government in return for shooting car chases around London and a fight scene at Battersea Power Station. In other words, Eros will see a healthy but hardly jaw-dropping investment return of around 20%.

But where Ra.One has broken records is in its promotional blitz, an innovative use of every available media that is reckoned to be India's largest marketing campaign ever at $8m. Some $3m alone was reportedly set aside by Red Chillies for online and social media promotion alone. With no stone or pixel left unturned, Ra.One serves as a case study in digital carpet-bombing that sets the bar for not only Bollywood productions but Hollywood ones too as US studios try to marshal the Facebook generation.

Red Chillies, which controls the IP copyright to Ra.One, had much to gain from all this. Much as George Lucas did when he turned Star Wars into a multibillion-dollar merchandising goldmine, Red Chillies took control of the toy spinoffs, designing them in-house and manufacturing them in China. A range of 50 action figures, games and other products were sold in more than 3,500 stores and e-commerce sites. SRK even oversaw the creation of a backstory for a graphic novel. As for that deodorant, Red Chillies is projected to make $10m from brand tie-ins that also include house paints. Although the bulk of this sum comes in the form of advertising barter deals, this still represents a new watermark.

The film's digital partner, EveryMedia, is said to have played a crucial behind-the-scenes role in the extraordinary pre-release visibility that the movie generated. The Mumbai-based marketing agency stepped in last-minute after SRK's company had problems with the US-based agency that was originally supposed to work on the website. EveryMedia came up with the design and the development of the online presence in a short period of time. In terms of popularity, the website is now breaking records for an Indian movie tie-in - and with nearly 3.5 million avid fans, Ra.One is currently the most populated Facebook page for a Bollywood movie.

Division 91, an EveryMedia partner, was responsible for the 34-page digital comic that was published electronically and given out to contest winners. Just ahead of the movie's opening, 310,000 copies of the digital comic were printed and circulated free with The Times of India.

EveryMedia was also instrumental in orchestrating several live Ra.One events that were broadcast on YouTube. Among the film-related contests was 'Capture Ra.One', in which fans were asked to snap and submit pictures of the movie wherever they saw an image of it. The winner, Khaja Afaq Mohiuddin, managed to click 2,500 pictures to win his signed picture of G.One, the name of SRK's superhero character.

The reason for such marketing overkill is simple. The business is looking increasingly risky, a victim of rising budgets and declining revenues. Only 25% of the 150-odd Hindi films produced every year make serious money and the box office itself is a shrinking component of a film's overall revenue. "Multiple revenue streams is the way forward now," says Film Information's Nahta. "Many studios have a pipeline of films that are not even in production but they are already in discussions over satellite, distribution and brand deals."

In the past, Bollywood films were heavily dependent on box-office revenues, which made the film business such a seat-of-the-pants experience for its backers, and one only worsened by piracy. Bootleg copies of the latest hit films are widely available all over the world, some even before the film hits the silver screen.

The Federation of Indian Chambers of Commerce and Industry (FICCI) says that Bollywood loses $100m annually in loss of revenue from pirated DVDs. Most copying is done by gangs of criminals but there are countless small cable TV companies in India and other parts of South Asia that broadcast films without proper rights.

Today, production companies are fighting back and focusing on new ways to make their businesses stable. "The more one is able to diversify the revenue streams on a film - and not need to depend on one route - the better it is as it enables you to reduce the risk per film. Moreover, an established studio with a strong slate of 12-15 movies a year today has the advantage of being able to de-risk an entire slate of productions," says Siddharth Roy Kapur, chief executive of UTV Motion Pictures, a Mumbai-based production house that is itself part of India's first vertically-integrated media and entertainment company.

The figures back Kapur's views. The Hindi-language film market was worth Rs 83.3bn ($1.7bn) in 2010, according to a KPMG study for FICCI. The industry is projected to grow nearly 10% annually to Rs 133.5bn by 2015. "The contribution of domestic theatrical revenues to the overall industry pie is expected to reduce slightly," the report noted, "while the share revenues from cable and satellite rights is expected to increase going forward and account for 13% of overall industry size."

