Has the era of digital streaming irreversibly disrupted the Tamil cinema business model?

Even before Coronavirus forced everyone indoors, it was clear that the single biggest game-changer in the Tamil industry over the last couple of years has been the prompt delivery of theatrical films on OTT platforms. Digital platforms such as Amazon Prime, Netflix, Hotstar, Zee5, Sun NXT have all gone regional in a big way, and the Tamil film industry continues to be one of their biggest targets. In fact, a paradigm shift seems to be taking place in the movie business, with producers starting to seriously consider the OTT revenue, even before planning the release date, as it is proving to give guaranteed returns, compared to theatricals, which is said to be risky and unpredictable. Earlier, Tamil film producers used to bundle satellite TV and Internet rights and give them to the television broadcasters. But now, producers see greater monetisation in dealing with digital platforms separately. It's reckoned that internet rights of Tamil films, which were 10 per cent of satellite rights in early 2017, are now valued at almost 60 to 65 per cent of satellite television rights for a movie with a big star.

To put it into perspective, the biggest hits of the last 18 months, including star-vehicles like Petta, Viswasam, Bigil, Nerkonda Paarvai, and Darbar, have all been made available for streaming, within weeks of release, with rights flying off the shelves at humongous prices. In an industry not always known for its acceptance of changing technology, how did this sudden and significant transformation take place?

One reason attributed to the upsurge of OTT platforms is the boom in mobile internet technology, with cheaper and smoother connectivity. A huge youth demographic has now easier and instant access to smartphones than to television. And the newer generation of Internet-savvy producers seems to have made their peace with the evolution of entertainment content delivery. Frankly speaking, this OTT booster shot couldn't have come at a better time for the industry. Rewind a couple of years, and you will see the market had virtually crashed following a hike in ticket prices and dwindling box-office numbers. Till ten years back, a big Tamil film needed to run in all centres for 100 days to recover its investment. Now, the same film typically takes 10 days or, at the most, two weeks to cover 95 per cent of its theatrical run, because it is so widely released. A big-budget movie hits over 1,000 screens worldwide and 85 to 90 per cent of its total theatrical revenue is said to be coming in the opening week.

In this business atmosphere, the release window between the theatrical and the OTT platforms has recently emerged as a serious bone of contention. Over the past few months, the release window has effectively shrunk from three months to one month. Exhibitors were left fuming when Karthi’s hugely-successful Diwali release, Kaithi, was released on an OTT platform, exactly 30 days after its theatrical release. As many theatre chains are against films being simultaneously available in theaters and OTT platforms, all the shows of Kaithi were stopped immediately after the film's streaming debut. A month later, in December, Venkat Prabhu's production, RK Nagar, which was lying in cans for quite some time, was made available on an OTT platform, even before its theatrical release. Though the makers pulled it out from the portal within hours of its release, citing some misunderstandings, many had watched the film by then. Similarly, Rajinikanth-starrer Darbar came on an OTT platform before the 50th day of its theatrical release, and Pattas, starring Dhanush in the lead, started streaming on its 31st day.

Distributors and theatre proprietors, in general, are unhappy with this new trend of rushed OTT release, as they feel it could have a long-term effect on the movie-watching habits of the audience, in addition to the immediate effect on theatre footfalls.

The representatives of the Chennai Kanchipuram Tiruvallur District Film Distributors Association recently took up this issue in their board meeting, and passed a resolution that all Tamil films should be made available on OTT platforms and TV channels only after eight weeks and 100 days, respectively, after their theatrical releases. T Mannan, the secretary of the association, explaining the decision, says that they intend to put down this 8- week OTT window clause in the legal agreement pertaining to the distribution, for both small and big-ticket films. "The number of screens that are showing the film at the time of OTT release should never be the talking point here. Films like Viswasam and Kaithi were released on the OTT platform, when they were still generating considerable footfalls. This 8-week dictum had always been in place, but now, a few producers are keen on breaching it. We will not let this self-destructing trend continue," he says.

The producer of Kaithi, SR Prabhu, who started the trend of releasing his films a few weeks after the theatrical release on OTT platforms with Kaithi, however, remained unperturbed. "In the current business model, the producer almost gets nothing as revenue from cinemas that are running it for the third or fourth week. So why should I not make my film available on OTT platforms on the 31st day? I can earn a substantial amount of money — much more than what I will earn by screening the film in theatres in the third and fourth weeks - by making it available on OTT platforms in a month’s time." he says. Prabhu also adds that the distributors, along with the exhibitors, should hold talks with the producers and understand their points of view, before coming out with official statements. "A producer is the one who owns the film. Business happens at least a year before a film's release. When such long-term business models are under contention, rash and myopic decisions won't serve the purpose," he says.

Tiruppur Subramaniam, the president of the Tamil Nadu Theatre Owners Association, however, welcomes the decision taken by the distributors, and agrees that adding the clause to the legal agreements is the way to go. "The 8-week window rule has been followed by Bollywood for a long time now. It also happens to be a global standard for many industries. If the biggest film industry in our country can follow it without any confusion, why can’t we follow it?” he says.

SR Prabhu, on the other hand, negates this argument saying that the business model is completely different in Bollywood. "In Hindi, they have different policies regarding the third week, fourth week, and subsequent week shares to the producer. If the 4-week window has to become 8 weeks, then many things have to change here. For instance, the producers' share percentages have to be urgently reconsidered. If you can’t stop the bigger piracy problem, and can’t give me a better share in the revenue in the later weeks, you shouldn't be stopping me from monetising my product the way I deem fit," he says.

