A few thoughts about Striker on YouTube

Posted on February 9, 2010 by

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I was recently asked an intelligent and thought-provoking question  that we at moovieshoovie had discussed over lunch just the previous day. To wit : “Given that a movie (called Striker) was released recently on youtube, how do you compete with a giant like youtube?”

Honestly, we don’t compete with YouTube with the same content, just like we don’t compete with other sites that give away content for free.  Our slice of the market is different : it is the monetization of premium content that is in search of the right audience. And while we’re on the topic, this is a nice deal for YouTube, but I’m puzzled as to why the makers of Striker – a large, well-monetized division of Network 18 – signed up for it.

To understand why the makers of Striker might have taken this path ( which effectively shoots them in the foot) , let’s first talk about how the revenues for a movie are structured. In general, the theatrical rights of a movie are sold first for a large lumpsum; after which DVD and TV-channel rights are sold. Depending on a movie’s quality, these rights would be worth lakhs, if not crores, of rupees.

If a movie’s makers were to release a movie to the internet – for free – at the same time the movie was being made available via theaters, DVD and TV, what would happen ?

I’ll pause here to let you imagine the consequences, but the short answer is this : the partners who are selling ticket seats, DVDs and TV ads would be very upset because online consumption would eat into their revenues.  For this to be financially viable, the revenues from online sales accruing to the maker of the film would have to equal the revenue from the sale of DVD, theatrical and TV rights.

Now look at another piece of data : the ad revenue from online video turns out to be about $50 per thousand views. If we’re talking about 50-50 rev share, that’s about $25 per thousand views – at the top end. You’ll quickly see that the numbers don’t add up for a direct to online strategy : not only does it eat into the real money, it also doesn’t amount to much by itself even when future revenues are added up.

It would only make sense if the makers didn’t expect the movie to do at all well in the cinemas or in stores. A quick look at Box office India tells us that Striker has indeed done very badly at the cinemas, but whether this is the cause of their free online distribution initiative or the effect of it is not clear. See http://www.bollywoodhungama.com/trade/boxoffice_update/index.html for viewership rates of 5-7% .  And despite whatever I am hearing about 2 lakh views, the most I could see onYouTube was about 11,000 views of one of their promos. If someone can direct me to the actual movie, I would be greatful. Update : tried it and got the message that Studio 18 “has decided to block it in your country”.

You’ll also notice that the makers of “3 idiots” talked about free online distribution, but quickly backed away when it turned out that the movie was a super-duper hit.  Giving away good movies for free just doesn’t make sense financially for the movie-maker, especially for large movie corporations that invest pretty heavily in their films and have no immediate reason to give away movies for free. From a revenue POV, online distribution is like icing on the cake, not the cake itself…. for now, anyway.

Now why did the makers of Striker opt for this , knowing that they were forgoing revenue ?

Answer a: This is a good way to give Siddarth, the hero of this movie, some name recognition since he isn’t known much outside  his native Andhra Pradesh . It would make sense if the studio had a multi-movie contract with Siddarth.

Answer b: They knew that their movie would do badly in their theaters and decide to use this as a strategy to position themselves as innovators and to experiment with online distribution.

Answer c: They didn’t know yet about MoovieShoovie : ) , which would have given them a chance to reach a wider audience without compromising their film’s premium content positioning.

This is a super-interesting space that’s full of developments and we are learners ourselves, so we will wait and watch – quite literally .

Your thoughts ?

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