Theatrical Rights – The writings on the wall

Once upon a time, films were made relying upon theatrical revenues as other revenue streams were limited or non-existent. With several revenue opportunities (digital, satellite, Telugu dubbing, Hindi dubbing, overseas territory, release opportunity in China, remake rights etc.) opened up, Tamil cinema has found new ways to recover investments. However, biggest uncertainty in revenue today is from theatrical rights. With an average 3 or 4 films releasing a week, solo release opportunity is limited. Even if the film takes off in first week, by second week momentum dies down and revenue is not even 40% of first week’s collections. In view of this, how much one can earn through theatrical is uncertain and is dependent on several external factors.

Leading producer K E Gnanaveal Raja spoke in an interview that, he is no longer looking at Tamil Nadu theatrical revenues to recover his investment. He packages his film with other big films under his production and achieves revenues through satellite, digital and Hindi dubbing rights, which ensures he almost recovers his production cost. All the other revenues including through theatrical becomes a bonus. Another leading producer S R Prabhu, who pioneered digital rights exploitation today ensures that most of his small budget films are sold at good price for digital and satellite rights through good packaging with his big budget films, which almost recovers production cost. Hence, he is not totally dependent on theatrical revenues and releases without worrying much about the outcome. Producer Sivakarthikeyan is also able to achieve pre-sales like this. Producers who are unable to package their films and pre-sell like them struggle and expect Tamil Nadu theatrical revenues to save them despite knowing the immense challenges from new releases, piracy etc.

Unlike digital, satellite and Hindi dubbing rights, which have good demand if the film features a good artiste or creates a good buzz and can be pre-sold on announcement, theatrical rights are not that easy to be sold for many. With limited buyers, the process of finding a buyer goes on until a week before film’s release for many films and in most cases rights are bought a few days prior to release date. Hence, whether the film will get its revenue from theatrical rights remains a question mark until release. Even if rights are sold, except a few, most distributors falter on their payment and at last minute reduce the agreed amount quoting various excuses. Hence, a producer has no guarantee of getting the agreed price from distributors.

Theatrical revenue faces immense challenges due to multiple releases, getting inadequate shows or screens, piracy, local problems like water scarcity, perceived high cost of movie viewing (ticket price, online booking charges, parking, cost of snacks etc.) among audience and extra-ordinary situations like world cup cricket craze and rains affecting the footfall.

This summer quarter (April-June) of 2019 was bad for Tamil cinema as except for Kanchana 3, none of the other big films clicked at box office. Small and medium budget films worked for a week and failed to sustain subsequently. Hence, this quarter reflected poor theatrical revenues. Producers who were not so dependent on theatrical rights succeeded financially as they ensured their investment recovery through other rights itself. Except for a few whose films worked theatrically, other producers, who did not have the opportunity to package their films either lost financially or recovered just their print and publicity cost from theatrical rights. Increasingly Tamil cinema is not offering a level-playing field. Only those who can pre-sell the rights by packaging their films well can recover their investment and succeed. Or like a few who can make their film in shoestring budget can succeed (House Owner and Merku Thodarchi Malai) with limited theatrical revenue. Those who are dependent on theatrical rights to recover their investment shall face big challenges. The writing is clear on the wall. Either you ensure pre-sales of your key rights or face the music!