How to sell films in 2023

The pandemic boom of direct-to-OTT films is over. But cinemas are also struggling. What must film producers do to make money in this complicated new reality?

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How many films can you watch in a weekend? A month? A year?

There was a time when even the most avid film buff wouldn’t watch more than one movie—almost always the Friday blockbuster—a week. Maybe a rerun of an old favourite on TV on a Sunday afternoon. Or watch Sooryavansham airing (yet again) on Set Max.

Now, there are endless films to choose from. Old, new, massy, niche, feature-length, shorts, documentaries, award winners, and every other conceivable category and type of film you can think of. During the pandemic, OTT platforms became endless spouts of content, and we got accustomed to watching big-ticket releases at home, on our TVs and mobile phones.

This glut is hurting the economics of filmmaking, especially in the Hindi film industry. And it’s having a cascading effect on everyone involved in the business of films.

Lights… Camera… Sell!

Iconic still from sci-fi hit ‘Le Voyage dans la Lune’ (1902); YouTube/Bill Brass Quintet

The pandemic years opened an unexpected opportunity for film producers. People were stuck at home, and the privileged among us spent a lot of that time glued to online entertainment. Viewership for OTT platforms swelled.

Content boomed. Flush with cash, platforms began acquiring all the films and shows they could lay their hands on. Lockdown restrictions made it hard to commission and shoot new content, so they turned to what was already ready for sale—films. In 2020-21, movies starring some of the biggest stars were released direct-to-OTT, including Akshay Kumar’s Laxmii, Sushant Singh Rajput’s last film Dil Bechara (Hotstar), Suriya’s Soorarai Pottru, and Amitabh Bachchan-Ayushman Khurana starrer Gulabo Sitabo (Amazon Prime), among many others. Platforms bid against one another for these films, and many paid as much as ₹80-100 crore ($9-12 million), sometimes even more, for individual titles.

That gold rush is now gone. Theatres have reopened, but as I wrote in last week’s edition of The Impression, they are struggling to attract audiences and make money. Meanwhile, OTT platforms are realising India is not a lucrative market for subscriptions, and they cannot afford to spend big money on individual films. Besides, they no longer need to invest to lure Indian audiences to the small screen. We’re already hooked.

So, filmmakers have gone from being spoiled for choice to contending with a buyer’s market.

“Who’s buying a direct-to-OTT film these days?” the head of a large Hindi film production studio asked me. She spoke to The Impression off the record. “I don’t know anybody who has a massive original film lineup. Original shows, yes. But not films. All platforms now want the big theatrical release.”

Streaming platforms are now asking producers to release their films in theatres first, even if it is limited to a few screens in big city markets, according to producers I spoke to.

There are a few reasons for this. One, as I mentioned above, platforms are no longer in a race to just fill up their content libraries. They’ve got Indian audiences hooked to streaming. Now, they want content that will keep them hooked.

Two, there is so much content that it is all getting lost in the crowd. Getting your content discovered by your intended audience is one of the biggest challenges in streaming right now. It has led to an increase in marketing budgets as platforms try to get the word out about their upcoming movies and shows. Not just online, but also in expensive, traditional ad spaces like roadside billboards. But a movie released in theatres already has a modicum of the audience’s attention. It gets an initial viewership and maybe even some word of mouth. It will usually feature a well-known star. All this saves the platform the headache of marketing an original film from scratch.

Three, OTT platforms want to moderate the prices they are paying for films and find a metric to anchor the price of digital rights. Box-office collection is one of the best ways to do it. Occupancy rates and ticket sales help a platform determine what premium (if any) it should pay to acquire a film.

Producers and studio heads who spoke to The Impression said platforms are either foregoing original films or drastically cutting their slates. For instance, Netflix India has slots for only 5-6 original films this year. It released 16 original films in 2020 and 15 the following year. Disney+Hotstar isn’t commissioning any original films for now (it also gets movies from sister concern Fox Star Studios). Rival SonyLIV is not in the business of original films; and post Sony’s merger with Zee, priorities for original films might shift at Zee5 too.

Cost control

Film producers are then left with two choices: to bid aggressively for one of the limited slots on an OTT platform’s slate, or produce a film that will make money in theatres first.

That is easier said than done.

“Earlier, even with the performance of a film on its opening Friday, you could estimate how much business it will do [in theatres],” says Priti Shahani, founder of production house Tusk Tale Films. She previously ran Junglee Films, the film production house of The Times Group. “Now, those opening-week predictions are gone.”

