OTT spurt may not affect cinemas in India, says Elara Capital report

India has been among the fastest-growing for over-the-top (OTT) platforms as the Covid-19 pandemic has pushed adoption of digital significantly in the last one year. However, a new report by brokerage Elara Capital says that cinemas will continue to remain strong in India and other markets within the Asia-Pacific (APAC) region, led by the need to socialise.

This stands in contrast with the trend that prevails in the west, where the influx of digital platforms such as Netflix has been stronger and OTTs now are big players in these markets.

"Cinemas remains an outing and socialising trend in Asian countries such as Singapore, Taiwan, China and India. This means there is relatively low or no threat of OTTs to cinemas, unlike the US and UK where the OTT trend is stronger," Karan Taurani, vice president, research, Elara Capital, says.

Already, 88 per cent of screens in the APAC region have reopened following the pandemic and lockdown, while 38 per cent screens in the US and 24 per cent in Europe Middle East Africa (EMEA) have reopened, Elara Capital says.

Of the 9,600 screens in India, 70 per cent are single screens and 30 per cent are multiplex screens. But multiplexes earn more than half of India’s theatrical revenues, experts tracking the market said, putting pressure on them to ensure fresh content keeps coming in for footfalls to grow.

Multiplex operators argue that the 50 per cent seating cap is a challenge and should be lifted for the exhibition business to bounce back to normalcy. Though Tamil Nadu (TN) had announced on Monday that it would permit 100 per cent occupancy in theatres, concern over an increase in Covid-19 cases prompted the Ministry of Home Affairs (MHA) to write to the state government to revoke its order. On Friday, the TN government withdrew its permission for the same, though additional shows have been allowed.

"Fifty per cent capacity is difficult to sustain," explains Devang Sampat, chief executive officer, Cinepolis India, a multiplex operator. "Especially when you are talking to producers for release of big movies," he says.

Audience turnout is crucial to most exhibitors, since their discussions with film producers hinge on how many people will make their way to cinemas to watch their movies. This is because around 40 per cent of a film’s revenue comes from the box office, which is, in turn, dependent on footfalls and ticket price.

While the regional movie markets including Bengali and southern are seeing the release of blockbusters as movie-goers slowly make their way back to theatres, it is Bollywood that is yet to come out with its slate of big films for the year.

Kunal Sawhney, senior vice-president, operations, Carnival Cinemas, says that Akshay-Kumar-starrer Sooryavanshi may be released in March increasing the prospect of other Hindi blockbusters to follow suit.

“Hindi film producers are watching the turnout for regional blockbusters and even Hollywood releases,” says Sawhney. Among big regional releases this month is Vijay-starrer Master in Tamil on January 14, which coincides with Pongal.

Last month, box-office collections of Tenet, starring Dimple Kapadia and John David Washington, were high, prompting multiplex operators to anticipate a quick recovery for the sector.

Given the 50 per cent seating cap, big-ticket movies will have to be shown in double the number of theaters or the number of shows will have to be doubled, sector experts say. This will make it difficult for distributors to keep a tab on their budgets, which explains the reluctance of Hindi producers to release their blockbusters yet.

Among the big Hindi releases expected this year are 83, starring Ranveer Singh and Deepika Padukone, Radhe, featuring Salman Khan. And Laal Singh Chaddha featuring Aamir Khan and Kareena Kapoor Khan.

Apart from this, there is Thalaivi, starring Kangana Ranaut, Bunty Aur Babli 2, featuring Saif Ali Khan and Rani Mukerji and Jayeshbhai Jordaar, starring Ranveer Singh and Boman Irani.