Two stalwarts of the film exhibition business were witnessing a dream run at the NSE, not very long back in the latter part of February ‘20, with each hitting their new 5-year highs. However, lockdowns soon grasped control over this unidirectional rise, and what followed next was a complete halt of operations. To add to the dryness, their often-spoken challengers, ‘over the top media’ seemed to lure away from them their “fair-weather friends” – the film producers. The bold brat amongst the two stalwarts (INOX Leisure Ltd – currently trading at ~1/3rd of what it was in last week of February 2020 – pretty close to its 5 year low), dawned its arrogant avatar of being the “backbone of the cinematic value chain” and outrightly warned the film producers of taking “retributive actions” if they chose to sway towards the Amazon Primes or the Netfliexes or the Disney Hotsars for releasing their new-unreleased films! While, the humbler one (PVR Ltd – currently trading at ~40% of what it was in the last week of February ‘20) wrote a letter with a tinge of professionalism yet echoing a similar message.
With premier dates of Bollywood’s first digital release nearing, in this piece we look back at the relations between multiplexes and producers in the past, assess the move of releasing films directly on OTT and its viability, and finally gauge its impact on the film industry at large.
Two pillars of the Cinematic Value Chain – The Producers & The Multiplexes
Film exhibitors and producers form two key linchpins of the cinematic industry. However, looking back on time, relationships between these two pillars have often resonated similar discomfort, as it is observing of late.
There have been a buffet of concerns where theatre owners and film producers have never seen eye-to-eye. Be it the refusal of screen space or showtimes for small and medium-budget films by the exhibitors or unsatiated demand of producers for a better cut out of the online ticketing business, be it the revenue-sharing tussle on advertisements that pop up before and during intermission or the unjustified virtual print fee charged by multiplexes to only Indian producers (exempting Hollywood releases) - relations have never been a bright color of spring!
In fact, even when a mega production house, Yash Raj films, demanded more favorable contractual terms for release of their multi-starrer “Tashan” – the multiplexes did not give in and the movie was forced to release sans multiplex screens (however, the lukewarm response to the film, forced the production house to accept their terms). Coming closer to today, when the Tamil film “Kaithi” was streamed on an OTT platform in 30 days, multiplexes decided to remove all its shows since as part of their policy, they “will never allow a film to be shown in both platforms simultaneously!”
Hence, the aggressiveness shown by Inox Leisure Ltd in its letter is not a ‘first-day first-show’ – it is merely a re-release!
Assessing producers move on direct digital release
With exhibitors being locked down, many films ready to be produced are facing the heat, more so with pre-release losses not covered by the insurers. Elaborate and expensive sets left unused, mounting financial costs on the funds used to produce the film, distant possibility of reopening of theatres – domestic or overseas, and that too with lower occupancies and a huge backlog of releases, have cornered the small-medium producers to desperately look for ways to monetize. Realizing this as an opportunity and a clear gap to address, OTTs jumped in, having already tested similar waters in the Tamil film industry. With multiple models of agreement, it offered a quick monetization tool for the struggling producers.
Meanwhile, multiplex owners (wanting producers to hold back the films till the screens reopen) are not quite offering relief to the producers – no minimum guarantees or fixed purchases with deferred profit sharing or guaranteed screen presence with upfront cost support!
Hence, financial prudence upholds the view of digital release in these uncertain and testing times. However, digital releases may not do justice for all movies! Movies built with mammoth budgets (eg. Akshay Kumar starrer Sooryavanshi – having a 150-crore budget) would barely recover its costs through such a release. But, if the same film takes the conventional route of a theatrical release first, followed by an OTT platform, and then a satellite release, chances of it raking way more are greater. Thus, given the revenue potential, movies expecting a box office collection of ~30 – 70 crores, would stand profitable in this model – and hence Gulabo Sitabo, Shakuntala Devi have confirmed digital releases while producers of Gunjan Saxena: The Kargil Girl, Ludo and Jhund are in talks of taking the same route.
Conclusion: Impact on film industry
Well, keeping the shorter run nuances aside these stirs in the cinematic value chain showcase a longer-term evolution. As OTT becomes a platform for featuring works of many small-medium producers and directors who often fail to get a screen space, the lost motivation shall see a refurbishment. A great case in point is the Tamil actor-filmmaker R Parthiban’s critically acclaimed film “Oththa Seruppu” which was pulled out of cinema halls even when audiences were coming to watch it with a justification that several new films were releasing every week. The successful film would have been long forgotten and never received the recognition it got had Netflix not offered it space! Pipelines for waiting to release films shall see a reduction further curtailing the capex plans of large multiplex chains.
The famous Cannes film festival and Netflix saga – where films released on Netflix were not considered eligible for the awards as it was not shown in the theatres – clearly puts forth that theatres shall not lose its sheen so soon. A new genre of films suited for the OTT audience shall come to life and co-exist with larger than life movies made for theatres. However, of course, the contractual upper hand or the bargaining power, as you may call it, of the multiplexes and theatres would begin to dilute. Power flow may happen towards the producers. But whatever be, it shall not be replaced by OTT rather shall co-exist catering to a different set of audiences. As consumers of cinematic entertainment, it shall be interesting to experience this evolution!
About the author: The post is written by our EZPP partner Aayush Jhawar with relevant edits and changes by our editorial team. Aayush has graduated from SPJIMR and currently works with the Boston Consulting Group.
Disclaimer: All views expressed in the post are personal, and not related to any organization to which the writer belongs.