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Impact of COVID-19 on Business of Movies in India

MARCOM Business | Bollywood: Impact of COVID-19 on Business of Movies
The effects of COVID-19 on the movie industry have been far-fetched with bleak hopes of returning to normal anytime soon, even if the restrictions are lifted by the government.

The entertainment industry was particularly shut abruptly due to the widespread coronavirus pandemic. The effects of COVID-19 on the movie industry have been far-fetched with bleak hopes of returning to normal anytime soon, even if the restrictions are lifted by the government. This largely owes to the general skepticism among the people to return to the movies or events. In such an uncertain scenario, how is the Bollywood movie industry particularly preparing for the post-pandemic world?

Pay Cut for the Industry?

J. Satish Kumar, who has produced many national award-winning films, has expressed his opinion that actors, directors and technicians should take almost 30% pay cuts for films stuck mid-production due to the pandemic. With high interests on loans, production houses may not be willing to offer as much pay as before to actors.

The leading actors and directors charge as high as ₹10crore per film plus any revenue sharing deal that they might enter into. With productions and releases stalled indefinitely, this figure is likely to drop by a large percentage for the coming few years.

Experts also predict a fall in the number of films produced in a year by almost 20-30% which will further affect the earnings for industry professionals. In addition, some also foresee a drop in sponsorship revenue for films which will largely affect the budgets for film productions.

Temporary Breather Found in OTT Platforms

Countless productions from big budget movies to indie shoots have been paused as India has places strict social distancing norms across the country. While many movie releases by production houses have been stalled, some are doing away with the wait by launching on OTT platforms. Amitabh Bachchan and Ayushmaan Khurana starrer, Gulabo Sitabo was one such movie to release on Amazon Prime amid the lockdown.

While OTT provides a breather in such times, many are arguing about the lack of profitability in such a model. Industry professionals are looking forward for the return of movie theatres as box-office ticketing accounts for a major revenue for production houses. Movies are often released in tandem with cinemas and multiplexes on a revenue-sharing model.

Theatrical releases still plays a dominant role in the movies experience. Industry experts have since long depended on theatres and multiplexes for revenues, which contribute almost 50-60% of the total revenue. OTT platforms are experiencing a surging demand for fresh content amid the lockdown but traditional cinema is still a fan of theatrical releases because it is the ultimate cinematic experience.

Preparing for The Future

The optimistic are looking at normalcy to start post July-end and August. Many are utilising this time to improve on scripts, connect with actors with otherwise busy schedules, prepare production outlines and even make lock in on locations for shoot.

Vijay Subramaniam, Director and Head of Content at Amazon Prime Video India, told Variety in an interview, “We have always maintained that theaters play an important role in film distribution and we aren’t looking to change that. These unique circumstances shine a light on the evolution of entertainment consumption and things are not going to be as binary as some may expect it to be”.

There are many films that are awaiting big-bang releases such as Sooryavanshi, Laxxmi Bomb, and 83. This is suggestive of the fact that big-budget movies are waiting out the lockdown and are focussing on traditional box-office releases. The sound and picture quality that cinemas offer is most definitely compromised on OTT platforms that are viewed at home. This is believed to compromise the movie experience which is a big factor contributing to its success.

A full recovery of the movie industry could take almost 2 years as the industry is expected to have already incurred a loss of almost ₹1,000 crore. Filmmakers are figuring out their own strategies for the future amid lack on any consensus in the industry. However, they do all echo one fact which is that the cinema experience will change drastically in future with more rules and regulations in place.

Uncertainty and confusion still prevails as no respite is in sight for the future. In such times, optimism and preparedness is the only medicine that can reel the movie industry at the moment.