Indians Prefer Watching Movie At Cinema Hall Rather Than OTT Content

Indians Prefer Watching Movie At Cinema Hall Rather Than OTT Content

Movie consumption remains strong despite COVID-19 & OTT.

There has been a lot of talks of OTT overtaking cinema and people not visiting cinemas ever, here are key points in brief to assess why the OTT release of movies is a temporary phase and is not here to stay.

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1) Direct digital release caps the amount of collection a movie makes even for some small/medium movies. Eg – Movies like Uri and Kabir Singh could have never surpassed RS 250 Crore collection had they not released in cinemas.

2) OTT’s payment may not always be attractive – large global OTT’s always prefer investing into web series content as it gives them sticky audience who can binge watch as compared to movie which is hero Content – many OTT’s don’t end up paying a mark up of nothing more than 20-25% to a producer which caps his income.

3) Larger films which are made at a budget of over RS 100 crore cannot be put on OTT directly as their recoveries from domestic and overseas cinema is very huge which the OTT alone cannot compensate for.

4) We believe, actors/stars themselves are never in favour of releasing their movies directly on digital – most of the bigger ones are co producers now – release of a film directly on digital impacts their brand value and image (Exceptions May be in the case of Laxmi bomb wherein the pressure of Disney + may lead to direct digital release, but it’s more of a one off).

5) Smaller production houses who generally don’t have more than one movie every year and who go for direct digital release may find it tough to deal with programming teams of multiplex to get screens (wider release) as almost 70% of box office collection in Hindi is controlled by multiplexes.

6) Movies with large sets, extravaganza are meant for cinema consumption only and audience may not enjoy the same at home.

7) Piracy in the form of torrents and others have always been there on the movie industry; despite the same, Box office collections in Hindi breached historic high levels in FY20 until COVID-19 happened

8) India is one of the few countries which does not have anything except cricket as an entertainment and family outing; the screen count (screen penetration) too is very less vs global counterparts given the variety of Content (Hindi and regional) – we hence believe that cinemas will be a priority if people want to go out.

9) India remains to be a large market where there is a big untapped opportunity for regional dubbed content to release in Hindi languages that too can boost collections.

10) Multiplexes will never fall short of content given the large number of releases (almost 400 Hindi films out of total of almost 1500 films released every year).

The above views hold true even in current uncertain times as few movies opt for direct digital releases ; however, the only big risk is that even if cinemas open up, if at all there is a second wave of virus and if the lockdown comes back again after 6 months, which is an unforeseen situation.

Karan Taurani @ Elara Capital

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