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  Business   In Other News  21 Feb 2019  OTT platforms pose risk for multiplexes

OTT platforms pose risk for multiplexes

THE ASIAN AGE. | SANGEETHA G
Published : Feb 21, 2019, 1:49 am IST
Updated : Feb 21, 2019, 1:49 am IST

OTT platforms have become a tempting option for consumers due to their aggressive pricing.

The subscription charges for movie-heavy platforms such as Amazon Prime and ZEE5 are quite affordable, finds Edelweiss Securities.
 The subscription charges for movie-heavy platforms such as Amazon Prime and ZEE5 are quite affordable, finds Edelweiss Securities.

Chennai: The aggressive pricing of over-the-top platforms, their quicker procurement of new movies and vast content library is driving consumers away from movie houses and posing a risk for multiplexes. Despite GST rate cut, the rising movie ticket prices will make multiplexes less attractive in comparison with OTT platforms in the near future.

OTT platforms have become a tempting option for consumers due to their aggressive pricing. The subscription charges for movie-heavy platforms such as Amazon Prime and ZEE5 are quite affordable, finds Edelweiss Securities. Amazon Prime has a subscription charge of Rs 999 per year and ZEE5 is available for Rs 499 per year. Original content is also available on these platforms for rates as low as Rs 300 per year as in the case of AltBalaji. “We believe this is crucial as both the leading OTT platforms have been aggressive in buying digital rights for recently released movies,’ said Abneesh Roy, senior VP, institutional equities, Edelweiss Securities.

As far as multiplexes are concerned, the GST rate cut will bring down movie ticket prices by 10 per cent and increase footfall in the medium term. However, movie ticket prices have been increasing by 5 to 6 per cent every year. This pricing inflation will be a long-term risk for the multiplex industry, especially when OTT platforms are highly competitive.

As of now, multiplexes are protected by the time window, stipulated for digital release of movies. Between the box office release of a movie and digital release usually there is a minimum time gap of eight weeks or sixty days. However, some movies like KGF Chapter 1 and Tumbbad were digitally released in six weeks and movies like Hindi Medium was digitally available in just over a month.

“The time frame for digital release is typically negotiated between producers and distributors/ exhibitors. Producers acknowledge the increased product life and monetary benefits of releasing movies on digital platforms given the rising number of subscribers and mitigation of piracy risk,’ said Roy. Going ahead, movie producers may push for shorter windows in their agreements for digital release.

Moreover, the reach of OTT platforms is equally strong as movies. Multiplexes like PVR and Inox cumulatively generated footfalls of 110 million for nine-month period of FY19. On the other hand, the cumulative Monthly Active User (MAU) count reported by leading OTTs was much higher. Hotstar has 70-150 million users, ZEE5 40 million, Voot 40 million, Amazon Prime Video 20 milllion and Netflix 5 million.

“Given the cost economics, if a person has to spend Rs 200 for one movie ticket in a multiplex, Rs 999 for Amazon Prime Video and Hotstar enables the subscriber to watch multiple new releases along with his/her friends and family for the whole year. We believe risks for multiplexes have increased, particularly in a price-sensitive market such as India,” he said.

Another trend which has been emerging lately is the direct release of movies on digital platforms by smaller production houses and regional producers, who create offbeat or differentiated movie content. With such deals, multiplexes are losing out, especially when audiences are opening up to differentiated content.

Tags: amazon prime, ott platforms, zee5