The Tamil film industry is likely to shut down on March 1 — the third time in a span of a year, after four South Indian film industries jointly raised a red flag over the “exorbitant fee” charged by digital distribution companies such as the Chennai-based Qube Cinema Technologies.
Recently, representatives of four South Indian film industries — Tamil, Telugu, Kannada and Malayalam – jointly decided to announce a shutdown to bring digital distribution companies to the negotiating table.
The fundamental conflict between the producers and the digital distribution companies seems to be the Virtual Print Fee (VPF). Explaining what the fee is, Senthil Kumar, co-founder, Qube Cinema Technologies, said it includes the total cost of hiring, installing digital equipment, operational activities and delivery.
When the film industry began embracing digital cinema, companies such as Qube Cinema Technologies were instrumental in creating infrastructure for digital distribution in theatres. In return, they charge a fee for distribution and claim a slice of the advertising revenue of the cinemas.
Arguing that the VPF being charged in the country was the lowest in the world, Senthil Kumar said the producers were, perhaps, not looking at the big picture.
“What have we done wrong for the film industry? We invested a huge amount of money with a huge risk. If the theatres buy their own equipment, like Sathyam Cinemas [now S2 Cinemas], Inox or PVR Cinemas do, there is no need to pay us a fee. There are operational and maintenance costs. The spares too cost money. Somebody has to pay for the equipment for digital distribution, which has brought down per-print costs considerably,” he said.
The producers argue that a considerable number of years has passed since the investment on equipment was made, and that the costs have been recouped. “Why should I, as a producer, pay for allied services offered by the theatre owner? The producer can’t be paying every time to change the light bulb in the projector,” said S.R. Prabhu, treasurer, Tamil Film Producers Council.
Disparity in charges
Producer G. Dhananjayan said there was a disparity in the rates for Hollywood and Indian films. “When it comes to Indian cinema, we pay ₹9,500 plus GST per week. On the same screen, Hollywood movies are played for ₹10,000. Why is there a disparity when over 800 screens play Indian movies?” he asked.
Tamil Film Producers Council president Vishal, who believes that the digital distribution cost for a big-budget movie should be reduced by more than half, said, “It is the producer who is indirectly paying for equipment. From now on, we will pay only for mastering, providing the digital key and delivery.”
Another industry source said that Qube Cinema Technologies and UFO Moviez, which have merged, jointly control close to 7,300 screens across India, with a seating capacity of 95.5 million per week.
“It is impossible to do business without these two players. The issue should be resolved through talks. A strike is going to affect everyone,” he said.
