Are OTT premieres for new films a viable option for all ventures?

The ongoing tussle between exhibitors and producers over skipping theatrical release for a direct OTT release has brought forth the debate whether direct OTT is a viable option for all films.

While experts say small films can benefit by taking the direct OTT route, this may not be the case for big films.

Let's take Ponmagal Vanthal's example. Reportedly, the film has been made at a budget of Rs 8 crore and the film’s digital rights have been sold to Amazon Prime for Rs 9 crore. While the film is not staring at losses, the profit could have been higher if the film had released in theatres first. Nonetheless, it is one of the best possible scenarios for a small film like Ponmagal Vanthal.

However, when it comes to big offerings, losing out on box office revenues, which is the biggest contributor to a film’s overall revenue, plus collection from overseas markets is not viable.

Take the example of Akshay Kumar's Laxmmi Bomb, which is reportedly made at a budget of Rs 50 crore and may take the direct OTT route. But will a digital premier be feasible for the film in terms of revenues?

Digital rights for Indian films have been in the range of Rs 25 to Rs 30 crore so far.

Take the example of Ranbir Kapoor-starrer Sanju. The film was made at a budget of Rs 96 crore and its digital rights were sold for Rs 20 crore. Here the economics for a direct OTT release doesn’t work and this shows that films need theatrical release. Sanju earned over Rs 334 crore from domestic box office alone. The film’s overseas collection was around Rs 162 crore.

Similarly, digital rights for Deepika Padukone’s Padmaavat was sold for around Rs 25 crore, while the film at the India box office collected Rs 282 crore.

OTT premieres a good release option for small films

On the other hand, experts say for small films, a direct OTT release will mean wider audience and the film can save up on print and advertising cost. For small films, theatrical release is an expensive affair especially if the film has no known names as it gets difficult to get a distributor’s backing. So, those who work on micro-budgets consider video on-demand platforms a good deal.

According to a 2020 EY report, around 50 small and low-budget films directly released on OTT platforms in 2019.

Digital rights continued to grow last year with an increase in revenues from Rs 1,350 crore in 2018 to Rs 1,900 crore in 2019 driven by a growth in both rates and volumes of films purchased.

Another aspect is that after theatres were shut down because of coronavirus lockdown, plenty of films are waiting to be released in theatres — both big and small. Due to this content overload, the smaller films may not get the right exposure. Fewer screens, odd show timings will prove detrimental.

OTT premieres can save the day for smaller films but such a trend, especially in the COVID-19 times, could hit the exhibition industry hard, which is already reeling under the pressure of the escalating coronavirus situation.

This is why the Multiplex Association of India (MAI) issued a statement on May 5, urging all studio partners, producers, artistes and content creators to respect the exclusive theatrical window.

“MAI would like to urge all studio partners, producers, artistes and content creators to support the cinema exhibition sector, a vital part of the value chain, by holding and releasing their films in the theatres, once they open again,” the association said in a statement.

The statement comes at a time when many filmmakers and producers are looking at taking the OTT route for a direct release.