Why Stars Are Adding a ‘No OTT Release’ Clause in Their Contracts

Actors are doing damage control post lockdown and adding a ‘No OTT Release’ clause in their contracts. Here’s why.

4 min read
Why Stars Are Adding a ‘No OTT Release’ Clause in Their Contracts

With OTT platforms taking centerstage for entertainment during the coronavirus lockdown, the power dynamics in the industry has seen a shift of sorts. After cinema halls were shut down, several producers found it feasible to cut their losses by releasing their films online on platforms such as Disney+ Hotstar, Amazon Prime Video and Netflix. As producers they preferred to get back their money invested in a film by selling it as a ‘direct-to-digital’ release than wait for imaginary profits if and when theatres opened up.

Now, as things are getting back to normal and single screens and multiplexes have been allowed 100% occupancy once again, several actors are in damage control mode. According to reports, a number of actors are adding a new ‘No OTT Release’ clause in their contracts with producers. This clause basically safeguards their film from being released on OTT platforms first before it gets a proper theatrical release.


The 'No OTT Release' Clause

Varun Gupta, Founder Director of Max Marketing, which is responsible for designing marketing campaigns for films like Padman, October, Kabir Singh and the upcoming RRR, tells The Quint, “Only A-listers like Akshay Kumar, Salman Khan, Hrithik Roshan, Shah Rukh Khan or Aamir Khan can put a clause like this and Ayushmann Khurrana is also adding this 'No OTT release' clause now. When a film directly releases on OTT it doesn't get the required response and recognition.”

“Only when a film releases in theatres is when you actually get to know whether the film has worked or not. So, there are two sides to look at. It is actors like Salman, Akshay, Ayushmann who are confident about their products clicking with audiences who are going for the ‘no OTT release’ clause because going on an OTT is a compromise on the stardom. The actors will definitely benefit out of this clause.”
Varun Gupta, Founder Director, Max Marketing

'Show Me the Money!'

Here’s why actors, especially stars with a box-office draw, prefer to have a theatrical release rather than a direct-to-OTT premiere. Most stars are now inevitably co-producers on their projects. Be it Aamir Khan, Akshay Kumar, Salman Khan, Shah Rukh Khan or Hrithik Roshan - as co-producers, their fees includes a share of profits from the money that their films eventually make at ticket windows. In an environment where a film is released only on a digital platform - the scope of making money from the box-office is scuttled and reduced to a one time fee that is shared with the other investors.

For instance, Akshay Kumar was a co-producer for Laxmii, which had to be released on Disney+ Hotstar. The star would have received a one time fee for the film based on their deal with the OTT platform, however if the film had released in theatres and gone on to become a hit like his previous release Good Newwz, his fee would have included a share of the profits that the film makes at the box-office.

Akshay Kumar co-produced Laxmii, which released on Disney+ Hotstar. While Good Newwz released in theatres and became a box office hit.
(Photo Courtesy: Twitter)

Why a Box-Office Hit Matters

Secondly, there is no criteria to measure the “success” or “failure” of a film when it is released only on online platforms because most OTT platforms do not release viewership numbers. A box-office success on the other hand gives a shot in the arm to an actor’s stardom and then he has enough justification to raise his fee.

For example, it’s because a Judwaa 2 did a business of over Rs 220 crore that Varun Dhawan could crank his rate up for his next film and also be confident enough to invest in another yesteryear Govinda-David Dhawan remake - Coolie No.1. However, now since the new Varun-Sara Ali Khan Coolie No.1 released on an OTT platform, there is no way of ascertaining if the film would have been a hit at the box-office, and neither Varun nor Sara’s star appeal has seen any significant rise after the film’s exclusive online release.

While 'Judwaa 2' was a box office hit, we can't say the same for 'Coolie No.1' as it got OTT release.
(Photo Courtesy: Twitter)

Akshaye Rathi, a Mumbai-based exhibitor and distributor says, "Its an interesting clause to have, specifically for stars who have merit at the box office. A star's box office determines his or her objective stardom, based on which his / her fee for films, endorsements, appearances etc is determined. By going straight to OTT, their films can dilute the impact of the stardom they have created over years. Therefore, to go straight to OTT without charging a large premium is probably not worth it for stars."

“As a medium, OTT puts the biggest of stars and character actors at the same level and thus, to establish their stardom and commercial value, stars need to keep their box-office up and running.”
Akshaye Rathi, Film Exhibitor and Distributor

It will be interesting to see how these post lockdown power dynamics between actors, producers, OTT platforms and exhibitors play out in the entertainment industry in the days to come.

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