The digital and satellite age changed things for the film industry the world over, but for India the change was even more significant because its satellite TV business is so huge. Today such deals contribute anything from 30%-35% of a film's revenue, sometimes even more, according to the KPMG report.

Take producer-director Vipul Amrutlal Shah's Action Replayy. The sci-fi romcom starred two high-wattage superstars, Akshay Kumar and Aishwarya Rai, and had a budget of around $8m. Shah pre-sold satellite rights to the Indian TV channel Colors for close to $4m - a shrewd move given the film's failure to pull in vast numbers of punters at the box office.

Or look at Eros International's Anjaana Anjaani, which headlines two of India's biggest stars of the moment, Priyanka Chopra and Ranbir Kapoor. Filmed on a budget of $8m, it still managed a $3m profit in spite of a critical panning and a lukewarm response at the box office. The studio recouped half its production outlay by pre-selling the satellite rights. Extra money was made selling the film's music rights for a reported $1.7m and distribution rights for about $7m.

As Kapur observes: "While earlier the revenue dependence of film on theatrical release was as high at 90%, today that has reduced to 45%-50% and contributions from other revenue streams like satellite, music, overseas and other sources have gone up drastically. So while theatrical as a revenue stream is witnessing growth, its contribution to the overall revenue of a film will decline."

This trend is likely to continue. The KPMG FICCI study noted that the satellite revenue segment grew more than 33% in 2010-11 and is expected to grow at least 10% more in the following year. However, the value of those rights hinges on the cast, genre and reputation of the production house. While the satellite rights of films such as Ra.One were pre-sold at record prices, producer Arbaaz Khan's 2010 hit Dabanng, one of the highest-grossing Bollywood films of all time with a global box office of $41m, was pre-sold to Colors for a paltry $2m. This was because Khan's credentials were not established enough to warrant a massive sum.

The satellite age has also made Bollywood global. Studios have realised that there is potential to earn more revenue outside of India and not just to the 15 million-strong Indian diaspora overseas. They want to reach broader Western audiences too. "This is something that wasn't possible before the digital age," says Nahta. "Now people outside of India are much more aware of Bollywood because of television." Indeed, those Bollywood studios that have their own distribution arms can truly go global with their launches. One of the largest, Reliance Entertainment, for instance, has 10 distribution offices throughout the country and offices in the UK and the US. In addition, it has alliances with various overseas distributors.

Amid all these changes, there is one tried-and-tested formula that Bollywood continues to rely on: the magnetic quality of its stars, many of whom are almost deities in the Indian psyche. Unlike today's Hollywood celebrities - think Tom Cruise - SRK is a guaranteed moneyspinner for Eros International. "Every film we make with Khan is a sure bet, each of his films has been profitable. Ra.One, like every film, is always a team effort but yes, for sure, fans of SRK will get their full value," says Eros's Jain.

But pundits say the industry is changing even in this regard. "From Raj Kapoor to Dev Anand to Shah Rukh Khan, Indian films have always sold on star value," says UTV's Kumar. "However, in the last five years a new generation of films uniquely influenced by a mix of Hollywood, Bollywood and world cinema is coming about. This cinema is more dependent on the concept of the film."

It seems that the filmgoing audience in India is becoming more sophisticated as Western films and TV gain wider distribution. For those willing to think differently, and take advantage of digital tools, this spells opportunity. "Strong distribution offices and networks can take advantage of an oversupply of films by striking advantageous bargains for films that lack huge star power," says Rahul Puri, executive director of production and distribution house Mukta Arts. "Targeting the right audience is becoming key, and skilled distributors can earn their keep by using their understanding of the market to turn quick profits."

Jain says: "India has a very young population, and a growing middle class with disposable income who are getting more and more tech-savvy. We have to be able to continue to deliver innovative film content that works across different platforms like mobile phones and on the internet."

The advent of emerging technologies paves the way for further revenue streams, adds UTV's Kapur: "Innovations like 3G, 4G and the web will change the dynamics of the movie-watching experience, creating new access points for consumers across the world." In many ways, Ra.One sits right on the cusp of this shifting paradigm: a song-and-dance film that used star appeal to push Bollywood into a new dimension. That deodorant could just as easily been called New Spice.