Without the ability to predict if a film will do well, producers are feeling their way through in the dark as they decide what to make a film on, and with whom. Tried-and-tested Hindi cinema formulae are flopping, including previously-bankable star names and film genres. Yet, producers are driven more than ever towards old, familiar themes and faces in an attempt to secure theatrical success. That’s because there are no takers for risk—the stakes in theatres are too high, and OTT platforms also want to back only winners.

One way to ensure a film runs successfully in theatres is to budget it smartly and recover the investment via early box-office collections. But budgets are swelling, because titles continue to flop and demand contracts both online and offline.

Here’s where star fees pose a problem.

“With everyone looking for a big name for their film, there are now just those five names, and 500 people are chasing them,” Shahani says. “Naturally, supply-demand dictates that these names will hike their prices, and that’s understandable. The question, then, is what kind of story can you mount on that budget.”

You could invest in a newcomer and try to make them a star, but that is a long, difficult process, a film producer told me, requesting anonymity. “Frankly, the audience and the media is more interested in the lives and glamour of star kids than in outsiders and newcomers. How do I, as a producer, work against that?”

Top actors in the Hindi film industry are jacking up fees, making films more expensive to make. And that lowers producers’ ability to experiment with stories or genres. For example, Shahani says the genre most likely to work right now is a ‘family entertainer’.

Finally, all of this is underscored by rising ticket prices. PVR-INOX, the country’s largest multiplex chain, said its average ticket price was 16% higher this past financial year than in 2020, according to its investor presentation (pdf). To compensate for lower footfalls, cinemas have no option but to increase prices. But higher prices are driving away audiences that are cutting discretionary spending to combat inflation.

“India is a price-sensitive, volume-driven market. How will mass audiences come to cinemas when ticket prices keep rising? But then, as producers, we can’t do anything about it. We can’t tell the exhibitors how to price the tickets of our movies,” the film producer quoted above says.

Producers say families will buy expensive tickets for a movie that’s worth it—one that has their favourite stars and a story that entertains everyone equally. So, films will have to get bigger, more expensive, and narrate catch-all storylines.

In all this, the small, niche movie has effectively lost distribution. OTT platforms are unlikely to take such films now, and such titles may also not make money in theatres. Even in the boom years, smaller films were lost in OTT platforms’ tsunami of content. In the past few months, Hindi films with new actors and unconventional narrative styles, such as Almost Pyaar With DJ Mohabbat, Zwigato, and Bheed have flopped. But some like The Kerala Story—criticised for vilifying Muslims with its inaccurate storyline—have done roaring business.

Déjà vu

This kind of disruption has happened before. Back in 2007-08, TV channels dedicated to showing films competed to acquire satellite rights to big hits. In the mid- to-late-2000s, TV broadcasters went big on films. Erstwhile UTV had announced a TV channel dedicated to action films; US production giant MGM launched an English movie channel here in 2008; even kids channels Cartoon Network and Pogo began airing more Bollywood films to keep children glued to the screen.

“In those days, satellite rights would be 40-45% of a film’s total revenue,” Shahani explains. “These channels were racing to get films, so they were outbidding one another and driving up prices. Audiences were also getting comfortable with watching a movie at home on TV. So, the film’s trailer became crucial. Audiences can gauge very quickly from a trailer if they will like a film. If the trailer doesn’t work, they won’t go to theatres. They’ll be thinking, “Okay, this will be on TV or online soon. I’ll watch it then.” That’s exactly what’s happening now, but on OTT platforms.

Eventually, new film stars were launched, new blockbusters hit the cinemas, and the business of films was back on track.

Will Hindi films recover once again? Some say it’s just the lockdown hangover and a matter of time.

“People had not met each other for two years in the lockdown. So, when it was lifted, tourism, hotels, travel, everything went ‘boom’,” Dimple Kharbanda, founder of production house Kangra Talkies, told The Impression. “People were looking for activities that let them spend time with families, friends, that kind of emotional outpouring. Since the pandemic, people are very distracted. They want to think twice before going to cinemas. But the thing is, the cinematic experience is the number one outdoor experience even today. This is temporary; it will all settle down in some time.”

 

Last Scroll Down📲

Credit: Imgflip

Same-same but different: Two rival Indian ad agencies have entered very similar ad campaigns for the Cannes Lions Award this year. Both use the ‘social experiment’ advertising device to market the exact same product: a mosquito repellent. Dentsu’s Suraksha ka Kaala Teeka campaign for Reckitt Benckiser’s Mortein reimagines the traditional ‘kaala teeka’ to ward off the evil eye as a mosquito repellent that wards off malaria from young children.

VMLY&R’s Aarogya Bindu campaign for local rival Maruti Plastorub’s Maxx Flash uses an identical concept. Both insist they devised their campaigns after studying the nuances of the mosquito repellent category.

