Coronavirus impact: Unable to release films in theatres, are producers opting for direct release on OTTs?

"Producers have taken loans and projects are getting delayed. So, there are a lot of overheads. Whoever can bear the stress should wait, while those who can’t should go ahead with the option of a direct OTT release,” Johar told Moneycontrol.

Concurring with Johar, Utkarsh Sinha, MD, Bexley Advisors, a boutique investment bank focusing on early-stage deals in tech and media, said, “With theaters not looking viable for the next few months at minimum, and OTTs having the money to spend, there is a possibility that slightly bigger projects could also be acquired by OTT platforms.”

“Most OTT providers we are speaking with are confronting an imminent content drought in absence of fresh productions, and may be willing to go higher on their content acquisition costs. However, they are unlikely to be able to match the revenues from a theatrical release,” Sinha added.

Even Preetham Daniel, Senior Vice President, Asia, Harkness Screens, pointed out, “From a box office point of view, OTTs do not give you the amount of revenue you need to make out of a movie; they don't make a film a grand event, like theatres do."

Exhibitors say no to direct OTT release

When it comes to exhibitors, not many are happy with the direct OTT move.

Tamil Nadu Theatre and Multiplex Association has threatened to ban Suriya’s upcoming films in theatres, if he goes ahead with direct OTT release of Ponmagal Vandhal.

“There are a few major producers negotiating with OTT's for a direct release in light of the COVID-19 scenario. Certainly, exhibition businesses would not be happy about films going this way; but in Hindi, I don't see many major releases skipping the cinemas as of yet,” Rahul Puri, MD, Mukta Arts told Moneycontrol.

“Once a film releases on an OTT, the theatrical revenue is finished for it. However, the reverse is not true, where big films can be successful on both platforms. Theatrical business will be affected if large films head to OTT, which I think is unlikely,” Puri added.

OTT- a savior for smaller films in the current times

As for small and mid-budget movies, Johar believes that going digital first is a good option given the current situation.

“If we look from cinema's perspective, when big films come, smaller films get buried under them. Small films shy away because they don’t want to clash with the big films. So, when the small films are getting a window, why leave the opportunity?” he said.

On the other hand, Daniel argues, “Theatres have contributed in a big way to studios; now content should come to the rescue of the theatrical chains at a point like this.”

What's happening globally?

Internationally, films have already taken the OTT route.

“In China, Lost in Russia, a Chinese film, was left with no other option but to go online. What is interesting here is that the film got over 600 million views. This means, there is a substantial audience waiting to watch movies. Trolls also went digital and released on Amazon Prime. There is another movie called Artemis Fowl, a Disney film, which may skip theatres completely and go straight to streaming on Disney+,” Daniel said.

"Mulan, a big Disney offering, which was supposed to release in June but got moved to July, may straight go to Disney+," he added.

“So, many people are looking at this option. I think, because of this, there is going to be a big boom in the home theatre market,” said Daniel.