At last year’s Cannes Film Festival — the annual gathering of who’s who of the movie world — an unlikely player made his red carpet debut. Anil Ambani, the Indian tycoon with interests in telecoms and energy, used the backdrop of the French Riviera to unveil plans to invest up to €800m in films co-produced by some of Hollywood’s biggest stars, including Brad Pitt, George Clooney and Tom Hanks. Ambani’s privately owned entertainment arm, Reliance Big, will fund scriptwriting and development of projects that catch the eye of the stars and Indian investors.

While many of these stars also have ‘first-look deals’ with major Hollywood studios, Reliance Big will have a right to co-finance production of any film they help with development. Whether or not they invest in the actual production, the Indian company will have the right to distribute the films in India, through its expanding network of urban multiplexes and small town movie halls.


Amit Khanna, the lyricist-turned-screenwriter who chairs Reliance Big, suggests the deal is a boon to the Hollywood stars frustrated by trying to steer their projects through the sluggish, bureaucratic and increasingly risk-averse studio system. “This is empowering the talent,” he says. “It’s changing the way Hollywood has been operating. In no way are we trying to say, ‘we are breaking the studio system’. We believe in collaboration.”


Certainly the narrative of a chivalrous Indian businessman heroically riding to the rescue of distressed Hollywood stars has thrilled urban Indians, who remain highly sensitive about relations with the West since India’s 1947 independence from British colonial rule. Murali Gopy, entertainment editor of MSN India, described the deal as “a natural turnaround in history”.


“It has once been the White Man’s burden to civilise the East on norms artistic and cultural,” Gopy wrote in an online commentary just after the deal was unveiled. “It might now be the time for the Brown Man to 
fund the superegos of the West and fill his coffers while doing so. It would be cinematic justice if not poetic.”


Yet the biggest coup came after the Cannes announcement, with the news that Reliance Big was in talks with the most popular Hollywood director of all time, Steven Spielberg, to create a new movie venture, easing the separation of Spielberg’s Dreamworks Studio from its long-standing partner Paramount. 


The new studio was to start with around €1.2bn, with half coming from equity from Reliance and the rest raised by JP Morgan. The deal had since stalled due to the credit crisis, as Reliance’s funds were conditional on matching investment. But Spielberg’s six-year, 30-picture distribution deal with Disney Studios, announced in February, is expected to help get the venture back on track.


The flirtation with Hollywood by Ambani, the younger son of the late legendary entrepreneur Dhirubhai Ambani, may seem an audacious effort to boost the tycoon’s glamour quotient, given his otherwise prosaic traditional businesses, and his bitter rivalry with his elder brother, Mukesh. But Reliance Big executives argue that the Hollywood foray has a clear rationale, given India’s massive, youthful, movie-mad population — and huge pent-up demand for entertainment. “It makes good business sense,” Khanna says. “India and the US are two of the biggest movie markets.”


Reliance Big has already been producing Bollywood films, but the cost of an entire Indian film is often less than the price of signing a single Hollywood star to a film. Revenues are small, too: India’s five top-grossing films in 2008 earned just $78m (€61m), up from $50m in 2005, but still paltry by Hollywood blockbuster standards. 


Reliance has indicated it is willing to invest up to €800m in its deals with the various Hollywood stars, in addition to the €395m it is expected to invest in the venture with Spielberg. The deals, especially with Spielberg, would give Reliance access to international markets, while gaining lessons into Hollywood’s brand of magic-making, which it could bring back home.


Ambani’s Hollywood adventure is hardly the only foray by Indian companies into overseas business. In the last few years, Indian firms, led by the Tata Group, have made seemingly audacious overseas acquisitions, including of major brands, leading to a burst of Indian national pride. 


In 2000, Tata bought the UK’s Tetley Tea, followed by Tata Steel’s £6.7bn acquisition of Anglo-Dutch steelmaker Corus. Last year, Tata Motors spent $2.3bn to acquire Ford’s loss-making Jaguar and Land Rover brands. Suzlon, the Indian wind energy group, spent $1.3bn to acquire Repower from Germany, beating out France's Areva. With the global crisis, these big bets are now causing plenty of headaches in Mumbai, the Indian financial capital, with Tata pushing for greater UK government assistance to keep Jaguar and Land Rover afloat, and seeking refinancing for the loans it took to make these purchases.


Ambani’s finances have taken a hit in the global crisis too. In early 2008, he was ranked by Forbes as the sixth richest man in the world, right behind brother Mukesh, with a fortune of $42bn. With the global market meltdown, Forbes estimates that Mr Ambani’s net worth has fallen to an estimated $12bn (€9.5bn), a plunge exacerbated by his brother’s scuttling of his telecom company’s deal with South African telecom firm MTN.


Yet Reliance’s audacious Hollywood-Bollywood tie-up could be sweet spot. With 70% of India’s population under the age of 35, India’s movie market still has room to grow. Despite its mania for films and their stars, India has just around 8,000 operational screens, compared to around 40,000 screens in the US.


Of India’s total screens, around 1,250, mainly those in multiplexes in upmarket, urban shopping malls, account for 30%–40% of box office revenues, with ticket prices averaging around INR150 (€2.30) compared to the meagre INR20 (€0.30) charged by most dilapidated small town movie halls. AdLabs, part of the Reliance Big Entertainment group, operates around 200 key screens, part of its fast-growing chain of big city multiplexes and refurbished cinema halls.


According to Anil Arjun, Adlabs’ chief executive, India’s movie revenues have increased around 14% a year over the last four years. Average cinema prices have risen around 157% over the last nine years, as new cinemas are built and old halls refurbished. Still, India’s total expenditure on entertainment and music is still just 1.1% of GDP, far below the global average of 2.9%, suggesting plenty of room for expansion. 


For the most part, India’s demand for entertainment will be met by its own vibrant Bollywood film industry, which annually churns out an average of 900 films, mainly traditional Indian ‘masala movies’, with melodramatic stories liberally spiced with song and dance numbers.


Yet India’s movie market is differentiating, with the new category known as ‘the multiplex movie’, that have themes catering to more sophisticated urban audiences. “You have a lot of urban lifestyle movies with issues like adultery, women working and urban aspirations,” says Arjun of the growing niche. The same audience are also seen as likely to have appetite for Hollywood films.


Khanna believes that Hollywood films will always take a back seat to Bollywood’s homemade products: “It will always remain a small player. “It will not be more than 5%–10%.” Yet Ambani realises that a small chunk of a fast-expanding market is still big.