Digital releases cost the box office ₹580 cr: Ormax

New Delhi: The prolonged closure of movie theatres during the covid-19 pandemic has robbed the box office of collections of around Rs. 580 crore from the release of 26 Hindi films directly on video streaming platforms since March 2020, according to a recent report by media consulting firm Ormax.

These figures have been arrived at after entertainment tax deduction. Originally conceived as theatrical releases, the films that had no option but to premiere on OTT (over-the-top) streaming services included titles such as Gulabo Sitabo, Laxmii, Coolie No.1, Ludo, Gunjan Saxena- The Kargil Girl and several others. Ten of these titles, including Salman Khan’s Radhe- Your Most Wanted Bhai, Akshay Kumar’s Laxmii, Varun Dhawan’s Coolie No.1 and Alia Bhatt’s Sadak 2, are estimated to have contributed 76% to the Rs. 580 crore loss calculated.

Ormax used its own methodology to arrive at this figure based on how such genre of films performed earlier keeping in mind extraneous variables such as clash with other releases, holidays and even the Indian Premier League. They used benchmarks data of films similar in terms of themes and star cast etc.

Presuming 50% of the entire Rs. 580 crore would go to exhibitors, from the producers’ perspective, the estimated loss at the domestic box office stands at about Rs. 290 crore, Ormax said with an additional loss of about Rs. 40 crore having been considered from what could have been overseas box office collections. This does not not account for Radhe, which did manage release in certain overseas territories. That takes the total estimated box office loss at the producer end to Rs. 330 crore.

Ormax, however, estimates that while exhibitors have been severely hit, most producers were paid a huge premium by streaming platforms, eager to churn out content featuring popular actors, and their gains from those sales can be pegged at Rs. 350 crore.

Shailesh Kapoor, CEO and founder of Ormax who has penned the report along with two other writers mentions so far, it’s been a win-win situation for both producers and streaming platforms.

“The exhibitors have suffered, of course, and their losses don’t have corresponding gains to show. As we prepare for theatres to re-open, hopefully sooner than later, the pandemic has given a genuinely lucrative model for small films, which often struggle to even recover their marketing costs. But for the likes of Sooryavanshi, '83, Laal Singh Chaddha and KGF: Chapter 2, the big screen still beckons," they said in the report.

“The films that were released (directly on digital) would have loved to have come on the big screen. They were all mostly made for that format. However, all producers will have their own individual situations to manage which would have led them to their decisions,” said Rahul Puri, managing director, Mukta Arts and Mukta A2 Cinemas.

Puri said a title like Coolie No 1 would be a perfect theatre film where people don't judge movies as minutely as they do on OTT.

“I can understand why it went to digital but I think its theatre performance is a missed opportunity,” Puri added.

Given that large TV screens are far from being affordable for a majority of the population in India and OTT is still seen primarily as an urban, personal medium of consumption, there is a significant market for theatrical releases, said film producer, trade and exhibition expert Girish Johar. “People want to go out for that community viewing and the theatrical churn will be huge, at least for the next decade,” Johar said.

People don’t watch movies, they experience cinema, Anant Roongta, managing director at production and distribution house Famous Studios said. “Once the pandemic eases out, cinemas will be the prime avenue for producers and studios to unleash their creativity,” Roongta said. Prominent Hollywood Studios such as MGM and Paramount have pushed the release dates of several film as OTT would not do justice to their cinematic experience, he added.

“Filmmakers who will have wherewithal to wait for a theatrical release for their films would prefer to wait as can be seen in case of Akshay Kumar-starrer Sooryavanshi. The only thing that may happen is the gap between theatrical release for a film and its subsequent availability on OTT platform may go down significantly,” said Shashank Singh, founder and CEO at Flyx, a social media network that allows people to curate content lists and give recommendations.