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.