Rakesh Gowthaman, the owner of Vettri theatres, Chrompet, believes that there is more than what meets the eye in this issue. "Take Vijay's Bigil for instance. The film got an OTT release on the 48th day of its theatrical release. But right from the third week or so, the news that the film will be available for streaming from this date, started spreading like wildfire. So, a considerable section of the audience would have been naturally tempted to skip the theatre experience, and wait for the release on the streaming platform," he says, while also stressing that smaller films without big stars are equally affected by this trend. "Such films, which rely on content, usually pick up steam only by way of good word of mouth. And when this WOM is happening, if the platform advertises that the audience will be able to stream it from the third or fourth week, its only natural that the drive to go to the theatre diminishes. So, what could have been a 20-day run drops to a 4-day or 5-day run in the big screens," he reasons out.

Nikhilesh Surya, the owner of Rohini Silver Screens, Koyambedu, also echoes the same sentiments. "I am talking about a cultural shift here. Once you know you can anyway watch the highest-quality version of the movie online in the new future, the urge to travel to the cinemas will obviously go for a toss. The audience, which would otherwise go to a theatre to watch a movie that has generated considerable buzz, would now prefer to stream the film," he says.

A spokesperson of a major multiplex chain, under conditions of anonymity, substantiates Nikhilesh's claims. "We do get 7-8 'spectacle movies' every year that everyone would want to see. But those films of upcoming heroes, who have the potential to command considerable box office numbers, but aren’t big-ticket ones yet, will take a hit," he says.

G Dhananjayan of Creative Entertainers, who has been in the shoes of both the producer and the distributor, is quick to dismiss these arguments, though. "I know for a fact that the OTT platforms come out with the release dates only a day or two before the actual streaming begins. That's how the announcement for the online releases of Darbar and Pattas happened. There's absolutely no logic in the claim that OTT streaming will affect long-term audience behaviour," he says. Dhananjayan also points that cinema halls in the west have been coexisting with OTT platforms for the past 15 years. "Despite the demand for OTT, the theatre-viewing habit will never die. The only factor that determines theatre footfalls was, is, and will be the quality of the film. You can't attribute the diminished audience response to any other thing," he opines.

Dhananjayan also says that if theatre owners give a written guarantee to producers that they will screen their films for at least 40 days, then the possibility of deferring OTT release can be considered. "Are the exhibitors guaranteeing an 8-week run for a film, while signing the deal? At least 4 weeks? Theatres run a film based on the audience's response. They are all ruthless when it comes to removing even a critically-acclaimed film from the listings. When that's the case, there is a guaranteed revenue coming through OTT platforms. Why would producers throw it away? If a theatrical run guarantee is considered an impossible thing, stopping us from releasing our films on OTT platforms is also impossible," he says.

Rakesh of Vettri Cinemas feels that such issues can be solved by adding subsections to the 8-week window umbrella clause. "Let's assume that a film has been removed in more than 90 percent of theatres within a week. In that case, the rushed OTT release might make sense. So, a subclause that such films alone can be screened after 30 days can be formulated. But, those are all intricacies. The 8-week window period should be the general consensus," he says.

Arun Thyagarajan, CEO of Sathya Jyothi Films and the producer of Viswasam, which got an OTT release on its 45th day, says that any decision on this issue should be in the best interests of all the stakeholders. "This whole OTT eating into the theatre business is just a myth. Time will bust it, just like the way the myth that two big films cant release on the same day was recently busted. Both Petta and Viswasam did well on theatricals, OTT and satellite streaming. Everybody in the trade got rich dividends. Also, the film that's believed to have it started it all, Kaithi, did exceptional theatrical revenue (close to 24 crores) before it got an OTT release; and so the argument that its theatre footfalls were subsequently compromised is rendered null and void. But, it's good that the debate has now started. An amicable solution, which ensures a level playing field in the industry, can definitely be arrived at," he says.

Ruban Mathivanan, the owner of CK cinemas, Porur, thinks that the hurried OTT-release trend, despite seeming like the magical cure-all, might turn out to be counter-intuitive in the longer run. "I understand that the producer has complete rights over his/her product. But, they shouldn’t forget that 70 per cent of the overall revenue still comes from theatres. Disrupting that conduit will prove costly," he says.

Shashikanth of Y Not Studios, the producer of Game Over, which started streaming on Netflix in its 9th week of release, feels that the biggest problem is trying to find a "one-size-fits-all" panacea to this multipronged issue. "Every film should be dealt with on a case by case basis. If the producer is willing to release the film at his own risk, then, he must have the authority in deciding the OTT release date. If the producer opts for the 'minimum-guarantee' model and receives money from the theatre owners before release, then I guess the distributors and exhibitors should also have a say on the OTT release date. In the latter case, the stakeholders should sit down and formulate an inherently flexible model. Having said that, you can't actually stop a section of the audience from migrating to the streaming platforms. Change is inevitable," he says.

With the producers and the distributors still divided over the issue, the niche curated streaming service, MUBI, has opted for a unique promotional strategy that seems to have hit the sweet spot. Subscribers to the streamer are getting a free ticket to watch a hand-picked film in one of the leading multiplexes chains every week. Is this sort of coexistence the way to go? Only time will tell.