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LONDON — Bollywood pics are doing boffo biz this year in the U.K., the biggest market for the song-and-dance genre outside India. But the significance of Bollywood to the overall health of the U.K. box office market remains minor, despite recent reports to the contrary in the British press.

“Traditionally, the top Bollywood release of the year in the U.K. makes around £850,000 ($1.67 million), but this year three films have comfortably passed the £1 million mark and ‘Dhoom: 2’ will also clear the £1 million ($1.96 million) bar soon,” says Andrew Turner, head of booking at the Cineworld circuit.

The growing popularity of Bollywood in the U.K. is set to soar even higher in 2007 thanks to the eighth edition of the high-profile Intl. Indian Film Academy awards in the northern England city of Sheffield.

Bollywood heavyweights including helmer Karan Johar and thesp Amitabh Bachchan will attend the four-day event, which rotates among cities with a large population of Bollywood auds.

Johar’s third feature, “Kabhi alvida naa kehna” (Never Say Goodbye), has led the 2006 charge with a gross of just over $4 million, the No. 2 foreign-language pic released in the U.K. this year, trailing only Pedro Almodovar’s “Volver” ($5.4 million). It did better business in Blighty than in its home country.

Johar’s U.K. box office triumph is no isolated success. Bollywood pics consistently crack the U.K. top 10 charts and post screen averages many Brit pics would salivate over. Shah Rukh Khan starrer “Don,” from distrib UTV Communications, took $545,324 at just 51, for a chart-topping per-screen average of $10,692 when it opened during prime moviegoing time after Diwali and near the end of Ramadan in October. Showing remarkable legs, the pic dipped just 14% in its soph sesh, en route to a final total of $2,819,667.

Other big Bollywood performers this year were drama “Fanaa,” which scored $1,175,627, and splashy actioner “Dhoom: 2,” which stands at $881,922 after just 10 days in release. Both pics were distributed by Yash Raj.

Despite the strong showing by Bollywood pics, their significance to the overall box office market has been overplayed in the mainstream media of late. Chris Hastings and Beth Jones wrote in the Times, “Now, for the first time, Bollywood films are more successful than homegrown productions.” This is not the case.

Of the 473 films released thus far this year, 66 are Bollywood titles, constituting a significant 13.95% of total releases. But 2006 Bollywood box office takings stand at just 1.87% ($27.5 million) of the $1.46 billion total take.

Last year, “British” films, as defined by the Dept. of Culture, Media & Sport, accounted for 35% of total box office takings. This includes U.S. studio-backed pics such as “Batman Begins,” but even with these pics removed from the equation, Brit pics outstrip Bollywood comfortably, according to Tina McFarling, U.K. Film Council head of communications.

Although the Bollywood B.O. impact has been overplayed, its vitality is a boon to savvy U.K. distribs and exhibs who find they do not have to spend big on mainstream TV or radio spots to build awareness among non-resident Indians, who constitute the lion’s share of Bollywood cinemagoers and are driving the current box office boom. Promotion is targeted at ethnic newspapers and radio stations and inhouse at theaters specializing in Bollywood product.

“The hardcore audience for Bollywood has always been there in the U.K. — in 1997 ‘Kuch kuch hota hai’ made $650,000 at the Cineworld Feltham site alone. It is just now that exhibition has woken up to the massive potential and is catering for the market better,” says Turner. “Multiplex operators are becoming heavily involved in the dating of Bollywood movies.”

But will Bollywood cinema find more non-Asian U.K. auds in the near future?

Johar has shot his films extensively in the U.S. and is convinced there is growing interest from non-Asians. He identifies three pics — “Devdas,” Oscar-nommed “Lagaan” and his 2001 effort “Kabhi khushi kabhie gham” — that captured the imagination and greenbacks of mainstream British auds.

Johar’s “Never Say Goodbye” courted controversy back home by depicting uncomfortable subjects such as divorce and infidelity, topics rarely addressed in Bollywood cinema. But the helmer is convinced auds are ready for an increased dose of social reality alongside the traditional song-and-dance routines.

Nonresident Indian auds who are more exposed to Western cinema display greater receptivity to Bollywood pics with a little more reality and a little less fantasy. Aamir Khan starrer “Rang de basanti,” which cuts back and forth between the Indian independence movement and apathetic modern-day Indian college students, did $1.6 million in the U.K. this year.