Two of the more interesting perspectives on Digital Entertainment at the IAMAI Conference came during the first panel of the day, which focused on films going digital:

PS Saminathan, Group Chairman, Pyramid Saimira initially launched into a tirade against the star system in film-making – “Stars collapse the system – they don’t give a damn about the system. They sometimes started charging over 150% of the total revenues of the films – I can give you an example of 142 films where that has happened. A star demands a glam heroine, scenes to be shot in Switzerland, on the moon, free tickets for the film for his fan club. Producers have become performers and arrangers. This is a system where sycophancy can be blamed. Corporates came and thought that we could put an end to the star system; we thought that when you aggregate the last mile through digital distribution, we’ll get control. True in theory, but in practice, when you aggregate theatres, stars demand even more. Unfortunately, in India, stars guarantee the movie, and corporates become content aggregators at the worst scale.”

“Will digital technology be an answer to that? It’s a system where the content is being pulled by the customers, rather than content being pushed by people. Apple is the largest music seller; YouTube is a very powerful medium. Today there’s a shift towards self produced content, and the business model, might become a pull business model. How will companies react?
Big institution power will vanish – they’ll have to become agnostic platforms, and the people will select the users. In our organization, we don’t pass comments on the quality of content. If it’s accepted by users, it’s good content.
Money will not become a commodity, creativity will not become a commodity. Money was becoming a commodity in India, but that has changed. Creativity is equal to acceptance of people. Creativity is not a commodity. Technology will change the traditional institutions. If customer wants bad actors – they’ll get them.

So while Saminathan looked to digital with, well, “Hope”, Navin Shah, CEO of Percept Pictures considered it a weapon of mass destruction:

“Digital is the culprit. If you look at PWC report, the music industry has grown by 2% over the last 5-6 years. Digital is growing by 40%. So much about piracy being curbed – Digital is instrumental in creating huge piracy, because it is very simple. Earlier, I used to be like a mafia thing. Now friends of mine say they’ve download Golmaal Returns, and it has become cool and accepted to say I went to Malaysia and bought 20 DVDs. Net-net you have lost out. there are two ways – one is a pragmatic, India way of handling the system. One is – can I use piracy to its advantage? You’ll see an Enrique video with a Nokia phone…so can I monetize the fact that the film is being pirated. The bigger answer is that India is very very value driven – how about making piracy a moral issue? We’re looking at making piracy a moral issue in India – in schools.

Since 99 to now, I’ve heard that digital is coming – but where is it? The consumer pocket is not going to change, so while the medium can change, the reality is that whether we digitalize or not…look at what digital has contributed to his bottom line. It’s more in the marketing space than actually revenue stream. You can have other forms of entertainment. We need to be shrewd about what is happening right now. I dont know about revenues.

There’s so much of distribution available – the real pain is the marketing cost. I need to get the consumer interested in my content. Any guess in case of a big budget film – a Rs. 30-40 crores project, with 1000 prints, the marketing cost is over 15 crores. That’s where digital comes in.”

Our take: Whatever Navin Shah may feel about the digitalization of films actually aiding piracy, the problem is that a shift has taken from analog to digital. Try as much as we can, piracy has and will flourish. If media companies seek to benefit from the lower distribution costs of the digital space, they cant expect margins to increase as a consequence of the reduction in cost of distribution – like in case of Apple iTunes, prices need to be rationalized. To quite an extent, poor distribution has played an important role in as well – why should consumers in India not get the same album, game or movie on the day it is released in LA or Tokyo? Whether you like it or not, digital distribution is here to stay – and businesses models will have to evolve as well.