Dip in satellite rates for movies – a temporary phase or a permanent change?

Enough has been said about the way how the pandemic transformed the business of entertainment, especially the movie business. The conventional theatrical distribution model witnessed tectonic disruptions in ways that would have been unthinkable till recently. When the pandemic forced people to shut themselves inside their homes, OTT became the only saving grace, which eventually disrupted the traditional theatrical distribution model. As a consequence, satellite acquisition rates saw a drop drastically. Is it a temporary phase or will it change the industry dynamics? Are satellite rights losing their lustre? Adgully reached out to industry experts to understand this and more.

Naveen Chandra, Founder-CEO, 91 Film Studios, feels that this is a pandemic-induced phase which will change soon. According to him, things will be back to normal by the end of this year or by next year. The current dip in satellite rates, he asserts, can be attributed to the pandemic-induced gluttony of movies, which could not find a theatrical release.

“One of the most important things about 2022 is that it actually was the first post-Covid year. Therefore, there was a lot of supply availability for the previous two years. Almost all the way from 2019 to 2021, a lot of movies that were made in different languages – all of them came up for theatrical release and distribution on satellite rights in 2022. So, this excessive supply, like in any other industry, always reduces prices. What happened to movies that were released during the said period suddenly found that there were limited avenues for films’ distribution. This year, some of the supply has gone away from last year.

So, this year we will find a lot of new content – stories that are coming out from this year onwards are about the post-pandemic times. So, the demand-supply equation should get balanced (get back to normal),” says Naveen Chandra.

He is certain that by end of this year and by 2024 things should go back to normal.

The dwindling of satellite rates happened because movies are released first now on OTT so satellite viewership share reduces, notes Mautik Tolia, Director and Co-founder, Bodhi Tree Multimedia, adding, “Hence the valuation of the rights gets impacted. For producers, they are able to monetise the rights over digital and satellite.”

Content is king

It may look like a hackneyed usage, but the fact is that content is not only the king, but has become an overriding factor in deciding the fate of a movie’s success. So, doesn’t the star cast matter? The fact is that the arrival of OTT platforms has almost destroyed the long-held industry norm that a stellar star cast is of paramount importance in deciding the success of a film.

Today, it is the best time for all kinds of stories to be told, says Naveen Chandra. “Look at ‘Love’, a Tamil movie which has no stellar star cast but it did well at the box office. There are similar movies like ‘Jaya Jaya Jaya Jaya Hey’ (in Malayalam) or in other regional languages like Punjabi. At the end of the day, a film’s success is purely determined by content; star cast does matter, it does have a role to play. But I think more than anything else it is the content the people are accepting rather than the star cast. Even in Hindi there are a lot of big-star movies that sell on the basis of star cast, but there are movies that sell based on the stories. Star cast becomes important due to the saleability; such movies require less marketing. Whereas a film with no star cast needs a lot of promotional activities for people to talk about it so that it becomes viral so that more viewers watch it,” explains Chandra.

According to him, a lot of stories that were made before the pandemic had different themes: some good for digital, satellite, or theatrical distribution, etc. So, that division has also happened now; as a result of this, some movies that were doing very well at the box office are the most expensive to acquire.

On the other hand, Mitesh Kothari, Co-Founder and CCO, White Rivers Media, feels that a known star cast helps in marketing and also gets the initial sampling for the platforms. However, at the same time he adds that non-star cast films do get a platform now due to OTT, whereas earlier they would struggle due to having to have a theatrical release which was expensive. “If the film is good, it does get good word of mouth and a lot of such films have been discovered by audiences. Take films like ‘The Great Indian Kitchen’, for example, which have benefited hugely from OTT,” he points out.

OTT platforms have become very convenient for viewers, but there is also always an issue of content discoverability, says Kothari. “Movies with a relatively new cast sometimes shift to the bottom of the discoverability pipeline. However, we also have a number of emerging content recommendation engines now in response to a common viewer’s struggle of not being able to find something that ‘just strikes’. The discovered movies have good opportunities here of being spotted by the relevant audience,” he adds.

Faqhrul Husaini, Producer and Co-founder, Smiley Films, also concurs with the rest on the importance of content. According to him, pandemic has made a lot of changes in content viewing patterns. “Our film and TV industry is also slowly picking up the pace to make our content at par with what is now easily available on OTT platforms. Now every TV network owns OTT platforms and the acquisition system is in such a way that combines satellite rights with digital rights; only the bigger films get away with the separate pricing for both rights. For small producers the key to success is to create good unique content, it will eventually take over all the challenges,” he adds.

Are movie channels losing their appeal?

TV movie channels have been the unwitting victims of the OTT revolution. Today, satellite earnings are not as encouraging as they were during the pre-OTT days. A lot of films, especially in the regional space, had no takers with a drastic drop in advertising and viewership for leading movie channels. The availability of blockbuster movies on multiple platforms (theatrical release followed by OTT) means that TV audiences are not keen to watch them again.

TV movie viewership for channels will undoubtedly be going to be affected thanks to the increasing dominance of OTT platforms, asserts Chandra. The producer, however, feels that there will be two kinds of audience: one for TV and the other for OTT. 

“You must remember that Hindi movie channels have been there for a very long time. The only thing that has happened is that there are streaming services, which show movies on demand. The audience can watch movies when they want to watch, that is the great advantage streaming services have given to the viewer. In the case of television, it is the linear viewing format. You don’t even know which movie channel is showing which movie. You tend to watch a movie in the middle or end or you don’t even know. A lot of Hindi or English movie channels will face a lot of pressure from the growing streaming services. But there is a silver-lining. When you are in front of a streaming platform, you tend to spend up to 30 minutes trying to figure out what content you are going to watch. Whereas on TV, where the content is already programmed, sometimes you don’t mind watching it. There are two types of audiences: one that will watch OTT and the other that are happy watching linear content on TV,” he says. 

Mitesh Kothari points to the fact that there has been a considerable drop in advertising for movie channels. “We have seen the Internet revolutionise through the pandemic. The widespread accessibility has propelled the growth of OTT platforms. Television premieres will always have their unique charm, but the windows have become slightly longer for new movie satellite premieres because of higher demand for direct-to-digital broadcast. This can often lead to loss of audience interest, especially when the same content is available easily on a digital platform. In the recent past few years, we have been seeing a 40-50% drop in advertising for movie channels, along with a definite rise in the advertising for OTT platforms. Things have undergone drastic changes ever since the pandemic, but we still have to assess more over time to affirm any trends,” says Kothari.

Audiences today have the option of watching the same content on multiple platforms. The producers, therefore, should find the best way forward in this context.

“We are in a digital era with relentless competition among similar brands and platforms. In the OTT sector, all platforms are going full-scale to collate the best content for viewers. In this powerful game, a platform primarily needs to be visible and in front of the audience more than the competitors in order to get distinguishably discovered. With consumer-based solutions and astute marketing strategies, we help platforms have an edge in this highly competitive market to stay at the top of their game,” says Mitesh Kothari.

According to Mautik Tolia, the best way forward for producers is to make sure that they are able to maximise the potential of their content over multiple mediums – theatrical, OTT, and television so that they can monetise this very effectively.