Single-screen owners highlight old and new issues in CCI complaint

New Delhi: Single-screen theatre owners have led the complaint by exhibitors to the Competition Commission of India (CCI) against the trade practices of distributors and producers, said theatre owners and film trade analysts, declining to be named.

The Business Standard had first reported that CCI plans to launch a study into film distribution and examine OTT impact on releases. The anti-trust body has received complaints from theatre owners alleging distributors are not supplying movies and that bigger players, including producers and top multiplexes, are monopolizing decisions on release dates.

The move brings to light both new and older issues single-screen owners have faced as small businesses. First, they see the direct-to-digital release of films on over-the-top (OTT) streaming platforms as a threat to their existence. Further, these theatres have long condemned the discriminatory practices of film producers who favour multiplexes with more films and better terms, often refusing to release movies in small towns or forcing them to accept titles in a package deal.

“When two big titles clash, it is common for distributors to pressurize cinemas to allot more shows to their film. The tactic is to offer a package in advance, if they want to show a particular film this weekend, they must confirm and lock screens for an upcoming title (that may be competing with another film in a few months) too,” Atul Mohan, editor of trade magazine Complete Cinema explained.

The owner of a single-screen theatre said these issues have existed in the business for years. “There have always been disputes on the fact that single screens are asked for hefty MGs (minimum guarantees) to be given a film to play. Many distributors also presume certain films won’t work in small towns and don’t give them to us even if we insist multiple times,” the person said.

Another one agreed that producers and distributors play favourites, giving preference to premium multiplexes. "Older cinemas like us have to fight to get films even though often great collections come from single screens in smaller towns, especially for mass-market films," the person said.

Besides, the virtual print fee (VPF) issue that has to be paid to digital service providers like UFO is also an immediate challenge. Until 2010, when physical film prints were in use, producers and distributors bore the cost of developing prints, while exhibitors bore the projector cost. With the emergence of digital technologies, digital service providers (DSPs)—such as UFO Moviez—have entered the picture and install costly digital film projectors at theatres at their own cost and provide technical assistance. Theatres collect a VPF of ₹12,000-15,000 per show per screen from producers and distributors and give it to the digital service providers. Producers have, in the past, sought a reduction in this fee, and in many cases, especially, for Hollywood releases, asked the cinema owner to pay the virtual print fee.

Perhaps the single screen owners approached CCI as the pandemic and the ensuing lockdowns and closure of theatres have exacerbated the problems. “These are unusually tough times for us because of the pandemic and there is hardly any business coming in. These are reasons why many cinemas are not reopening even though state governments have given permits,” said a third theatre owner explaining why he didn’t play Hollywood flick Mortal Kombat released last Friday.

Film producer, trade and exhibition expert Girish Johar said that studios and producers argue that taking the film beyond major multiplexes to single screens leads to increase in their marketing and distribution costs.

Atul Mohan pointed out that cinemas are also aggrieved seeing OTT platforms dictate terms even for theatrical release, such as the window for digital premiere of upcoming titles such as Akshay Kumar’s Bellbottom that is likely to start streaming on Amazon Prime Video by mid-September after its theatrical release on 19 August.