Hello Readers! 

In India, we have a number of OTT (over-the-top) platforms, that acts as media service and directly offer viewers through broadcast, internet bypassing cable, and satellite television platforms. These are the traditional platforms for the distribution of such content.

OTT platforms were popular in India before the arrival of the COVID pandemic, but still, a large population favored the multiplexes to watch their favorite movies or the new release of their popular actor. However, after the government announced the lockdown, theatres and multiplexes were also closed. In fact, they remain closed after the unlock phase was announced. Now the cinemas and multiplex are open for the public but with proper COVID guidelines that are must to be followed.

The emergence of the OTT platform during the lockdown has resulted in a disruption in the entertainment sector. This is more supported by the rise in the evolution of smartphones, the standard of living, changing preferences of the audience, and by the affordable Internet connectivity coupled with increasing penetration in rural areas.

How OTT Platforms have Hit The Multiplexes? 

This evolution in the popularity of OTT platforms has directly hit the business of Cinemas theatres and Multiplexes in India. According to a recent report by the Boston Consulting Group, it predicted that the OTT divisions in India are currently secured $0.5 billion and is expected to grow around $5 billion by 2023.

Multiplex Chain Owner’s Perspective 

During the lockdown, when multiplexes were closed, many producers decide to release their movies on OTT platforms. However, this decision was openly criticized by the various multiplex chain owners. India’s largest multiplex chain, INOX, had even released a statement regarding the same. In their statement, they stated that the film industry is not standing by the side of their partners in times of need.

However, despite the statement released by the INOX multiplex chain, the film industry producer’s without even pondering over the situation, they suddenly announced the release of a line of Cinemas on OTT platforms like Amazon Prime, Zee5, Netflix and others. This was completely shocking for the multiplex and theatre owners.

Not only INOX but PVR multiplex chain owners also requested the producers not to release their films until theaters do not reopen. Kamal Gianchandani, CEO of PVR Pictures, in his statement, in an interview, stated that they are disappointed with Gulabo Sitabo being directly released on the OTT platform.

Tamil Nadu Theatre and Multiplex Owners’ Association had also expressed its displeasure when it was announced that Suriya and his company 2D Entertainment Ponmagal Vandhal, would be directly released on OTT platforms. They even threatened to ban their films in the future.

However, after the threat also, the movie was released on Amazon Prime, on 29^th May 2020.

Well, besides the threat or stamen released by eth multiplex chain owners, they have their strong reason and point. As per them, huge investments have been done in the infrastructure of these theatres, and apart from the revenues, these exhibitions generate huge employment opportunities. Currently, around 2 lakh people are earning their bread and butter from this industry. And if these exhibitions suffer from loss, families depending on it will eventually be affected.

As per an estimate, around Rs 10-15,000 crore of yearly revenue is generated from the box-office, which is already suffering from a loss this year due to COVID and Lockdown. Now with the producer's decision of releasing their movie on the OTT platform will make the matter worse. As obviously, the audience will be least interested to pay to watch an old film that is already out in the market, after the theatres open.

Filmmakers Perspective Over Their Decision 

Filmmakers and producers, justifying their decision of film release on OTT platforms, generated the statement, saying that, seeing the COVID pandemic spread, the government is not going to open the theatres too soon. The rising cases in the country have forced the state governments to put the reopening of the theatres at last on the priority list. Thus, it is time for some new experiments. They said that it’s better to release the movie on OTT to curb the losses, instead of incurring losses by shelving the movie for so long.

However, they said, films released on OTT are not at loss. This has helped filmmakers to cover the damage and earn a good premium. Now they have begun to work on their other projects without any stress on their mind.

They also stated that once the theatres open, people would be back watching their favorite actors on the big screen. Also, several films will be lined up for the screening. According to an analysis, approximately six films will be lined up every Friday for the release. So basically, multiplex chain owners do not need to worry about the competition. Theatres are the best medium to watch a film.

Challenges To The Theatres

OTT platform is taken as a boon for low budget films, as it guarantees a big audience for small films with less saleable names. The release of a movie on the OTT platform cuts the cost of printing posters and advertising. Thus, we can say that it acts as a savior for small films, but it cannot replace the multiplexes.

Well, we all know that the digital release of feature films is not new. As per the sources, there has been a 100% increase in the streaming subscription revenues last year. OTT platforms are more popular for their noteworthy web series, besides offering live entertainment. The Web series has been successful in capturing the eyeballs of eth audiences towards it. It has created a tension that the filmmakers will lose out on the theatrical experience. Video streaming platforms have certainly made experiencing movies convenient, affordable, and available ‘on the go,’ especially for those who prefer binge-watching.

Well, before the OTT platforms there were many other challenges that Indian cinema theatres and multiplexes had to face like VCRs, VCD, and DVDs. During every challenge, people predicted that now theatres would perish down, but to their surprise, every time theatres and multiplexes emerged as the most preferred choice among the audiences. It too shall pass.

In the coming days, people will witness the co-existence of both theatres and OTT platforms. This is not said baseless. Surveys say that audiences have different relevance for both OTT platforms and multiplexes. While people watch OTTs on weekdays, on the other hand, people watch movies over the weekend. However, the technological revolution will redefine the type of movies that will be released on OTT platforms and in theatres.

The current audiences are not willing to shy to shed an extra penny to seek a completely transformative experience for fresh, relatable, and engaging content. Thus, commenting on a worse era for any of them is not justified.

Nevertheless, customers today have a wide range of options and the freedom to choose any of them as per their interest. So, it is up to the various mediums to adapt to the changing scenario.

For any kind of query you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.

Happy Investing!

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