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Trade: A new "non-theatrical rights" based business model in Telugu Cinema!
By: Tupaki Desk | 27 Feb 2022 5:23 PM IST
For people who are interested in the business of cinema would love know how the trade shifts with tide. In the early days, a producer used to bring money from his own pockets and finish the film at his own pace, whenever he can arrange the funds.
Hence, the actors used to treat them with respect as god's. Later, film business has become an industry. Investors started knocking the doors of actors with big suitcases and actors used to ask their producers to encourage them.
Youngsters with business sense and passion for films came with some investment money and tried to learn the craft by shadowing established producers who built their own studios like Gemini, Vahini, Vijaya, AVM.
Once they started producing, they encouraged their friends and family members to join them. This formed groups in Telugu Cinema and looking at the growth opportunities, local influential business men decided to take up distribution in their areas and hence given rise to distributorship.
Distributors have divided their regions and whoever had major influence they used to "rule" that territory. Slowly, distributors started preferring a hero or a star and they their home distributors.
By the encouragement of these distributors and constant growth in public demand for cinema consumption, theatres started increasing. Once, the biggest release in Telugu Cinema was 12 prints and 25 theatres only. Today, it is upto 900 theatres worldwide and 1200 screens.
Increase in theatres, paved way to exhibitors sector. Each distributor had to divide the region into sub-divisions based on the revenue. The high paying or earning division exhibition used to be under their direct control while lower ones go to third party exhibitors.
Slowly, exhibitors started becoming stronger and as they started forming syndicates and do business by their own, competition in distribution grew. The distribution sector which used to be two or three player game turned into a bidding war. This paved way for realtors to take over exhibition sector and thereby influencing distribution.
Producers started getting money from distributors for making films with their preferred stars and friends of these distributors who were making money in real estate and other businesses turned into financiers.
So, producers had to just have the nominal amount to pay for a star for his dates and technical team for their signature on bond papers. Once they were all hired, these financiers used to give the producers money and project used to go on studio floors. Producers used pay salaries from this money. Some used to pay in installments some in full.
Financiers started using compound interest mechanism to demand 30 crores return for 5 crores loan. As producers started diminishing financers tried their hand at producing and distributors, exhibitors also tried their hands.
But a good producer understands story and project requirements better than a businessman who is looking to recover investment or save money. Hence, ticket rates have been exponentially increased, star remunerations have increased due to fight for their dates and product quality, that is, film quality diminished.
Distributors and producers to survive started looking at non-theatrical rights business that is, selling audio rights, digital streaming rights and Satellite broadcast rights. This gave direct revenue to producers and to distributors who turned into financiers.
Banks, realtors, big established business firms started turning into financers, investors. Producers offered them guarantees looking at non theatrical revenue. Still, the compound interest mechanics started working against these producers and now, people who buy non-theatrical rights from producer and then sell off to Amazon Prime Video, Netflix or other big digital streaming OTTs and Satellite broadcasters have started coming up.
They have their business model simple. They invest in a Film based on its non-theatrical rights value. If a film can get 5 crores from non-theatrical from market they will invest 3.5 or 4 and try to sell them to the other main parties for 5 or 6 crores. This will help them make some money off the film and producer won't have to return one paise also.
Aditya Music, Zee Studios, Sharat Marar, B4U, T-Series have become pioneers in this third party non theatrical rights business model, in Telugu Cinema. Recently Aditya music and B4U bought rights of big cinemas and producers had to return 15% more money than original investment to acquire the rights back from them and sell off on much better price.
Hence, the actors used to treat them with respect as god's. Later, film business has become an industry. Investors started knocking the doors of actors with big suitcases and actors used to ask their producers to encourage them.
Youngsters with business sense and passion for films came with some investment money and tried to learn the craft by shadowing established producers who built their own studios like Gemini, Vahini, Vijaya, AVM.
Once they started producing, they encouraged their friends and family members to join them. This formed groups in Telugu Cinema and looking at the growth opportunities, local influential business men decided to take up distribution in their areas and hence given rise to distributorship.
Distributors have divided their regions and whoever had major influence they used to "rule" that territory. Slowly, distributors started preferring a hero or a star and they their home distributors.
By the encouragement of these distributors and constant growth in public demand for cinema consumption, theatres started increasing. Once, the biggest release in Telugu Cinema was 12 prints and 25 theatres only. Today, it is upto 900 theatres worldwide and 1200 screens.
Increase in theatres, paved way to exhibitors sector. Each distributor had to divide the region into sub-divisions based on the revenue. The high paying or earning division exhibition used to be under their direct control while lower ones go to third party exhibitors.
Slowly, exhibitors started becoming stronger and as they started forming syndicates and do business by their own, competition in distribution grew. The distribution sector which used to be two or three player game turned into a bidding war. This paved way for realtors to take over exhibition sector and thereby influencing distribution.
Producers started getting money from distributors for making films with their preferred stars and friends of these distributors who were making money in real estate and other businesses turned into financiers.
So, producers had to just have the nominal amount to pay for a star for his dates and technical team for their signature on bond papers. Once they were all hired, these financiers used to give the producers money and project used to go on studio floors. Producers used pay salaries from this money. Some used to pay in installments some in full.
Financiers started using compound interest mechanism to demand 30 crores return for 5 crores loan. As producers started diminishing financers tried their hand at producing and distributors, exhibitors also tried their hands.
But a good producer understands story and project requirements better than a businessman who is looking to recover investment or save money. Hence, ticket rates have been exponentially increased, star remunerations have increased due to fight for their dates and product quality, that is, film quality diminished.
Distributors and producers to survive started looking at non-theatrical rights business that is, selling audio rights, digital streaming rights and Satellite broadcast rights. This gave direct revenue to producers and to distributors who turned into financiers.
Banks, realtors, big established business firms started turning into financers, investors. Producers offered them guarantees looking at non theatrical revenue. Still, the compound interest mechanics started working against these producers and now, people who buy non-theatrical rights from producer and then sell off to Amazon Prime Video, Netflix or other big digital streaming OTTs and Satellite broadcasters have started coming up.
They have their business model simple. They invest in a Film based on its non-theatrical rights value. If a film can get 5 crores from non-theatrical from market they will invest 3.5 or 4 and try to sell them to the other main parties for 5 or 6 crores. This will help them make some money off the film and producer won't have to return one paise also.
Aditya Music, Zee Studios, Sharat Marar, B4U, T-Series have become pioneers in this third party non theatrical rights business model, in Telugu Cinema. Recently Aditya music and B4U bought rights of big cinemas and producers had to return 15% more money than original investment to acquire the rights back from them and sell off on much better price.