Is Bollywood ripe for Digital Disruption?

The tragic demise of a young and very talented actor Sushant Singh Rajput (SSR) shook everyone and specially India’s Hindi-based film industry Bollywood. There have been ongoing debates and discussions on allegations of nepotism and favouritism that led to his suicide in all social circles. Bollywood movies have always been the connecting thread for us not only in India but also abroad. I remember striking up conversations with strangers in Europe about popular actor and movies. And SSR’s tragedy made us question the truth about the industry and go beyond the dazzle to learn about the plight of so many talented actors, writers and directors who are marginalized by the ‘Powerful Few’ of the Bollywood. The real question that came up in our discussions was ‘What gives the Powerful Few such influence and control over who gets the contract and who doesn’t or which film gets released and which doesn’t?’

The opinions on what gives this power ranged from corruption to inner circles to cults to underworld influences and many other which even if possible, aren’t likely. Because the factors that decide the fate of actors and other creatives is systemic. It is not against a certain individual, it is against a whole category of talents and ideologies. Bollywood sometimes seems to work on certain ‘rules of thumbs’ or ‘recipes of success’ that determine the configurations of a production including lead cast, supporting cast, music, direction, locations, genre and story. And one such factor that seems to be THE deciding factor but is often overlooked in Distribution. The real customers of a film production are not the audience, it is the distributors who buy the theatrical distribution and screening rights. Although the producers have other sources of earning e.g. selling music rights or satellite rights, the theatrical rights are the most significant source of revenues. The financial or ‘box-office’ success or failure of a movie depends upon the net profit arising from the sale of tickets minus the cost of these rights. In fact, many movies having good ticket collections still struggle to make money for their distributors due to the high cost of theatrical rights.

Valuation of a Movie Production

The aforementioned ‘recipes’ or ‘formulae’ for success like having A-rated actors or exotic shooting locations or music numbers are still used for the valuation of movies. Distributors independently value each production based on such parameters and bid for theatrical rights. Many members of the Powerful Few are not just producers but also major distributors and have their own ecosystem of smaller distributors in different circuits. This includes big names like Dharma Production, YRF, Red Chillies etc. Indian theatre ecosystem has both large chains like PVRs and small stand-alone theatres and multiplexes. Large chains usually buy their rights directly from the producers. But large parts of the country and rural areas still have single-screen theatres of independent multiplexes who work with distributors divided into regional circuits. Small regional distributors and exhibitors don’t have the financial muscle to obtain the theatrical rights of movies that are in the tune of $5Mn - $20Mn USD. By controlling and influencing the distribution and pricing of the theatrical rights, the Powerful Few exert their influence over independent directors and producers. If a large distributor puts a condition to remove a specific actor or decides not to buy the theatrical rights of a production after the movie is produced, independent producers, directors and distributors must abide by it. And if we want to challenge and change the influence of the Powerful Few, Bollywood’s distribution channels need to transform.

Ripe for Disruption – Online Distribution and Video on Demand

Despite the challenges and hurdles that large producers-cum-distributors present, some independent producers have opted to take another route. Recently, veteran actor Amitabh Bachchan and actor Ayushmann Khurrana starrer Gulabo- Sitabo became the first mainstream Bollywood film to bypass a theatrical release due to the lockdown in India. Earlier, U-Turn was crowdsourced and distributed online via Netflix in 2016. With the rise of Indian Video-on-Demand (VoD) platforms like Hotstar, Jio and TVF Inbox and international players like Amazon Prime, Apple iTunes, Google Play and Netflix, movie distribution has started to get democratized. VoD platforms are always looking for exciting new content and it has broadened the reach of independent filmmakers to not only reach their target audience but also build a community around different themes and genres.

And this is not just in India. With the ongoing corona crisis, theatres around the globe are cracking under the effects of lockdowns with growing debts and tumbling stock-prices. Even large theatre chains are facing pressure and are on the verge of bankruptcy. With the theatres losing their bargaining power, leading studios have started bypassing the theatrical releases and moving directly to VoD. Recently, Universal launched new features like Emma, The Hunt and The Invisible Men on VoD platforms. Even Studios like Disney, Warner Bros. and Pixar are following the suit.

However, the online distribution is still beyond the reach of a large population of Indian fans who still don’t subscribe to Netflix or don’t want to rent a movie from Google Play. Small viewer base and traditional business and revenue models are still limiting the potential of online distribution and VoD. But the most important factor is the lack of ‘Theatre Experience’ in VoD. And being a movie-buff myself, I know that no amount of VoD compares with the physical experience of sitting in a movie theatre with popcorn and softdrink. One part of the theatre experience is of course the big screen. But the other significant part is the complete detachment from the real-world and its distractions as you get completely absorbed in the movie. For me, that’s what I pay for when I go to the theatre to watch a movie. And going to theatres is still a prominent outing for family and friends in India. So theatres are an important piece of the puzzle for transforming Bollywood’s distribution strategy.

Oyo-fication of independent theatres

One potential solution to solve India’s unique distribution challenge would be to ‘Uberify’ or rather ‘Oyofy’* independent theatres. This requires a combination digital rights management platform like Netflix and a demand-management platform like Booking.com. Once verified and onboarded, theatres will be able to bid for screening rights for individual screenings or bundles of 10 to 50 screenings at a time. Production houses may allow theatres to host a premier or free screening to test the market and place bids. Once the rights are acquired, theatres should use the same platform to directly stream the high-quality content. The platform may allow an additional 20-30 minutes window to buffer the content and setup the screening.

Such a distribution would allow producers and exhibitors to remove the middlemen and distribute risks and profits evenly. By dividing the theatrical rights into smaller screening packages, producers can reduce the investment risks of exhibitors. By directly selling rights to exhibitors, producers can improve their margins. Many film distribution aggregators exist today but they distribute only to digital VoD platforms. Digital Theatre Distribution is a great opportunity for entrepreneurs to disrupt the film distribution industry. Most importantly, it will take the power and influence away from the Powerful Few and that would be a great boon for the industry. It will allow producers to tap into the rich creativity of artists to create content that audiences are longing for. And next time when someone talks about nepotism and favouritism, I hope they will think about transforming distribution as one of the ways to eliminate these evils from our beloved Bollywood.

* Oyo is one of India’s largest hospitality chains of leased and franchised hotels, homes and living spaces that started listing and booking of budget accommodations in India in 2013.