The disruption triggered by OTT platforms is exciting but how can we still draw audiences to cinemas?
The buzzword today in corporate cabins and coffee shops among the Suits and the Strugglers is ‘Content’. Everyone is searching for it, like the Holy Grail. Everyone wants to make good content and the reason is simple – it drives people to the theatres, and therein lies our biggest struggle!
The movie business is all about footfalls. So far, 2017 has seen one of the lowest number of footfalls and the box office has been muted except for a few films that have delivered the numbers and have excited people enough to come to the theatres.
In the case of Baahubali: The Conclusion, theatres which had a weekly share of ` 20,000 were generating a share of ` 4-5 lakhs a week. This film also showed the potential of the pan-India box office and has reinforced the power of content. In a similar vein, the audience has been equally unforgiving this year. No matter who leads a film, bad content has been pummelled. The year 2017 has clearly told us – the Indian audience is discerning and cannot be taken for granted – and we have no choice but to shape up!
It is important that we create content that excites people, stirs their imagination, lifts boredom and gives them an escape from their day to day lives – and we all know that we need to because if movies work people come to theatres, and exhibitors, distributors, producers, broadcasters, OTT platforms, all in the chain derive value.
This means that we need people to come to theatres but of late that is becoming a challenge – we will come back to this as we evaluate some interesting shifts driven by the advent of OTT platforms and their need to access content.
OTT Disrupting The Content Consumption Pattern
It has certainly been good news for the industry. With the advent of the OTT platforms, there is a greater demand for content. This translates into a need for acquired content and to create in-house content.
Actors, directors, script writers, production houses are in demand and have been given the leverage to experiment with different types of content, and film studios with their libraries are being fought for and pursued aggressively.
For motion picture producers, digital rights are now offering far better scope for monetisation to offset production costs. Cable and satellite deals, which were till now the best source of revenue for monetisation of non-theatrical rights, are being matched by OTT players as they seek to bypass the C&S windowing to become the preferred choice after the theatrical release of a film.
From scripts to book rights, Amazon and Netflix are competing sharply in the content market and whenever there is high competition in any industry, it tends to gain overall.
Where Are The Consumers Watching This Content?
As per the KPMG 2017 report, India has around 465 million Internet users and more than 300 million smartphone users. It’s higher than the US but still lagging China. Till 2021, the number is expected to grow 2.2 times and cross 800 million. Video is expected to grow to 78 per cent of the overall mobile data traffic. The average time spent on mobile consumption of content stands at a staggering 18 minutes per day currently.
Therefore, creating content for mobile phones is going to be the ultimate challenge for market players.
Rural Mobile Penetration Affecting The Content Matrix
As things stand today, of the 915 million rural Indian population, only 165 million have access to the Internet. It’s the remaining 750 million that are waiting to be tapped – with market disruptors like Jio who are making 4G data affordable, we are seeing a huge uptake of smart phones in the smaller towns. And eventually, that may also hold the key to not just smartphone growth in India but also the kind of content that is created for this audience.
For nearly 30 OTT players currently in the Indian market though, the immediate pie is the urban Indian smartphone user. It’s for him/her that most of the content is being created and that’s where consumption is also taking place. The entire OTT platform universe base currently stands at about 100 million users but it is growing. However, once the rural consumer becomes an active user the kind of content that will appeal to him/her is likely to dramatically change the content that is created. Like television, it will be the Tier 3 and 4 cities that will define the content matrix for OTT platforms too.
Currently, movies continue to be the key drivers of traffic on OTT platforms, besides international shows like Narcos, Game Of Thrones, etc., with superlative narrative and production quality. There is a huge investment being made in home-grown content by OTT platforms but will this audience be the consumer for this kind of content is a question that only time can answer.
You may argue that recently Netflix brought Brad Pitt to India for its original film, War Machine, so why can’t we replicate that for the OTT platforms with Indian talent? The answer is that the reach of OTT platforms is limited in India at the moment and audiences that the superstars may cater to are far wider than the universe of the OTT platform viewing audience.
Having said that, there is definite merit in creating very small budget films that can be directly released on OTT platforms. It’s a model that will work perfectly for independent cinema because it will make a viable economic sense.
So for the current OTT consumer, movies are a big driver and movie producers must work towards meeting this demand. Films that work in theatres seem to be a bigger draw and hence once again we are reiterating that we need to make movies that get bums on seats.
