Telugu OTT bubble bursting? Streaming giants tighten budgets, dictate release dates as theatrical hits become rare

The OTT platforms in the country have an interesting graph over the last five years. From thumping theatrical releases during the Covid-19 pandemic to taking a hit as cinemas were revived and once again dominating the entertainment sector, the OTT platforms have emerged as one of the decisive forces that are now calling the shots in the film industry. OTTplay looks at how OTT dominance has impacted the Telugu cinema, one of the biggest and most happening industries in the country.

Post-COVID OTT boom

The country witnessed the biggest OTT surge in late 2021, amid the height of the COVID-19 pandemic. As theaters were not operating, everyone shifted to watching films at their convenience, and the biggest of the stars had no choice but to release their films on OTT. Some said that the OTT business would eat out the theatrical releases, as films with only solid content and big-budget extravaganzas started working in theaters, and the rest were going to OTT.

Some of the biggest films in India were launched with star heroes only to make money, as these OTT players were shelling out big amounts to bag the digital rights of these big films. The producers were making films on unheard-of budgets with only one purpose: that a chunk of their investment would be recovered through the OTT rights.

Speaking about the same, director Pawan Sadineni, who made OTT hits like Dayaa and is making a film with the likes of Dulquer Salmaan, says, "Post the COVID lockdown, OTT platforms saw a potential market in India and had huge budgets to capture the digital market. That is the reason they spent unheard amounts to bag the digital rights of the film. The producers saw this as a huge blessing in disguise and announced films one after the other to recover their costs and star remuneration from OTT deals."

But sadly, the narrative has completely changed now, with even the so-called big films starting to flop, the viewers' interest in watching the films on OTT has also come down. One of the young directors, Pradeep Maddali, says that the streaming giants such as Netflix and Amazon Prime Video are going after big films, but the only change is that they are not ready to shell out big money, despite the film having a big star.

The latest example is Chiranjeevi's Vishwambhara, which completed its shoot a year ago. The OTT deal of the film is yet to be locked, as popular platforms like Netflix and Amazon Prime Video backed out as the makers of the film demanded big bucks for the digital rights. Despite being such a huge star in India, the OTT rights of his film remain unsold, and hence, even the theatrical release date is yet to be locked.

OTTs ‘star’ exceptions

However, these big players make an exception for a few select stars. For films that have the likes of Bollywood stars Shah Rukh Khan, Salman Khan, and Ranbir Kapoor, the platforms go all out. The OTT rights of these films are sold even before the films go on floors. When it comes to the South, popular heroes like Nani are a hot favorite for the platforms, as his films bring in a lot of views online. That is the reason Nani's last film, HIT 3, was sold to Netflix for around Rs 55 crore, according to sources. His next film, The Paradise, has also been bagged by Netflix for a higher price, as they very well know that Nani's films recover a lot of money.

Platforms dictate theatrical releases

But things have reached a stage where the OTT platforms decide the release date of theatrical releases these days. OTT giants like Netflix announce their annual chart of shows and movies much in advance after taking into consideration the release date. If one biggie is slated for a particular month, they decide to release the other biggie at a later time so that their internal releases do not get disturbed. The producer has no say in the release date and has to give in to the terms and conditions set by the platforms.

But in general, why are the OTT platforms staying away from big films and star heroes these days? Producer Naga Vamsi of hit films like DJ Tillu and Lucky Baskhar states that the heads of the OTT platforms have become smarter, and they keep track of the hero's previous hits and flops. "OTT players want only hit films these days. So, they keep in mind the hero's previous hit, how much it made, and the views his last film got on OTT to buy his upcoming film. This has become a daunting task for a producer to sell his film on OTT," Naga Vamsi said.

The latest example in this aspect is Ravi Teja, as his last four films ended as flops, and his new film, Mass Jathara, is struggling to find takers. Even if it finds a platform, the rate at which it will be sold is going to be the lowest in the star's career so far.

Middlemen in OTT deals

Amid all this, the producers are facing huge issues. Until recently, the OTT platforms used to offer big amounts to bag the digital rights. But they are no longer approaching the makers. One of the young producers who is bankrolling multiple films in Telugu says, "There is a whole new angle of middlemen in these OTT rights. We, as producers, have no choice but to give in to the middlemen who take a quote from us, approach the platforms with higher prices. The platforms, in turn, reject our films due to the exorbitant rates increased by these middlemen. But the sad part is that apart from the so-called star producers, the rest of the mid-range makers in India are only depending on these middlemen to crack the OTT deals. This is where the platforms have complete domination in deciding the OTT deal."

OTT platforms cite a drop in subscription

But why are OTT platforms not shelling out big money is the most asked question. One of the key team members from Zee5 states that there is no return on investment. "OTT platforms shell out big numbers to bag the digital rights, but they only have to depend on the subscriptions to recover that money. In the last few years, the subscription rates have gone down so much that not many are interested in taking annual subscriptions. The user is clever enough and buys a monthly pack, watches what he wants, and does not renew the subscription. Due to this, the platforms are facing a loss and do not want big films at all in their library these days. But things have been slowly changing ever since ad revenue started to generate money. But in the days to come, the OTT platforms will mostly be interested in medium-budget films," the Zee5 official stated.

Adding to this, one of the heads from ETV Win says that they predicted this trend a long time ago, and that is the reason they are producing low-budget films. "We at ETV Win are into content-rich films these days, as they come with no tension. Their budgets are low, OTT deals happen quickly, and the recovery is instant. All our recent releases like Anaganaga, AIR, and Little Hearts have been solid money-making films on OTT," the ETV Win official pointed out.

Yet another major reason for the OTT platforms to stay away from certain films is rampant piracy, as pirated versions are out within just days after the theatrical release. As the films, especially the medium-budget movies, are leaked online, the platforms show no interest in buying them. They land on OTT only months after their theatrical run ends.

Siddharth Naidu, a budding director, adds that the Telugu OTT platforms have limited the slots, especially in the regional market, and this has landed new filmmakers in a bit of confusion. "Apart from the big stars and noted banners, newcomers find it so difficult to approach the platforms to pitch new web shows and films. They are only interested in either the star or the concept. So, one needs to have a solid concept in hand to convince these platforms," Siddharth Naidu explained.

Due to all this, the OTT platforms have been calling the shots, and they have reasons of their own to do so. There is no denying the fact that OTT plays a major role in the film's revenue for the producers, but looking from the platforms' point of view, they only want star films, and that too at lower prices and on their terms of release date.

There are several clauses being added to big hero films, especially in Telugu cinema. One of the sources close to a big star reveals to us that if a star hero film does not make a certain amount, the deal is altered, and less money is paid to the producer, who does not have any choice but to give in.

This practice is rampant in the South, especially in Telugu cinema, where big-budget films like Varanasi are being made. OTT giants are only ready for such films, as they pretty much know the impact the SS Rajamouli film will create. But is that the same for other stars and young filmmakers to approach OTT to crack digital deals? The topic is debatable.

Also Read: Globetrotter event thrilled millions, yet Varanasi director SS Rajamouli was hugely upset-Here’s why? 

FAQs

Q. What is Aha's latest release on OTT?

A. Aha is out with its new original titled Chiranjeeva and can be streamed here on OTTplay Premium 

Q. Where to stream K-Ramp on OTT?

A. You can now stream the film on Aha and here on OTTplay Premium.

Q. Where to stream Ravi Teja's Mass Jathara

A. The action drama is yet to lock its OTT platform.

Q. What is Netflix' upcoming series in Telugu?

A. Super Subbu featuring Sundeep Kishan is Netflix's upcoming web series.