Is entertainment recession-proof? Well, yes and no; the film and television industries–both growing at double-digits for three years now–will vouch for that. In films, the box-office is recession- proof if the content is good; in television, even a celebrity show cannot salvage the whole channel. Producers of entertainment are going back to the drawing-board to find just what is going to tick, as insiders claim the worst may be over.

“We are going through a trial-and-error phase,” says an insider. Across the pecking order, Bollywood producers, distributors and exhibitors are mixing and matching, looking for fresh tie-ups, new ways of marketing and distributing, and most of all, new content to take the industry out of a sticky situation.

Bollywood has been having a lousy year with at least two of the latest releases, Shree Ashtavinayak’s Blue, reportedly made at a budget of Rs 90 crore and UTV’s Main Aur Mrs Khanna, finding it hard to recover the spend at the box-office. Bollywood has seen just four hits this year.

What’s been a dampener is the slump in satellite, music and Home Video rights. It appears as if Bollywood has gone to sleep. The big production entities, including Reliance and Studio 18, haven’t bought or announced new projects for months. There haven’t been any new Hindi film releases on TV for months. “We haven’t acquired any content in 2009,” admits Priti Shahani, senior VP, marketing & distribution, Studio 18. “There’s been a huge rationalisation in production and acquisition costs. And with the sharp decline in satellite, Home Video and music numbers, the focus now is on price.”

Blue’s producers didn’t find a distributor till the last minute, selling north India (Delhi, Punjab and Chandigarh) rights to PVR and overseas to Shemaroo Entertainment. It distributed the key Mumbai circle itself. Insiders say with the heady days that saw huge capital infusions and the resultant high costs gone, Bollywood is much sober today.

“Nobody has the cash to buy… everybody is waiting and watching. No deal is happening because of the pricing issue,” says Smita Jha, associate director, PwC. For one year now, the entertainment space, especially films and television, has seen much churn. Think cost rationalisation, dumping unviable projects, buying good content and downsizing expansion plans.

But analysts and insiders say that with revival signs in many sectors of the economy, there’s a general feeling of optimism and renewed PE (private equity) interest in the industry. “PE players have started looking at deals now,” says Jha, adding, “Foreign investors are also looking to enter the Indian market.” A multiplex player, who didn’t want to be named said, “Money has begun flowing in”. But with studios and producers becoming cautious about greenlighting new projects, experts agree that it will take at least six to eight months for the situation to ease.

Pricing issues are also delaying consolidation in the exhibition space, which has been talking of buyouts and sellouts for months. As Milan Saini, country head, Cinepolis India, points out, “There’s nothing on the table right now… though we are in talks with several players at an informal level for the past many months…we continue to receive enquiries at preliminary levels.”

“The top 40 cities are our target,” says Saini. Cinepolis, a Mexican chain, has been aggressive on its India plans. “There is some slowdown, especially in the real estate space and we see some existing operations walking out of malls; those opportunities have become available to us,” he says.

“There are significant discussions on valuations going on,” says an analyst. What’s giving players like Cinepolis hope is that multiplex penetration is still low in India. There’s 0.5 screens per million in India, compared to 120 screens per million in the US. “We are 240 times less penetrated than the US so there’s potential for growth,” Saini says but admits that everybody will not be cut out for it. “Consolidation will happen sooner than later. Players are looking to exit and we are exploring those options. Eventually, it may turn out that people with deep pockets who can scale up will survive,” explains Saini.

In the TV space, too, there’s a fair bit of “ups and downs.” At least one, REAL, a joint venture between Turner and Alva Brothers Entertainment, is reassessing its business plans. Says Anshuman Misra, managing director, Turner International India: “Although our first experiment may not have shown great results, it did show that neo-Indians are ready and willing to experiment with new forms of entertainment content and are even looking out for more. For sure we did not get the results that we aimed for. We are reassessing our business plans,” he adds.

On the ratings chart, the top ten programmes week after week are taken up by soaps and reality shows of Hindi general entertainment channels, and sometimes by sporting events. Some channels like UTV World Movies are doing a lot of on-ground activities, like releasing titles at the multiplexes, holding festivals and the like to create a buzz. Says Sameer Ganpathy, business head, UTV World Movies: “We have released 20 titles in the Home Video segment together with Shemaroo. We plan to launch 10-12 more titles by March.”