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The Hollywood Connection in U.S.-India Relations

Posted: 11/24/09 08:16 AM ET

The summit meeting on November 24 between President Obama and Indian Prime Minister Manmohan Singh is certain to be a glittering celebration of what has become one of the most strategic relationships of the post-Cold War era. Yet for all the talk about the emerging U.S.-India geopolitical partnership, it is important to remember that the foundation for this relationship was actually forged outside the realm of government policy and far beyond the confines of Washington and New Delhi. Indeed, West Coast entrepreneurs have played just as important a role in building ties as any diplomat or national security official.

Mr. Singh's visit therefore provides a good opportunity to renew the key private-sector and societal linkages that help bind the relationship together. A good starting point lies in the area of global entertainment and media, where the United States and India have complementary strengths and convergent interests, and where California again has a special role to play.

For all the glamour attached to Hollywood and Bollywood in their home countries, their potential in fostering bilateral ties has been scarcely appreciated. The United States and India possess the world's largest entertainment and media industries, both in terms of sheer output and global popularity. Yet traditionally neither industry had much interaction with the other or enjoyed success in the other's domestic market. All of that is beginning to change, however.

With a growing English-speaking middle class, a booming number of multiplexes and television channels, and a cinema-obsessed popular culture, India is a natural destination and partner for Hollywood studios. The country is the largest producer of feature films in the world (over 1,000 a year), the third largest producer of television content, and the third largest cable TV market. A new survey by PricewaterhouseCoopers estimates that the Indian entertainment and media market will expand by 10.5 percent annually over the next few years, a rate that is four times the global average. More than half of India's 206 million households possess a television and of this number about 60 percent have cable or satellite connections. A recent forecast finds that the country will become the top pay-TV market in Asia by 2015.

Within the last few years, U.S. studios have begun to make headway in the Indian market by tapping local creative talent to make their own Bollywood films and by forming joint ventures with Indian partners. Besides looking to the Indian market as a way of offsetting its own sluggish box office sales, Hollywood is drawing closer to Bollywood both as an important source of financing and a cost-effective production venue. Increasingly, U.S. studios are shipping animation and post-production work to India, taking advantage of its modern facilities and affordable workforce. The success of Slumdog Millionaire, which besides winning for best picture this year also won Oscars for music scoring and sound mixing, will accelerate this trend. According to the U.S.-India Business Council, bi-national co-production and other forms of cooperation in media and entertainment should increase to $1.5 billion per year for the next three years.

Like Indian companies in other sectors, Bollywood firms, once chaotically-managed enterprises but increasingly run like Hollywood studios, are beginning to expand their global reach. Reliance ADA Group, one of India's headline industrial houses, is aiming to create a world-wide entertainment conglomerate. It has entered into a high-profile joint venture with Steven Spielberg to form a new movie studio that will make some 30 movies over six years. It has also cut deals with a number of Hollywood heavyweights - including George Clooney, Tom Hanks, Brad Pitt, Julia Roberts, Nicolas Cage and Jim Carrey - to fund the development of scripts and jointly present proposals to studios. UTV, a Mumbai-based media and entertainment giant, released its own independent Hollywood film in the summer of 2009, and has a two-movie venture with Will Smith's production house. Indian studios, which are leaders in experimenting with innovative ways of film distribution, like the Internet and mobile applications, could also be a valuable source of new business models for their Hollywood partners.

All of these developments signal a new era in global entertainment. Although U.S. and Indian government officials would not naturally think of it, enhanced partnership in the entertainment sector has important foreign policy implications. First, given that Hollywood and Bollywood are successful exporters of cultural content, the two countries have a major shared interest in keeping global markets open for their products. Washington and New Delhi should thus craft a common approach on cultural market access and use their combined weight to advance it in international trade negotiations. True, the two governments have been at loggerheads in the Doha Round of multilateral trade talks. But a joint proposal on cultural access would focus U.S. and Indian energies on discrete, easily-managed trade issues in which the mutuality of economic benefit is self evident.

Second, with broadband penetration continuing to accelerate worldwide, the private sectors and governments in both countries have a common interest in advancing the digital transformation of the global media industry. Washington and New Delhi should thus convene a summit of all relevant parties in both countries to consider implementing this objective on a joint basis.

Beyond their commercial ramifications, these initiatives would have real political value, further solidifying the U.S.-India partnership and providing an important example of joint leadership in the global economy.