BT Buzz: Decoding Mukesh Ambani's Jio First Day First Show business model
Reliance Jio First Day First Show: Mukesh Ambani in his address let out just the tip of the iceberg, which has kept industry guessing on how the business model will pan out.
- Aug 28, 2019,
- Updated Aug 28, 2019 1:46 PM IST
The announcement by Mukesh Ambani, Chairman, Reliance Industries of the 'Jio First Day First Show' offering for premium JioFiber customers (wherein the customer would get to watch a film at home on the day of release) has triggered a lot of chatter around emergence of new business models in the film industry. The roll-out of the service may be a good year away, but the obvious question that comes to mind is how Jio will be able to release a film when there is an eight week ceiling to release films on any digital platform.
Salman Khan-starrer, Bharat, for instance, released on June 5 in theatres but made its debut on Amazon Prime Video only in August, eight weeks post its theatrical release. Today, digital and satellite rights constitute over 40 per cent (in certain films it is close to 70 per cent) of a film producer's revenue, but box office revenue is sacrosanct. In fact, even before a movie goes on floor, producers sign a minimum guarantee deal with distributors for theatrical revenues. "Releasing a film only on Jio will make it a loss-making proposition for the distributor and he will never allow it unless he is compensated for it," says film producer and entertainment industry expert, Ashish Kaul. This explains why exhibitors such as PVR initially expressed concern over the Reliance announcement of releasing films on the Jio platform.
Ambani in his address let out just the tip of the iceberg, which has kept industry guessing on how the business model will pan out. Will movies be offered as part of a value-added service or will consumers be charged for it, is still anybody's guess. On the face of it, the Jio offering sounds like a great way for film-makers to reach out to a much wider audience. A blockbuster such as Baahubali 2, for instance, which raked in Rs 1,500 crore at the box office, was watched by less than five crore people, which is less than 5 per cent of the population. If Jio makes a business case saying that it will enable producers to reach out to 50,000 consumers on the first day of release, it will be an attractive option for film-makers. If the cinema industry today churns out revenues of Rs 13,000 crore per year, releasing films on platforms such as Jio which promises a reach of 50,000 crore, could well increase the revenue 15 times.
The reality, however, is not that simple. "Over 75-80 per cent of theatrical revenues come from multiplexes and by saying that you will completely shut down a steady source of revenue just because a digital platform promises to give you a wider audience is unlikely to happen. There are clear windowing agreements which exist," explains Girish Menon, Partner and Head, Media and Entertainment Practice, KPMG.
"The whole charm of a movie is watching it on the big screen. A digital release could spoil the fun of the movie, so, why will producers want to release on a platform like Jio," asks Sunil Lulla, Former Group CEO, Balaji Telefilms, who says that right now there is no clarity and everyone, is merely speculating.
The announcement by Mukesh Ambani, Chairman, Reliance Industries of the 'Jio First Day First Show' offering for premium JioFiber customers (wherein the customer would get to watch a film at home on the day of release) has triggered a lot of chatter around emergence of new business models in the film industry. The roll-out of the service may be a good year away, but the obvious question that comes to mind is how Jio will be able to release a film when there is an eight week ceiling to release films on any digital platform.
Salman Khan-starrer, Bharat, for instance, released on June 5 in theatres but made its debut on Amazon Prime Video only in August, eight weeks post its theatrical release. Today, digital and satellite rights constitute over 40 per cent (in certain films it is close to 70 per cent) of a film producer's revenue, but box office revenue is sacrosanct. In fact, even before a movie goes on floor, producers sign a minimum guarantee deal with distributors for theatrical revenues. "Releasing a film only on Jio will make it a loss-making proposition for the distributor and he will never allow it unless he is compensated for it," says film producer and entertainment industry expert, Ashish Kaul. This explains why exhibitors such as PVR initially expressed concern over the Reliance announcement of releasing films on the Jio platform.
Ambani in his address let out just the tip of the iceberg, which has kept industry guessing on how the business model will pan out. Will movies be offered as part of a value-added service or will consumers be charged for it, is still anybody's guess. On the face of it, the Jio offering sounds like a great way for film-makers to reach out to a much wider audience. A blockbuster such as Baahubali 2, for instance, which raked in Rs 1,500 crore at the box office, was watched by less than five crore people, which is less than 5 per cent of the population. If Jio makes a business case saying that it will enable producers to reach out to 50,000 consumers on the first day of release, it will be an attractive option for film-makers. If the cinema industry today churns out revenues of Rs 13,000 crore per year, releasing films on platforms such as Jio which promises a reach of 50,000 crore, could well increase the revenue 15 times.
The reality, however, is not that simple. "Over 75-80 per cent of theatrical revenues come from multiplexes and by saying that you will completely shut down a steady source of revenue just because a digital platform promises to give you a wider audience is unlikely to happen. There are clear windowing agreements which exist," explains Girish Menon, Partner and Head, Media and Entertainment Practice, KPMG.
"The whole charm of a movie is watching it on the big screen. A digital release could spoil the fun of the movie, so, why will producers want to release on a platform like Jio," asks Sunil Lulla, Former Group CEO, Balaji Telefilms, who says that right now there is no clarity and everyone, is merely speculating.