Karan Johar's 'Shershaah' to release on Amazon Prime; with theatres shut, new film releases to go OTT way

He added that number of regional films produced in a year is 2x of Hindi films. Hence, more regional films will be going to OTT this year.

However, if there's a third wave then may be even the larger films will look at simultaneous release, said Taurani.

After all Salman Khan's Radhe did opt for a simultaneous release which premiered on Zee Entertainment's streaming platform ZEE5 and pay per view platform ZEE PLEX. Zee had paid around Rs 225- Rs 250 crore to acquire Radhe.

Shailesh Kapoor, CEO, Ormax Media, a media consulting firm, estimates that so far 26 Hindi films that were originally conceived for theatrical release have taken the direct to digital way including recent film Haseen Dillruba starring Taapsee Pannu which is streaming now on Netflix.

He said that Netflix has showcased nine of these, Amazon Prime Video and Disney+ Hotstar six each, and ZEE5 the remaining four, including those through its pay-per-view offering ZeePlex.

Ask Kapoor how many more films will opt for digital release, he said, "Till theatres do not reopen, films have little choice but to take the OTT route."

He said, "Hence, how many more films will continue to take the OTT route is dependent on when theatres reopen. Bigger films like Sooryavanshi are unlikely to go the OTT way, as they have waited so far, and would rather wait for some more time. For films of that scale, getting a price from OTT that matches the box office potential is difficult as well."

Kapoor points out two important aspects in this direct to OTT discussion.

First -Whether big films will skip theatrical release?

Taurani thinks that big films will wait for theatres to reopen but the window is likely to come down to two weeks from six to eight weeks on a temporary basis. The window of a theatrical release going to an OTT has already come down from six to eight weeks to three to four weeks.

"As the situation is currently, larger films might want to go to theatres first and stream on an OTT in two weeks. Cinemas have agreed for a four-week window but unsure how a two-week window will pan out," he said.

He also pointed out that shorter window will be a double whammy for exhibitors as theatres are likely to operate at not more than 50 percent occupancy.

Along with shortening of window, Kapoor also pointed out the viability for producers who are offering their films to OTTs first.

While for large films getting a price from OTT matching box office revenue may be difficult, Kapoor noted that more than 80 percent films going direct-to-OTT have got a price from OTTs which is higher than what their revenue from a theatrical release would have been.

Even Taurani said that premiums that OTTs are offering remain the same as last year.

Video OTTs acquiring new films have offered 80 percent higher premiums to small and medium-size ventures as compared to pre-COVID levels. The premium for bigger films has been 120 percent in times of COVID-19.

Kapoor estimates that the 26 films that took the direct to digital route so far have minted around Rs 720 crore overall from streaming rights.

In addition, Taurani said that the premiums of second window (a theatrical release going to OTT), those premiums have increased by about 30 percent primarily due to window getting lower.

So, why are OTTs spending so much on films?

"The Indian OTT market is growing at about 25-30 percent per annum. In terms of paid subscribers, platforms are looking at these films as a way of building a subscriber base over time and ensuring that their current subscribers don't lapse. Unlike theatrical, no one film in isolation can achieve these objectives. Hence, platforms that are investing in films over time are likely to benefit over a period of two to three years," said Kapoor.

Last year when the the digital first strategy for films had picked up pace due to shutting down of theatres because of coronavirus-led lockdown, experts had estimated that video streaming platforms had added four to five million new subscribers in the overall OTT space. This is why they said that investing in films especially direct to digital releases is a good strategy.

While OTTs are benefitting, what about theatres?

Exhibitor Amit Sharma who is the managing director of Miraj Cinemas which has 150 screens across India said, "Cinemas are not operational yet and because of the uncertainty producers are going to OTT. This is a blow to the exhibitors."

While it is disheartening, Sharma noted an important aspect.

"Once films go to OTTs, they get cash flow back which helps them to complete other under production films. For me, production not happening is a bigger concern than films going to OTT. It is important that current under-production film continues so that whenever we start we have content," he said.

Adding to this, Utkarsh Sinha, managing director Bexley advisors, said while the year has been great for OTT players, a function both of the lack of theater alternatives and the rich content calendar, the real test will come post-Covid.

"That's when we will have to see how much of the behavior shift was permanent. I do believe a point of inflection in how content is consumed, and hence how it is released, has been reached the past year."