INDIA’S buoyant entertainment industry, led by Bollywood, has always focused on the domestic segment. Unlike other sectors, foreign players were hesitant about entering the industry, nor were domestic majors keen on tie-ups with international giants.

But there’s a sudden change in the strategy of both domestic and international players, both of who are now seeking greater interaction. India’s entertainment sector has for years been plagued with the problem of small-time, often unprofessional, players dominating the industry.

Corporates steered clear of the industry, worried about their image. Some of the producers and even actors had links with the underworld, the source of funding was largely mysterious, and Bollywood functioned in an opaque manner, without accountability to any stakeholders.

The absence of professionalism in the industry was reflected in the manner in which filmmakers and financiers genuflected before celebrities and superstars. The entire industry was dominated by this syndrome – if you were a superstar, you could demand whatever price you wanted, cancel shootings arbitrarily, behave irresponsibly and turn up – or wind up – shooting assignments without any notice.

The emergence of a parallel world of entertainment – on the small-screen – and the blossoming of hundreds of ordinary stars on television dealt a severe blow to the feudal system in Bollywood. A crackdown by the authorities on the growing nexus between Bollywood and the underworld resulted in the drying up of funding sources.

The last few years have seen the entry of corporate players, both Indian and international, into tinsel world. Headed by professional managers, they have gone about transforming the way Bollywood functions. Most of these companies have access to huge resources, both in terms of funding and technology.

And they have not hesitated in calling off the bluff of unprofessional players in India’s entertainment industry. The result has been dramatic. International players are now taking a serious look at Bollywood and other entertainment centres – including Chennai and Hyderabad.

Importantly, Indian entertainment companies are aggressively making a foray abroad, acquiring assets, tying up with foreign firms, superstars and filmmakers. Many have dreams of emerging as global entertainment giants, seamlessly making the change from Bollywood to Hollywood and other ‘woods.’

Not only are some of these companies loaded with tonnes of spare cash, many have attracted international private equity players who are extending them huge funding. And the new generation of entertainment industry players is leveraging its strengths, breezing ahead confidently, hoping to meet the growing appetite for quality entertainment, both in India and abroad.

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THE new crop of entertainment industry giants in India include names like Reliance Big Entertainment (owned by the Anil Dhirubhai Ambani Group), UTV (founded by Ronnie Screwvala, virtually unknown in Bollywood till recently), Pritish Nandy Communications (set up by a former poet and editor), Percept Pictures (started by an adman) and animation and other creative companies including DQ Entertainment, Toonz, Paprikaas and Crest Animation.

The most ambitious of these is of course Reliance Big Entertainment Ltd (RBEL), set up by Anil, the estranged Ambani brother (who, with assets of $48 billion, ranked sixth on the World Billionaires list of Forbes magazine earlier this year, with elder brother Mukesh ranking fifth).

RBEL is now in talks with Steven Spielberg, maker of international hits like Jaws, ET and Jurassic Park, and is likely to stitch up a deal amounting to $600 million. Spielberg and his Dreamworks SKG (established in 1994 together with Jeffrey Katzenberg and David Geffen) is seeking to end its arrangements with American entertainment giant Viacom Inc and its movie studio Paramount Pictures.

But it would need at least $2 billion to cut its relationship with Viacom and Paramount Pictures, and emerge as an independent film-making unit. Hollywood studios are facing a cash crunch, thanks to the sub-prime mortgage crisis in the US, which has resulted in hedge funds and other financiers cutting back on their lending to the studios.

Cash-rich Indian groups like ADAG are now wanting to fill in this breach by injecting much-needed funds. The $600 million that RBEL is considering extending to Dreamworks will ensure it gets access to one of Hollywood’s most energetic entertainment house.

A few weeks ago, RBEL announced a billion-dollar venture to co-produce films with production houses owned by top Hollywood stars. They include celebrities like George Clooney, Brad Pitt, Nicholas Cage, Tom Hanks, Jim Carrey, Chris Columbus and Jay Roach.

Amit Khanna, chairman, RBEL, points out that nearly a dozen films could be produced over the next two years through these joint ventures. RBEL’s aim is to emerge as a $10 billion global entertainment behemoth, with a presence in some of the world’s most vibrant markets, including of course, Mumbai and Los Angeles.

One of the key markets that Indian entertainment majors are aiming to address is the one represented by Non Resident Indians (NRIs) and Persons of Indian Origin (PIOs). About 25 million NRIs and PIOs are spread across a hundred countries, and most of them are affluent – and importantly, crazy about Bollywood and other Indian language films.

RBEL has, for instance, acquired over 250 theatres in 30 American cities, including New York, New Jersey, Washington DC, Chicago, Los Angeles, San Jose, Detroit, Atlanta and Seattle. The company owns nearly 200 theatres in India – through its Adlab chain – and is aggressively looking for theatres in countries with a significant Indian population. It has also acquired over two-dozen theatres in Malaysia.

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BUT Hollywood’s major studios are also increasingly interested in Bollywood. Sony Pictures Entertainment released its first Indian film, Sanjay Leela Bhansali’s ‘Saawariya,’ Walt Disney Pictures is involved with Yash Raj Films in the making of ‘Roadside Romeo,’ while Warner Bros is associated in the making of ‘From Chandni Chowk to China.’

UTV, the Indian group founded by Screwvala – which has emerged as a significant player in the television space as well – produced ‘The Happening,’ made by M. Night Shyamalan, which did surprisingly well in the US. Others including Time Warner, Fox and Disney Channel are also enhancing their exposure to India.

Last week saw Catherine Zeta Jones and husband Michael Douglas in Mumbai, preparing to shoot their film, ‘Racing the Monsoon,’ which will be a sequel to the 1984 hit, ‘Romancing the Stone.’ The $60 million films is a joint venture between Douglas’ Further Films and Percept Picture Company of Mumbai.

Bollywood’s popular filmmaker Sajid Nadiadwala is making one of the most expensive films to be made, ‘Kambakth Ishq,’ at the Universal studio in Hollywood. The $22 million film will feature Sylvester Stallone, California governor and actor Arnold Schwarzenegger and two popular Bollywood stars, Akshay Kumar and Kareena Kapoor.

UTV is also planning to rope in Heather Graham and Jennifer Coolidge for its new film, ‘Exterminators,’ which is being shot in Texas. Another Hollywood star, Jennifer Aniston, has shown interest in a remake of a 1969 Bollywood hit, ‘Khamoshi,’ and could end up re-enacting Waheeda Rehman’s role.

Pritish Nandy Communications has also signed up a three-film deal with Sony; the first film, ‘Raghupati Raghav Raja Ram,’ will be shot in Las Vegas, by Nandy’s son, Kushan.

International financiers are naturally being drawn by these ambitious plans. George Soros paid $100 million a few months ago to acquire a three per cent stake in RBEL, valuing the company at $3 billion. Others including Kohlberg Kravis Robrets & Company (KKR), Carl Icahn, the billionaire investor, Japan’s Softbank and the Abu Dhabi Investment Authority have also shown interest in acquiring a stake in RBEL.

India’s ‘filmed entertainment’ business has seen a hefty growth of 17 per cent per annum over the past three years. It is now worth $2.5 billion, according to PricewaterhouseCoopers, an international consultancy, and is expected to grow at an equally brisk pace over the coming years.