Telugu film industry is on a overdrive with nearly 70 feature films, series, OTT films under production right now. As exciting as this may sound, the summer of 2021 could turn out to be quite chaotic.
There’s an air of excitement in Telugu film industry these days. Almost all the films and series, which were stalled during the lockdown in summer of 2020, have resumed their principal photography, and new films are being launched almost every other week. That’s not all. Hyderabad has become a hotspot for film shoots from neighbouring film industries as well. All this has resulted in a dramatic rise in demand for actors, writers, directors, cinematographers and other film production members in the industry. Right now, people in the industry say that if you are a registered member in any of the unions, there’s ample work to be done. Even equipment for filmmaking, generators, and caravans are hard to find. It’s not surprising, considering that nearly 70 feature films, series, and straight-to-OTT films are under production.
Rajamouli-Ram Charan-NTR’s RRR, Chiranjeevi’s Acharya, Allu Arjun-Sukumar’s Pushpa, and Prabhas-Pooja Hegde’s Radhe Shyam, Pawan Kalyan’s Vakeel Saab are among the biggest of Telugu films which are under production. Ever since cinema halls reopened in December, 2020, the Telugu film industry has gone into an overdrive, of sorts, to ensure that there are plenty of films ready for release, whenever a window opens up from summer onwards. In January and February, several films, which were in the final stages of production before the pandemic, have already been slated for release. And the growing number of films, which will soon be ready for release, means that there’ll be enough supply for theatrical releases and OTTs that are looking forward to showcase fresh content. (Read more about how South Indian Film industries coped up during the pandemic)
However, there’s a catch. Beyond the veneer of this dramatic increase in production of feature films and series, the industry could face major hurdles in near future. Right from scheduling the release dates and raking in moolah at the box-office, to grabbing the attention of the viewers on OTTs and revenue-sharing, there’s a lot that the industry needs to figure out before this euphoria turns into a financial mess.
Money, Money, More Money
Money seems to be free-flowing these days, if the number of films and shows under production is anything to go by. Perhaps, it’s a sign of our collective hope that things are only going to be better in the next few months, and no one wants to be left behind when the market condition improves dramatically. Thus, without an end to the pandemic in sight, many producers and financiers seem to be pumping in money to facilitate production of films. The long period of inactivity had turned into a blessing in disguise for several writers and directors, who were ‘ready’ to go for shoot as soon as the number of Covid-19 positive cases reduced considerably.
Amidst all this, however, the less discussed aspect is how money is meant to be circulated to keep the industry running. A financier lends money to the producer, who earns his money through sale of theatrical, dubbing, TV and streaming rights. The producers repay the debt in due course of time. And the financier once again funds another project. In many instances, the financiers keep lending money to producers even though the debt accumulated isn’t cleared. There’s a significant amount of interest levied too. And this cycle keeps on repeating itself, until a film does so well at the box-office that all debts can be cleared at some point. Then, there’s another subset of people, who have no choice but to keep making movies so that the line of credit (money) is in circulation. If they stop working, then financiers demand to repay the debts. In some instances, producers go completely bankrupt and then, everything goes for a toss.
The pandemic has disrupted the entire ecosystem to an extent that the value pegged to feature films and shows has to be reviewed. The days of theatrical rights raking in big moolah are long gone, and it’s inevitable considering that theatres will continue to run with 50% occupancy for some more time. And if it doesn’t turn out to be great, then, the occupancy in cinema halls will fall so drastically that it won’t even make enough to pay the VPF (Virtual print fee) charges. In this scenario, the value of theatrical rights undergoes some sort of course-correction, and the producers have to rely on OTT and TV rights to recover the costs.
Eyeballs And Conversion Rates
The dramatic rise in popularity of OTTs during the pandemic has opened up all kinds of possibilities for content-creators in the industry, especially when there’re are tens and thousands of people ready to watch films and shows from the comfort of their homes. In the absence of a theatrical experience, this is an alluring proposition, which is too big and too tantalising to miss. Truth be told, this is the best case scenario for low and medium budget films which have struggled to find a big theatrical release. With the number of subscribers that the likes of Hotstar, Amazon Prime, Netflix, and Aha boast about, movies and shows have found a home, so to speak.
While there’s quite a lot to cherish with the increase in production of films and shows to cater to the OTT market, the economics, however, tell a different story. The budgets for the shows vary depending on the production house and even the financial muscle of the OTT commissioning the shows. This, in turn, has put a strain on the ROI (return on investment) for the producers. Not every film gets a jaw-dropping price from OTTs. In fact, most producers will be lucky if they can manage to get a 10% profit on the budget that they have put into the movie. And the majority of the producers have to be content signing deals with OTTs where movies are streamed on a revenue-sharing basis. This revenue, industry insiders say, is calculated on the basis on the hours of content streamed on the app.
For example, if a movie is watched by an X number of people for 500 hours, then it’ll earn a Y amount of money. And then, the Y is split between the OTT and the producers. Now, we are looking at a scenario where there’s no guarantee about how much money one might make from this sort of a deal. The number of people who have subscribed to an OTT might be huge, but then, one might never know if they’ll watch every new film that’s available for streaming. Now, who’s responsible for grabbing eyeballs and getting people to stream movies? OTTs have been spending big money on marketing and branding, but then, the revenue generated might not even match the budget in most cases.
First In, First Out
Then, there’s the problem of scheduling movie releases which are aiming for a theatrical release first. The longer the queue, the steeper will be the interest accrued. Not all producers are willing to take the risk. For better or worse, there’s only so many screens available and this limitation hampers the plans of producers to ensure that their film reaches the maximum number of people.
For now, the Telugu film industry is betting big on a massive wave that’s bound to strike sooner or later, where we might see hordes of people thronging to cinema halls every week. At the moment, no one knows if this wave will be evident in summer of 2021 or maybe in the last quarter of the year. But one thing is certain – Everyone wants to be ready when the floodgates open. No wonder, the gold rush has reached a fever pitch now.