Will movies releasing directly on OTT platforms become a norm post-Covid? Experts think otherwise
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Amazon’s announcement evoked mixed reactions from the multiplexes.

Will movies releasing directly on OTT platforms become a norm post-Covid? Experts think otherwise

Amazon’s announcement evoked mixed reactions from the multiplexes.
  • Amid the nationwide lockdown, production houses are releasing their movies directly on OTT platforms and have skipped the theatrical window run.
  • Multiplexes are expressing their disapproval of this trend on social media and requesting content creators to not skip the traditional windowing pattern.
  • We reached out to industry experts to find out what this means for the industry and if this could be a long-term trend.
The on-going COVID-19 crisis has forced the multiplexes to shut down. As per Ormax Media’s Shailesh Kapoor, the pandemic has led to a whopping loss of Rs 2500 crore, which might accumulate upto Rs 5000 crore by the time theatres reopen.

As a result, for the first time in its history, production houses have skipped the theatrical window run for a few Indian movies and are now releasing them directly onto OTT platforms.

To be specific, Amazon Prime Video announced that it has acquired global streaming rights for seven upcoming Indian movies in Hindi, Tamil, Telugu, Malayalam, Kannada, on its platform between May and August. It includes Gulabo Sitabo, Shakuntala Devi, Ponmagal Vandhaal, Penguin, Sufiyum Sujathayum, Law and French Biryani.

Amazon’s announcement evoked mixed reactions from the multiplexes. They expressed their dismay with the production house’s decision to go directly for streaming services.

The Producers Guild of India responded to the multiplexes ensuring that it ‘would work extensively to get audiences back to theatres once the cinemas reopen.’

INOX and PVR, both, issued a public statement reacting to the same development. However, both of them had a different approach.

Karthik Srinivasan, Social Media and Brand Expert, uploaded a blog highlighting how INOX’s outburst teaches us a lesson on framing in corporate communications. He compared both the letters and said, “In principle, INOX’s argument has merit. But the way it frames the argument demonstrates arrogance and holier-than-thou stand. When someone or a corporate entity showcases that, it becomes a natural sign for the reader to mentally bring down that arrogance.”

We further spoke to experts to find out if this could be a long term trend and how it might affect the stakeholders, here is what they said:

Jehil Thakkar, Partner, Deloitte India:

This is a solution to a short-term need of the film industry which is getting by financial difficulties. It is a win-win situation for the OTT players who are looking for content as consumption has gone up and filmmakers who have ready products which are due for use. In the longer term, assuming things return to normal, I don’t see this being a paradigm shift. More deals will happen now than earlier but given that India’s 65-70% of revenue depends on box office collections, I don’t see this becoming a long-term trend. There may be a few odd films that go directly to OTT. They have commissioned movies before and it’s no different right now. It is just that the windowing is changed from going to theatre-first or OTT second, vice-versa.

Shailesh Kapoor, Founder and CEO, Ormax Media:

I don't see this as a long-term trend but a short-term one, created because of the indefinite closure of theatres. Once theatres re-open, we can expect old business models to take over. Though some small films may be tempted to take the digital route, most films with a medium or big scale will go for theatrical releases. Even the OTT platforms are currently paying a premium for direct OTT releases because the lockdown gets them more captive audience. This will not be the case when life begins to get back to normal.

Harikrishnan Pillai, CEO and Co-founder, TheSmallBigIdea:

OTT-first release will depend on the status of social distancing. If it continues even at half the current intensity, then this is the new norm. If this continues, the theatre/multiplex business will definitely be affected quite badly. But you can’t attribute this to only the film deals. The film deals are a result of the current situation which anyway renders malls and places of mass gathering redundant for a while.

Disclaimer: TheSmallBigIdea is a party to some of these film deals/rollouts. The opinion might be biased.

Karan Taurani, Vice President - Research Analyst, Elara Capital:

I think it is a continued phenomenon. These are primarily small-budget movies which have been released directly on digital. None of the large films have announced any sort of digital release. This was an expected move -- nothing surprising on that. More announcements will follow as many films that were shot before the lockdown are going through the post-production work, these will be small-budget in nature. Usually OTT don’t pay a mark-up for more than 15-20% over the cost of production. However, now that they don’t have content right now, it is more of a desperate measure. They have given a very hefty premium to these movies to release directly on digital. So it is a win-win situation for the OTT platform and producers. But I think this trend is not sustainable once the cinema opens up. It will take a lot of time to come on-track after opening up but if it at all cinema occupancy comes back in place, I don’t think movies will go directly on digital.