Where We Stand
In addition to ensuring that we create content that excites and drives footfalls, we also need to consider other factors impacting footfalls
Screen Density And Showcasing
When it comes to our Industry, with just 6 screens per million, we continue to be heavily under-screened compared to 29 screens per million in China and 120 screens per million in the US. The number of screens in India is at around 8,000 whereas in the US it stands at around 40,000 screens. China leads the race with 45,000 screens. A huge majority of population in Tier 2 and Tier 3 cities is yet to have access to good cinemas.
There needs to be a huge impetus given to the exhibition industry to excite them to set up shop in the smaller towns. What helps our cause is that cinema is still considered the first choice for family entertainment. However, as an industry, we need to do a lot more to ensure we remain the preferred choice.
Currently, the Indian film industry churns out 1,500 to 2,000 movies per year in 20 languages. Regional languages led by Tamil, Telugu, Malayalam and Kannada along with Marathi, Punjabi, Gujarati and Bengali are growing exponentially. With so many films releasing due to the screen crunch, today the shelf life of a film has been reduced to just the opening weekend.
We need to strategically look at the showcasing being given to films. In the release week of a big film, most shows are given to the big film and the smaller films get relegated to one or two shows. A proper balance will ensure that there is an offering in theatres for different patrons which eventually helps in increasing footfalls – and gives breathing space to all films.
Rising Ticket Prices
Moreover, the continuous rise in ticket prices has also impacted the annual footfalls. We are still struggling to increase the footfalls that have stagnated around 80-million mark in the last couple of years. That’s a shockingly low number for a country like ours where cinema is still considered the mainstay of entertainment.
While families still consider films as the ultimate form of collective entertainment, something which a mobile or an iPad can never replace, the sheer cost of watching a film over a weekend has become extremely high for them. An average family of four today spends around 3500 rupees to watch a film including F&B over a weekend. That clearly discourages them from visiting theatres often.
So, what’s the solution? We could explore a variable pricing model that will provide stimulus to the price sensitive Indian population to come to the theatres. If people don’t come to theatres, who will we make movies for?
Proper Windowing Strategy
Nowadays, movies come on to alternate platforms within 4 weeks which is self-defeating. In the interest of commerce, we are sacrificing the need to create a theatre-going habit to watch movies. There is no urgency to see the film in the theatres as people can catch it on TV or other platforms and that too will eventually add to lack of footfalls.
What We Need To Learn
For us, as a film industry, along with the above challenges, it is now becoming increasingly difficult to get audiences back into theatres. With plethora of options available to watch content, as filmmakers and producers we need to create compelling content that drives footfalls.
This year, the Hindi film industry has had a de-growth of 23 per cent for Jan- July 2017 compared to same period in 2016 without accounting for Baahubali: The Conclusion. The star power has given way to content this year- firmly. The success of Hindi Medium, Shubh Mangal Saavdhan, Lipstick Under My Burkha and Bareilley Ki Barfi, this year are testimony to that fact. Content therefore will always work, regardless of scale. All the films had strong emotional core, local connect and a story removed from the glitz and glamour of city lights. Hinterland India has moved to the big screens this year.
The audience too has shown the willingness to accept their superstars beyond the image they love and embraced newer stories. Today Akshay Kumar can deliver his career best performance based on a film that talks about defecation in public where as an Aamir Khan can pile on kilos and still demolish box office records.
We need to focus on stories that connect and have cinematic appeal. We need to invest in content creators – the existing lot is busy making content for other platforms and now is the time to give new talent a chance.
It is said that films don’t flop, budgets do. It is critical that we cap production costs and let content drive the engine. Stories and ideas must lead the way. Even with films top-lined by superstars, it is important we keep the film costs low and have talent participation in the back end.
The need of the hour is to create high-content cinema that is different which have a reasonable chance of recovery. And this must simultaneously continue while, we come up with event films like Baahubali or a 2.0 that just cannot be seen on the small screen or on hand-held devices.
Collectively, every movie that we greenlight and produce, must have something that compels the audience to come to theatres. The strike rate of our films continues to be abysmally low and that is where the major content producers must come together and understand the criticality of creating content that will matter in this new environment of multiple platforms and will stand up as a preferred viewing choice at a theatre near us.
Let’s not also forget that even on OTT platforms, only those movies are a big draw that are huge theatrical successes. So, we need to create movies that deliver not just on paper and in our balance sheets but in cinemas.
Cinema in India is over a hundred years old and rooted deep in our cultural traditions because as a society at large we like to celebrate together and entertainment is the biggest form of celebration for most of us. But will we still be saying that a few decades later? The jury is still out on that one!
(Written by Vivek Krishnani, Managing Director, Sony Pictures Entertainment, India)