Updated: May 21, 2014 16:23 IST

Is the big screen enough?

Sudhish Kamath
Comment (5)   ·   print   ·   T  T  

As Kamal Haasan sticks to a conventional theatrical premiere of Vishwaroopam instead of DTH, industry insiders open up on why the market is not ready for change.

When Kamal Haasan’s Vishwaroopam releases in theatres on January 25, it begins a journey in recovering its budget of Rs. 95 crore. One of those rare cases where hitting 100 crore is only halfway to recovery. Yes, the film needs to collect Rs. 180 crore to break even, with only satellite and international rights for a cushion, now that the DTH release date of the film and the pricing is still undecided.

Thanks to the entertainment tax of 30 per cent in the cities, out of Rs.120 per ticket, the producers will make Rs. 40 in the city after the distributor/exhibitor share. The makers would make a little more in towns and villages since the entertainment tax is lower (20 per cent) and their share is higher (60-70 per cent).

To break down the math, Vishwaroopam needs to sell over 3 crore movie tickets if the film were to depend on theatrical revenue alone, thanks to government regulation of ticket prices, cap on number of shows and the high entertainment tax.

“You want to hit full capacity during the first four days and also price the ticket according to demand but you don’t have that option,” says a distributor.

Also, with Vishwaroopam getting a U/A certificate, the producers are not eligible for exemption provided only to U-rated films that protect and preserve Tamil culture (see below for more on the government policy).

“An exclusive theatrical window remains the most viable option for filmmakers around the world to recover costs,” the distributor observes.

“Just because technology gives you an option does not mean it’s necessarily good for business. DTH has existed for years in the U.S. and if it made business sense, it would have eventually happened.”

Admitting it may be a good thing for the customer who is provided with the choice to watch it at the theatre or at home, the DTH premiere may not make business sense for the producer, he says. “The sum of the parts will be less than doing it in a staggered manner. The industry has settled on a model that’s tried and tested... Theatrical release is a great launch platform for revenue to be earned from other avenues. When you go straight to TV, the excitement of a release is not there. But this case has made the industry see that there is an opportunity to monetise the film through DTH which was earlier sold along with satellite rights,” the insider believes.

“The truth is not black or white. The exhibitors and distributors also have some valid points,” says Shakthi Girish, editor of Galatta. “I laud Mr. Kamal Haasan’s efforts to revolutionise the business but his team of advisors should have given him a clearer picture about the potential of DTH in the current scenario. Perhaps, another release and pricing strategy that was acceptable to all parties involved could have avoided the controversy. That said, it’s imperative that we explore and adapt to changing distribution models for further profitability of the industry and reduce piracy.”

Despite the possibility of tracking the fingerprint on DTH to the address of the pirate, many theatre owners are not convinced.

“This is an immature market where piracy thrives and people expect everything for free, especially if it’s on TV. We are not ready to deal with DTH,” opines a trade analyst.

“The DTH premiere is now a lost opportunity,” says S. Sashikanth, producer of Y Not Studios. “Now we will never find out what could have happened. It could have really opened up the doors for small films. This case study has only revealed that the market is not ready for change.”

Is State playing villain?

Producers for long have been lamenting against government policy on restriction of ticket prices, number of daily shows and entertainment tax.

"Let the government take the tax, but allow theatres to decide on ticket prices according to the demand, like it is done in other States. Let people decide if they want to spend or not spend. That's democracy," says an executive of a popular film production company, who alleges that this process of applying for entertainment tax had led to many corrupt trade practices.

One, producers were resorting to bribing officials to get a 15 per cent entertainment tax exemption provided by the government for U films with Tamil titles. Out of 105 films that applied for tax exemption in 2012, only eight, including two (Oru Kal Oru Kannadi and Neerparavai) produced by Udhayanidhi Stalin, were rejected.

Two, to bypass regulations of fixed number of shows and cap on ticket pricing, theatre owners outside the city were bribing authorities to be able to sell tickets priced above the government enforced cap and for getting away with illegal special shows, the producer claims.

Three, the scourge of under-declaration. "To cheat on entertainment tax, many theatre owners under-declare occupancy. If they sell 800 tickets, they declare only 600. How can anyone prove this? Why doesn't the government reduce bureaucracy and grant entertainment tax exemption for all U films with Tamil titles instead of making producers organise for another screening," he asks.

A trade analyst says that it is high time the business was freed from political interference from the State.

"Both political parties are equally responsible for this practice over the years. Governments should have no business poking its nose into the film business,” says the journalist.

And there’s the longstanding, losing battle against piracy.

The State's inability to keep piracy in check has led to a fear psychosis among producers who are quick to resist change. Resistance leads to bans. And controversies.

Vara, None is forcing people to watch the movie.The owner of the content has every right to price it the way he/she wants. If it's worthless and expensive, people have the right not to go to the theatres.People in India are used to 'freebies' in all forms and need government to intervene in every private enterprise. That's why all the state governments and centre are in huge deficits and the whole nation is full of corruption.Government is for the people but in reality, it's not...

from:  ramesh
Posted on: Jan 15, 2013 at 00:53 IST

Author, instead of finding faults with so many people and process, why dont producers stop spending crores for making a movie and that too in expensive foreign locations. you want to rip off Tamilnadu people's money to pay for hollywood technicians. price limit on tickets and entertaintment tax are very much right. for few people to become millianore or experiment unneccessary, people should not be the victim.

from:  Vara
Posted on: Jan 14, 2013 at 07:36 IST

Seriously the opening premise is flawed. This movie cost Rs. 95 crores for making? What for? What is that is unique to this movie that made it so costly? A suave businessman like Kamal would know better to understand such budgets are impossible to break even by theatre run alone. But hey what's wrong in grabbing a few eyeballs by exaggerating production costs? Secondly, satellite, home video and overseas rights would account for atleast 20 crores for a movie of this scale. Kamal is a shrewd marketing guy and has managed to create enough hype for a movie which was very much in the cold storage using DTH releasing strategy. Remember there was hardly a taker for his movie among the distribution circle before he decided to announce DTH release. It is impossible in the current scenario for movies to recoup costs by a grand DTH release. In fact it is death knell when that means pirated copies by end of the first show. Well done Kamal the marketer.

from:  Prasanth Nottath
Posted on: Jan 13, 2013 at 21:37 IST

There is some truth in any of the arguments presented. But it is diversification of audiences, not the destruction of one due to another. The population in Indian urban areas that wants to watch cinema has been increasing, not decreasing. Change is inevitable, but more than anything else, there isn't much value in going to a theatre for most of the films coming out these days.

Some films are indeed better experienced at home, on the computer screen or TV. Towards this end, DVD pricing is hardly realistic for it to be attractive, and that is precisely why pirates prevail. Producers need to be clever about learning from pirates. How can something rake in profits for someone who is not even involved in the business of producing those goods?

The government is never going to eradicate piracy, because it doesn't have the intent, or the means, except for some knee-jerk reaction raids. It is unfair for the film industry to be asked to pay both entertainment and service tax.

from:  B S Kumar
Posted on: Jan 13, 2013 at 21:11 IST

If you swallow more than you could munch, hiccup is sure to follow.
Better option would have been to have taken the theatre owners and
distributors into confidence at the time of film production.
Feasibility study and market research must have preceded. In the case
of ‘Viswaroopam’ there appears to be an attempt to put the cart before
the horse. Film distribution & screenings through theatres and via DTH
have different yard sticks and marketing factors. You cannot outwit
one to score against the other.

from:  Madhu
Posted on: Jan 12, 2013 at 23:45 IST
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