In his widely read research work, Management guru Michael Porter, has talked about competitive strategies that make successful companies. He states thatone key competitive strategy, that makes companies successful and command high valuations on stock market is creation of entry barriers against new entrants. These barriers could be:
•Denial of access to customers/vendors
In film industry, all the above are essentially bye-products of the current buzzword ‘nepotism’. So if buildingentry barrier is lauded by consultants and stock markets, should that really be a matter of concern? Before we answer that, a quick look at the history of the reward system in the film trade.
During the single screen era, without big stars producers would struggle to get distributors. Directly releasing the film meant an additional risk of high theatrical rentals for the producers. The reward system of the film trade, therefore, did not provide a level playing field to theproducers of content-based films with smaller talent (actors/makers/writers/composers).
Multiplexes tried to solve the above by offering an assured and a transparent share of the box office producers of all films. While it solved the problem of dealing with non-transparent distributors and of high theatre rentals but justice was still far away. The producer’s share of box office was high only for the first two weeks but for subsequent weeks it was substantially low. Big talent films could generate big pre-release hype and therefore would earn large box-office collections during the first two weeks. But since content-based films worked only through word-of-mouth publicity, itwould draw crowdduring third week and beyond. However, for those weeks producer’s share of box office collection was very low.
So the market imperfections again deprived level playing field to content-based films. The monopoly of big producers and big talent, therefore, continued.
History has proventhat monopolistic powers and market imperfections have more often than not been subsided by technology. So, whether it was the demise of Kodak’s dominance in film rolls by digital medium,OR be it demolition of stock brokers’ hegemony and non-transparency by screen-based trading, OR be it the displacement of expensive Money Order by electronic transfers, everywhere it was the technology that had supportedthe cause of the smaller player.
Fortunately, for smaller talent,technology-based distribution platform – OTT – has the potential to play the role of the leveler against market imperfections.
Currently, the OTT acquisition pricefor any content is based on OTT’sestimate of the content’s estimated viewership and NOT on the content’s actual viewership, so even this structure is not very fair tocontent-based films with smaller talent. However, if OTTs could work out a revenue sharing formula whereinproducersreceive royalties based on the actual viewership levels then we will have a very fair and a level playing trade structure which would be independent of the pedigree of the talent.
Since OTTs offer a long window of viewership, access to audiences across the world and extremely low distribution cost, content-based films will have a huge opportunity to earn their fair share of royalties over a long period and from across the world.
While a few OTTs do offer the above structure but the same is not widely open to all producers. Once the same is in place, producers could simplylist their films on one or more of these online multiplexes (OTTs) and generate royalties based on actual choice of consumers. OTTs would also benefit as they will have much lower risks.And benefits do not stop here.With such a fair and transparent royalty structures, producerscould – instead of a fixed fee–offer a share of revenue to artists/writers/composers. This, therefore, also means that a filmmaker’s ability to make good films will no more be restricted by his finances.
The fight against market imperfections like nepotism, therefore, lies not in criticizing them but in making them irrelevant.
Lastly, if absence of level playing field is largely as issue related to structure of film trade, shouldit really concern everyone?
Theconcernbecomes visiblewhen one understands the larger role of cinema. While it is true that cinema is a business – businessof entertainment – and therefore like any other business,market players should be free to develop and practice their own competitive strategies ; butfor the society, cinema is also a custodian of art. Market imperfections not only deny art a fair share of revenues but also deny art the access to consumers – and this is extremely pertinent.Cinema ( including TV serials/web series ) are the vehicles on which art and literature rely to move from generations to generations – and more so when the reading habits are falling. Only whenart and literature survive, can the society expect to grow intellectually.