We sell ads: Messaging app Snapchat is scaling up its India ad sales team and hiring senior leadership here in an attempt to monetise its teen and young adult user base, Snap Inc.’s APAC head Ajit Mohan said. Mohan’s pitch is that Snapchat’s users aren’t present on any other platform, and the social media platform can charge advertisers a premium for that exclusivity. In a previous edition of The Impression, I wrote about what Snapchat needs to do to succeed in India.

Clean-up act: Lots has happened with streaming companies this week. HBO Max officially renamed itself ‘Max’, a questionable decision to drop the more hallowed ‘HBO’ just as it airs the Succession series finale. Warner Bros Discovery has also inexplicably purged the platform of some well-loved shows, including Westworld and a bunch of Adult Swim series. Meanwhile, Netflix has finally introduced its anti-password sharing features to US subscribers. Almost all streaming companies have promised shareholders they will turn profitable by next year, but a Variety analysis shows many are unlikely to keep that promise because they still don’t have expenses under control. Back home, the Sony-Zee merger may be up against yet another legal hurdle.

The sound of music…: …is now (legally) AI-generated. Universal Music Group, the world’s largest music label, has signed a deal with a sound ‘wellness’ company, Endel, to use AI for the artists it manages. UMG and Endel want to publish AI-generated ‘soundscapes’ for relaxing or studying using the voices of their artists, such as The Weeknd and Ariana Grande.

Indian music labels are also getting creative about monetising their IP. Older music labels such as Saregama and Shemaroo are banking on nostalgia to keep spinning money from their libraries of yesteryear hits, offering them for recreations, stage shows, or simply raking in ad $$$ from repeat YouTube views of vintage movies and music videos.

OK Google, write me an ad: If you’re a brand manager, you could soon do without a large creative team. At least that’s the Google-Meta-Amazon pitch. Big Tech firms are going to offer AI tools to advertisers that automatically generate ad creatives using content they are provided. There are already countless AI-based tools to generate ad copies, headlines, and captions; most are free. This week, Adobe also introduced a Photoshop feature called ‘Generative Fill’ that lets users change images using text prompts. In March, rival photo editing software Canva also introduced major AI tools to make editing and creating images easier.

This is goodbye: Longtime NDTV news anchor Sarah Jacob unexpectedly quit the channel this week, posting a farewell note on Twitter. This was a day after she anchored a segment titled ‘How PM Shows Respect Towards Women’, showing Prime Minister Modi bowing in front of a woman who greeted him on his Australia visit. It also carried other stories of how Modi has shown reverence for women, such as his mother, in the past. Many criticised the segment as obsequious. Jacob’s resignation follows a long line of top-level exits from NDTV, including its star Hindi anchor Ravish Kumar after the Adani Group took over the channel.

 

Trumpet 🎺

Instagram/Nandita Das

Quick, what comes to your mind when I say ‘Cannes’? Beaches along the French Riviera? ‘Artsy’ films for snobby geniuses? Your favourite Aishwarya Rai red carpet look?

A lot of buzz around this year’s Cannes Film Festival, much like for previous editions, is around the designer looks of the biggest stars from India and abroad. But actor and filmmaker Nandita Das seems dismayed. In an Instagram post, she reminisced about the years Cannes was a “festival of films and not of clothes”.

Das’ post highlights how much Cannes has changed in just the last five years. It has always evoked images of niche, even esoteric cinema discussed among the world’s most influential filmmakers, but the focus is shifting to new forms of entertainment. First, in 2017, Netflix entered two of its original films in competition at Cannes for the first time. Then last year, TikTok became an official festival partner and launched a short film festival. This year, there is more grumbling about a variety of influencers showing up at Cannes, including Masoom Minawala (for Tata group’s Titan), Kusha Kapila (for Dr Sheth’s and Airbnb) and Ranveer Allahabadia aka BeerBiceps (for Brut India).

But why are people so cut up about this? Fashion and beauty brands have been bringing their ambassadors to the festival for years. Luxury fashion brands are increasingly relying on the Cannes red carpet to launch new collections.

Cannes may be a film festival, but it’s also in the business of attention. Back then, the big bucks were in cerebral celebrations of cinema. Now, they’re in branded red carpet looks and Insta celebrities.

 

That’s all this week. If you enjoyed reading The Impression, please share it with your friends, family, and colleagues. And please write to me anytime at soumya@thesignal.co with thoughts, feedback, criticism or anything you’d like to see discussed in this space. I'd love to hear from you.

Thanks for reading, and see you again next Wednesday!