There is a limit to how much producers can negotiate with OTT platforms since they find themselves in a tough spot with few options.

Jyotika in Ponmagal Vandhal poster in laywer robe and Jayasurya and Aditi Rao Hydari in Sufiyum Sujathayum
Flix Cinema Monday, May 18, 2020 - 16:27

At least seven Indian films will directly release on the online streaming platform Amazon Prime Video in the coming months. These include five south Indian films -- Ponmagal Vandhal (Tamil), Penguin (Tamil and Telugu), French Biriyani (Kannada), Law (Kannada) and Sufiyum Sujathayum (Malayalam). With theatres shut due to the lockdown necessitated by the COVID-19 pandemic and uncertainty over when they will reopen, many producers are considering going the OTT route to cut their losses.

But, how much money can a film make as a direct OTT release? Baahubali producer Shobu Yarlagadda reckons that a small budget film will be able to recover its cost of production or at least a good fraction of it with a direct OTT release.

"The price varies from project to project. Small films have a smaller budget and if they have good content, the OTT price might come close to the production cost. But for big budget films, OTT release alone won't cover the cost of the production. So for large films, theatrical release is the only way out. For smaller films, they can look at how much they're getting from OTT, satellite and other non-theatrical rights, and decide if they're going to be happy with the amount covering 80% or 120% of their production cost. Or they can wait for theatres to open and see if people will come to watch the film. A producer has to weigh all the factors and make a decision based on the merit of the film because nobody can tell what the future holds now," Shobu explains.

Suriya's 2D Entertainment became one of the first producers in the Tamil film industry to opt for a direct OTT release.The Jyotika-starrer Ponmagal Vandhal was due for release in March this year but got postponed due to the lockdown. A Tamil producer told TNM that the film was sold to Amazon Prime Video for Rs 5 crore while the budget was Rs 8 crore. An industry tracker, however, says that the film fetched Rs 3.5 crore on OTT and was made on a budget of Rs 5 crore. Whatever be the actual figures, it appears that between 60% to 70% of the total cost has been recovered through a direct OTT release.

A producer from the Malayalam film industry who did not wish to be named, says that a direct OTT release can even make double the price it would have otherwise fetched if the film had first been screened in theatres.

"Exclusive content always gets prime spots and prime pricing. There's no doubt about it. They (Amazon Prime Video) approached us for a direct release of one of our films. But we chose not to do it as a sign of solidarity with theatres, considering they have been part of the chain in all these years," the producer says.

However, the producer adds that smaller films have routinely struggled to get a theatrical release, and so, theatre associations should not resort to intimidating filmmakers who want to go in for a direct OTT release.

"Sufiyum Sujathayum is a Malayalam film that's going for direct OTT now. For that director's first film (Shanavas Naranipuzha) Karie, they went around asking theatres to give at least one week of screening time which they didn't give. That's because at that time they had a lot of superstar movies that could have earned them more money. Many theatre owners don't care about cinema, they care about their profits," the producer says.

Shobu, too, believes that theatres should come around to accepting the new reality.

"In normal circumstances, if theatres object to films going directly to OTT, I can understand the concern. But in this situation, it's like saying 'I'm sinking, you also have to sink with me'. For many producers, if they don't exit now, the interest burden and the final cost might be too large for them to bear the losses. It's a matter of survival and continuing in business. Going forward, there is no guarantee that people will come to theatres and watch films. Not that this will be the case forever, but immediately after they open up, I don't see people flocking to theatres. There will be several government restrictions. Especially for small films, it will be a challenge to get audiences to theatres until this fear is gone and people are really comfortable coming to theatres. Producers have no choice but to go directly to OTT," he says.

In any case, there are many big budget films which aren't looking for a direct OTT release because their losses will be steep. So, it's not as if theatres will not have any content to screen when they eventually reopen.

"Big budget films will have to wait for the situation to settle, and include the costs in their overall costs. We have very little choice," admits Shobu.

The Malayalam producer adds that there are two ways to sell a film to OTT platforms. One is an outright sale while the other is pay-per-view. Citing the example of a blockbuster Malayalam film which came out in recent times, the producer says, "The production house didn't sell the rights of the film to an OTT platform before the release, which is always a disadvantage. The price always comes down after release. They negotiate because they know we want to sell the movie."

OTT platforms also enter into tie-ups with production houses if they believe that the content coming from the latter can be trusted.

"The price of the film varies. Stars are important. However, since OTT platforms have an audience that gives more importance to the content than stars, the content is really important. Since we gave them a good film, they will approach us themselves for the next one.The rate can be anything from Rs 1 crore and upwards. A Mohanlal film will probably fetch Rs 5 crore," says the producer.

In Hindi, Shoojit Sircar's Gulabo Sitabo and Anu Menon's Shakuntala Devi have announced that they will release directly on OTT. The first stars Ayushmann Khurrana and Amitabh Bachchan while the second has Vidya Balan in the lead. Both films are likely to have enjoyed a fair to big opening in theatres because of the cast and the content. However, the producers have taken the call to release the films directly on OTT, and Gulabo Sitabo is rumoured to have fetched Rs 35 crores.

In the south, big films like Vijay's Master and Mohanlal's Marakkar: Arabikadalinte Simham were supposed to have been released by now but the makers are expected to wait for the lockdown to lift.

Shobu says that OTT platforms don't reveal what factors they take into consideration for fixing a price. 

"But they have an internal model by which they work. One is obviously the cast, how well-known they are, what were their previous successes, the director, the production house and their track record. And of course, the genre and the story. They'd also like to watch a portion of the film to make the final offer. They look at how the film can be marketed, how different it is from other films, what's the hook and so on," he says.

Since production houses are now opting for direct releases, the price at which these films are sold is likely to go up. However, there is a limit to how much producers can negotiate with OTT platforms since they find themselves in a tough spot with few options. 

"Right now, it's a monopoly for Amazon Prime Video because only they're buying content in India now. Netflix is not and Hotstar buys a few here and there, but it's mostly in partnership with Asianet. So if you sell satellite rights to Asianet, Hotstar will take OTT rights. It's still murky and we're figuring out things in the OTT space," says the Malayalam producer.