What’s inflating the costs of south film industry: DSPs or exorbitant star salaries?

While producer SR Prabhu has detailed the stance of the south Indian film industries, a distributor has hit back at the claims he's made.
What’s inflating the costs of south film industry: DSPs or exorbitant star salaries?
What’s inflating the costs of south film industry: DSPs or exorbitant star salaries?
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The ongoing standoff between the south Indian film industries and digital service providers (DSPs) has thrown film releases into uncertainty.

While the film industry representatives claim that DSPs overcharge them for their services, not everyone is convinced.

Why film industries are protesting

Producer SR Prabhu of Dream Warrior Pictures had recently written a detailed post on Facebook about changing technology and the increasing costs over the years. Starting from the time when theatres used to play film reels on projectors to the present era when DSPs transfer content through satellite, he explains how costs went down with the advent of technology initially.

However, SR Prabhu goes on to say that this situation did not last for long. He alleges that certain companies exploited the ignorance of producers, distributors, and theatre owners. "In the last 10 years, in spite of investing 1500 crores, 90% of theatres don't have their own projectors, they've also lost the revenue they used to earn from advertising for generations. I consider this to be the biggest scam to have taken place in the film world in recent times."

Detailing the history of how digital service providers convinced theatre owners to shift to the new technology, SR Prabhu says that the Visual Projection Fee (VPF) for a stipulated period was the agreement reached by the two parties world-over. By this agreement, a certain amount would be paid to DSPs for five years, after which the theatre owners could consider the newly installed digital projectors to be their own. However, he claims that certain DSPs catering to the Indian film industry did not play fair and that apart from eating into ad revenue, they've also increased the VPF.

Apparently, when theatre owners and industry people asked the DSPs why they were still charging VPF, the DSPs claimed that the agreements signed did not mean transfer of ownership and were only related to providing services. He further alleges that DSPs have "bought" the silence of some theatre owners by giving them incentives, thereby keeping them off the battle.

Claiming that the cost due to VPF was way too high to bear, SR Prabhu asserts that this is why the film industries are standing united to combat the DSPs.

The other side

In response to SR Prabhu, distributor Tirupur Subramaniam has issued a WhatsApp voice message, hitting back at his post.

"You've spoken about VPF, which forms 2-3% of the total cost incurred by a producer, in such detail, SR Prabhu, why didn't you say anything about the production cost which forms 70%? No, I won't say production cost - it is the salary of the top stars and technicians. The reason why the film industry is going towards destruction is this salary and you haven't spoken about this even once," he says.

Tirupur Subramaniam further adds that previously, actors used to charge the same amount for even a period of 8 years but these days, rates escalate to exorbitant amounts in very short periods of time.

"Those who were asking for 10 lakhs are now asking for 20 crores!" he exclaims.

The distributor says that SR Prabhu wouldn't speak about this because he's a producer and cannot afford to discuss actors or technicians. "You say you want transparency, so why aren't you speaking about this?" he asks. He further adds that if there should be true transparency, the Producers' Council should be willing to share true details about how much money a film had made at the box-office.

"Let's show real figures, let's not deal with black money. Let's all have peace of mind. You don't ask why it's so difficult to make a film but you talk about Qube," he says.

Subramaniam adds that he hasn't taken money to speak this way and that he has no connection with Qube beyond a professional relationship.

Senthil Kumar, co-founder of Qube, has rubbished the claims of the film industries.

Speaking to Sreedhar Pillai for The Hindu, Senthil Kumar has said, "Our VPF rates are the lowest in the world and the most flexible. Apart from the flat rate of ₹22,000, we have multiple options as low as ₹325/show. Like mobile phone plans, producers and distributors choose what’s best for each of their release theatres, thus bringing their effective cost down to just half the flat rate. What’s more, we offer digital cinema mastering services, content delivery, digital rights management and long-term archival... all for free. These are all considerable costs in the rest of the world. Finally, the digital cinema release costs here are between 0.3% to 1.7% of a movie’s total costs, so to suggest that these are draining the industry’s profits is preposterous.”

According to the grapevine, the current stand-off is also because some producers themselves are interested in getting into the DSP business and that this is an attempt to break the stronghold of companies like Qube and UFO.

The last round of talks between the film industries and the DSP will take place on February 23. If these talks fail as well, there will not be any new south Indian film release from March 1.

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