Home News Theatres vs OTT – What Rakes In The Moolah For Filmmakers?

Theatres vs OTT – What Rakes In The Moolah For Filmmakers?

By Binged Binged Bureau - July 12, 2020 @ 2:48 pm

Theatres-vs-OTT---What-Rakes-In-The-Moolah-For-FilmmakersWith the ongoing coronavirus pandemic and the subsequent lockdown many a things around us have changed and the way entertainment is consumed is no exception to it. The theatres have been shut for the past few months and no one knows how long it is going to be like this. But all this became a blessing in disguise for the various OTT players around the world, including India. This is evident from the back-to-back premieres of latest movies, both bollywood and regional, on the video streaming platforms. Though a number of questions are crossing everyone’s mind – Will this become the new normal? What will be the scenario when things get back to the way they were before lockdown? Would the movies have made more money if they had a theatrical release?

One of the biggest concerns is that is this format of movies going for direct-to-digital a sustainable one or not. There are a lot of opinions around this subject. Some think that with the indefinite nature of this lockdown it is best to go for digital release in order to recover the cost. While this might be applicable for small and medium budget films, it is not true for movies with budgets over 100 crores. This is so because on OTT movies are sold for a fixed price with no linkage to the performance of the film. Also there is a thought and rightly so, that when the theatres re-open there would be a rush for films to be exhibited and this is where the smaller ones would be at a loss as bigger films would be given preference.

These are exceptional times and they call for exceptional measures. No one would have thought of big star movies going for OTT release if situation like this wouldn’t have occurred. But this is something that both the filmmakers and the OTT platforms need. The filmmakers want return on their investment while the OTT players need fresh content in order to satisfy the ever growing appetite of people for entertainment. This is the best time for OTTs to capture a large market by providing exclusive content. As long as the theatres are closed and people are confined at home they are left with no other option but to turn to these digital platforms for catching up with movies and shows.

This is a great opportunity for the OTT platforms to increase their subscriptions. More so because the competition is limited to the OTT players only and not the exhibitors. With low annual subscription rates, if they can capture more and more subscribers during this period they might be able to retain them permanently. Other things that work in the favour of these platforms is that they provide a wide variety of entertainment to people in the comfort of their homes. The flexibility of watching content on multiple screens and on the go is also a plus point for them.

According to a study by EY, over 60 per cent of consumers are streaming more content than they were before the lockdown, with time spent on video-streaming surging 1.2 times to an average of 4.2 hours per user per week. This is a proof of the fact that it is the best time for OTT platforms to grab on as much new content as possible in order in to increase their subscriptions. The mobile only subscription plans is further helping in bringing new customers on the platform. As long as the theatres are closed things look pretty good for OTT players.

There have been debates doing rounds that the movies going for direct-to-OTT release are not making as much money as they would have made on a theatrical release. While this is something that has no evidence to support the argument because there is no proof of which movie would work at the box office and which would be a flop. And therefore the movies that might have flopped in the theatres would actually be making profits by releasing directly on OTT. The argument is true only for those which would have been a sure shot hit, but who’s to judge that when the films didn’t actually make it to the theaters.

Another important thing to take note of is that as per industry estimates, traditionally, the theatres’ or box office collections have accounted for around 60 to 70 per cent of the film’s overall revenue. The rest is made up by the selling of satellite rights. The movies which are super hit at the box office, their satellite and OTT rates are quite high. But with movies going for direct OTT release, the OTT rights constitute almost the entire revenue (80 per cent), while satellite rights may contribute 15-20 per cent, depending on the film. This is one major reason why big budget films like Sooryavanshi, 83 etc. are not going to release on OTT.

There is no doubt that when things resume to being normal people will want to go back to theatres for the overall experience. This doesn’t mean that OTTs would loose customers because the amount and variety of content they provide would convince people to stay on the platform. This lockdown has just helped accelerate the process of bringing more and more people on board who were initially hesitant or did not have the time. There is the advantage of cost saving which is the biggest concern for a common man. Also being able to binge watch premium content being at home in your pyjamas is the preferred choice of the millennials. So the best case scenario seems to be where both the theatres and OTT platforms co-exist catering to the needs of people as and when required.

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