Tuesday, January 19, 2010

Piracy Is Good (Part Trois)

Now this topic doesn’t seem to be coming to an end. Chinmayi, a very popular singer, radio RJ and multi-faceted personality (whom I am not stalking on Twitter), and I had a tweetersation (Twitter Conversation) about the piracy affecting the film industry.

While, I have happily suggested that the movies should be released in various formats – theatre, CD/DVD, internet, DTH…- I seem to have made it look so simple.

It never is that simple, is it!

Before we look at the issues plaguing the industry, it might be worthwhile to look at the value chain. Broadly, on the basis of the players in the market and when they receive the compensation, the cinema industry can be divided into:

1. Pre-release beneficiaries: Actors, Directors, Technicians…
2. Post-release beneficiaries: Producer (Financier) and Distributors

Now, I wouldn’t claim that I am an expert. This is at best my logical thinking. Even if this classification is wrong, it is quite clear that the biggest investors in the whole game are Producer and Distributors.

I have heard that in the initial days, movie goers were given money to watch the productions! Of course, even today there are movies for which you hope the producers compensate.

Things have changed and have changed drastically. The intervention of technology in every aspect of film making has drastically changed the way cinema is made and served. Right from capturing and recording to editing and distribution, technology has had a telling effect.

But the basic rule of profit making has remained unchanged. The director, actors/artists and technicians have to whip up a fare that a producer finances, serve it to customers through the distribution channel (theaters). Producers and distributors being the biggest risk taker are likely to reap extraordinary profits, at least theoretically.

Picture perfect!

But as it would be, it was an ever changing picture. Not many may realize but JL Baird can be blamed for this change in fortune. Yes, the inventor of Television/Telly/TV. The importance of television is that it produced the first real viable display mechanism. The continuous innovations have ensured that the quality of sound and picture produced over the idiot box matches, if not surpasses, the experience of a theatre. There has been constant improvements in the software for TV, too, making things more difficult for movie industry. In fact, there are plethoras of delivery channels – tertiary, cable, DTH, internet…TV itself has emerged as an entertainer and far more inexpensive.

If this weaning was not enough, the arrival of VCRs and VCPs sounded the death bell for cinema theatre. The only respite being that the reproduction was a barrier. But things changed, yet again. Computing, Internet and digital reproduction now accessible to masses struck final nail on the coffin.

Theater industry is highly dependent on real estate. The success of a theatre depends on the location and patronage of customer. In its golden days, these theatre owners through monopoly made a killing from new releases. But today, the real estate dedicated for screens has become a liability. Many theatres that were popular, today, don’t exist. Theatre complexes have either become captives in malls or have reinvented themselves, as Satyam in Chennai, or transformed into small screens screening multiple movies to reduce their dependence on single hits. The box office has turned empty coffer! Unless theatre industry reinvents itself and realizes the reality of the new age, its fortunes are likely to sag like that of the fallen star.

In my opinion, the fortune for producers isn’t that bad. They, in fact, can gain from this paradigm shift. Earlier the distribution chain was the king because of the limited supply. Movie theaters are capital intensive; hence, the supply could not be built at will.

Today, the producers have multiple options. Monies can be made on rights for:

1. Theatre
3. Internet
4. DTH/Cable

At reduced risk and greater number of buyers, the producer can actually mint money. Of course, the consumers also get to make choices on how they would watch a movie.

While collective bargaining can put off the imminent death of theatres, it may never present an answer to the problem of piracy which is fast eroding the current rusted structure of the movie industry.

Till then, it is happy piracy watching. Sorry, privacy watching!

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