Theatrical release window increased to eight weeks: What does it mean for OTT platforms?

The move is expected to boost the footfalls in cinema halls, which is not back to its pre-Covid levels yet.

In recent times, Bollywood films have been making it to OTT platforms shortly after their release in cinemas. The hugely successful Bhool Bhulaiyaa 2 released on Netflix barely a month after its theatrical release. And so did Prithviraj. Gangubai Kathiawadi was one of the rare films in recent times to have an eight-week gap between the theatrical release and the movie debuting on over the top (OTT) platforms.

But now, exhibitors and producers have agreed to maintain the eight-week window between the release dates after August 1 for all Hindi and Hollywood films.

Before the onset of Covid19 pandemic, the films would have an eight-week gap. During the pandemic-induced lockdowns most films released on OTT first. However, when films returned to cinemas in November 2021, after almost a two-year long break, the gap had reduced to just four weeks.

Though around 20 major Hindi films were released in the first six months of 2022, only three films managed to get the cash registers ringing - Kashmir Files (Rs 253 crore), Gangubai Kathiawadi (Rs 129.10 crore) and Bhool Bhulaiyaa 2 (Rs185 crore).

While films are releasing and people are stepping out to watch them, the footfalls remain low. Ticket sales contribute 60-70% of a film's revenue. The industry hopes that increasing the theatrical window will urge more viewers to come to the cinemas than wait for the OTT release. But what will its impact be on OTT platforms?

Impact on OTT platforms

This move is expected to bring down the cost of acquiring the digital rights for films for OTT platforms. In fact, a film’s performance in cinemas will help the players gauge its’ real value.

“In the last two years the premium on digital rights had increased by 30-40%. With this it will come back to pre-covid numbers. There will be no negative impact on OTT platforms,” said Karan Taurani, senior vice-president, Elara Capital.

Pradeep Dwivedi, group CEO, Eros Media World, says this window will work well for everyone. “OTTs have already carved a niche for themselves and are here to stay. This will ensure the right valuation for the right content. Small budget movies will either directly release on OTTs or will make it to OTT in a shorter time span,” he says.

The platforms are now expected to focus their investments on webseries and original content to drive subscriber growth.

“Webseries have been important for these platforms as it drives customer retention and a sticky audience profile. During the pandemic they moved away to movies. But that was more in terms of experimenting with the business model and also shoots were stalled. The share of content budget in terms of webseries will come back to the pre-covid levels,” he adds.

Saurabh Varma, CCO, Content Engineers, says that it is a myth that OTT platforms and cinemas are competing against each other. There is enough content for OTT and cinema, that they can complement each other.

“If a film works in cinema it also complements the OTT release. In fact OTT platforms will prefer films that work in cinemas. Cinema is the first window and if it works all others get a boost from it. It is not that a large population watches a film in cinema, but still people notice when a film gets a good response there,” he says.

This decision’s impact on the TVoD model is yet unclear. Platforms like BookMyShow and Amazon Prime allow viewers to pay per view. The content is released after the theatrical release and before it is made available on streaming platforms.

“Those models are not scalable in India. We have seen it coming in India a couple of years back as well with Google Play store renting out films. But the Indian audience has not taken to it yet,” he says.

Varma has a similar opinion. “I'm not sure how many people will opt for the model in India, because content is freely available. It is yet to catch up here,” he says.

Impact on theatres

The move is expected to give a boost to the ticket sales in cinemas.

“Eight weeks is a fairly large gap. So earlier, consumers would wait for it to come on OTT. But now they will go to cinemas. It is a positive move for exploratory and large scale content and for footfalls in cinema,” adds Taurani.

Varma says it will cater to the impulsive movie-watching audience.

“Right now the perception is why go to the cinema when it is available after four weeks. If the window is longer it will definitely attract more viewers,” he says.

In a statement INOX cinemas said, “Theatrical run is the most revenue generating phase for any film, with contributions to the tune of 60 to 70 percent. As the fundamental aspect of the cinema value chain, this windowing pattern has done wonders in terms of revenues for the content creators and other stakeholders, as it offers the creators an opportunity to extract the best from all available mediums, whether it is cinema, OTT or satellite.”

Dwivedi sees this as good news for the entire industry.

“The theatrical industry is finally picking up after a long hiatus. However, I see the trend has changed. Today, theatrical success is about everything - scale, production quality and content. And it will remain like this for times to come. I believe this is good news for the entire industry as big budget movies will make it to large screens and for the rest, we will have OTT and satellite making everyone happy.”

More importantly, the theatrical release defines the brand equity of a film, the popularity of its actors and even its soundtrack. “Because everything becomes measurable through the box office records. When it does well in cinema it can ask for a good price for digital and satellite rights. On the other hand, since OTT platforms don’t share numbers, there’s no way of knowing how a film has performed,” he says.