Kollywood's VPF row: Digital service providers Qube and UFO say demand unfair

While the DSPs have agreed to waive off the VPF for the month of November, when theatres will reopen, the fight is far from over.
Booking counter of cinema theatre
Booking counter of cinema theatre
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The conflict over the Virtual Print Fee or VPF has once again come up in the Tamil film industry even as theatres have been allowed to reopen after they were shut down in March this year. VPF is the fee that producers agreed to pay for theatres to acquire digital cinema equipment when the film industry moved from film reels to digital prints, and is paid per screen. 

Since 2018, Tamil film producers have been saying that they do not want to pay the VPF any more. Following a standoff that lasted for over a month in 2018, the two parties came to an agreement with a reduction in the VPF. But now, the producers want to do away with the fee entirely.

Speaking to TNM, Senthil Kumar of Qube Cinemas, a major Digital Service Provider, alleges that Tamil film producers are using the pandemic situation to set unreasonable terms. He further adds that under the current arrangement, there is no possibility of the VPF being waived off ever.

"The producers are cherry-picking the best parts of the Indian VPF scheme vs the US and other international VPF schemes. In those schemes, they have what is called the recoupment model where the DSP invested in the projectors and they also paid for the maintenance and upkeep of the projector, collecting VPF until they made a certain return on their investment. So if they invested 80,000 USD in a projector, got 850 dollars as VPF every time a movie released, and paid 4,000-5,000 dollars for maintenance, all these calculations will come up on an Excel sheet until they make something like 7% return on their investment. Then we say that recoupment is achieved and the VPF stops," he explains.

In September this year, the Tamil Film Active Producers’ Association, headed by veteran director P Bharathiraja, had written a letter to the Tamil Nadu Theatre Owners' Association, with six demands. The letter was signed by over 51 producers, including Lyca Productions, Vels International, V Creations, Studio Green, Y Not Studios. The first demand on the list was about VPF.

“For the past 10 years, the producers have been paying the VPF for the Qube/UFO in theatres. This has now exceeded the investment costs. Going forward, we will not be paying this fee,” the letter said.

However, Senthil says that in India, the VPF charges are nowhere so high (850 dollars is around Rs 63,000) for the DSPs to have realised their investment costs. The VPF here is only Rs 10,000 (per screen) on average per movie, he says.

Further, the agreements signed do not specify an end date for the VPF to be paid.

"What we're doing here is not the recoupment model but the usage fee model," Senthil adds, pointing out that Qube still has a Rs 120 crore loan to pay off for their investment.

Rajesh Mishra of UFO, another major DSP, says, "Earlier, before digital prints, distributors had to send the print to the cinemas and that was never questioned. The cost of the print at that time was Rs 60,000. Now the average cost is barely Rs 10,000."

He further says that the equipment used previously had mechanical parts and would last for 30 years with low maintenance costs but the projectors used now are highly expensive and their life span is less than 10 years because they have electronic components.

Tamil producers have pointed out that though the DSPs brought down the prices after the strike in 2018, the rates have gone up again and that this is why they decided to do away with the VPF entirely. Rajesh and Senthil, however, say that it's not possible to stick to the same heavily discounted rates forever.

"There is a continuous investment in these things," says Rajesh, adding that the film industries have benefited from the digital print technology because their films now enjoy a much wider release.

Following pressure from the Tamil Film Active Producers Association, Qube and UFO, have decided to waive the VPF for new films released in the month of November alone. The charges for logistics of content delivery, KDM (Key Delivery Message) and relevant taxes, however, will continue to be charged. But, this is only a temporary resolution and the fight isn't over. Rajesh adds that the demands from the Tamil film industry are not only about VPF.

"They have a clutch of demands, from us, the theatre owners and the government. It has become normal for them to raise such demands during periods of low activity. Unfortunately, this situation is not out of anyone's choice. It's not the right time to hamper the opening of the cinemas. It cannot be a unilateral decision," he says.

Senthil echoes his views, noting that the film sector has been badly hit due to the coronavirus pandemic.

"We're all partners in this business. Producers, distributors, theatres and digital service providers. Cinema industry has been one of the most affected industries in these times. At this stage, when we're all bleeding and we're about to die because we don't have any more money for salaries, this is the wrong time to do that. We need to help each other, that's the moral thing to do. We can start our internal squabbles later when we're doing better," he says.

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