Could Movies Start Skipping Netflix to Go Straight to YouTube?

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1:16Screen Rant hails it, a stunning, emotionally resonant film, starring Emmy Award-nominated lead actress Sally Field. Awards Watch Raves, Remarkably Bright Creatures, is a beautiful tale about loss, connection, and the power of family. Sally Field remains a force of nature. It is Friday, August 8th. We've talked a lot on the show about the battle between YouTube and Netflix for the most attention in streaming video. That war is being fought for engagement, of course, or time spent on the platform. And YouTube is winning that war because the service is filled with a huge volume of user-generated, non-premium content.

1:52Netflix may have less engagement, but it's premium, curated, special. Netflix pays for the content it carries rather than people who upload for free and get revenue shares. No real star or filmmaker would take their movie to YouTube before it debuts on Netflix, right? Well, not always. A new Bollywood movie called Stars on Earth caught my eye, not because I'm particularly into Indian movies, no disrespect. It's a fun sports dramedy about some kids with disabilities who compete in a basketball tournament. It's because Stars on Earth went to theaters in June in India where it grossed about$30 million, dollars, one of the higher grossing movies of the year there.

2:27And then it went directly to YouTube, not Netflix or Prime Video or any of the other traditional subscription streamers. It's now available to rent in India for about a dollar, and it's in 38 other countries too, including the US and Canada at various price points. Sounds like a traditional video on demand window, of course, which is common in the US, but India doesn't really have VOD. And its windows and theaters are short, similar to the US often. So this is a pretty unprecedented had moved there. The question is why? Turns out this was a deliberate choice by its star and producer, Amir Khan.

3:00Khan is a very successful movie star in India. He's basically the Tom Hanks of Hindi films. And he's known for projects that raise social awareness as well. His company produced stars on Earth. And rather than doing a traditional pre-sale for the film, where rights are sold before the movie is made, he held on to those rights. And when the$11 million budgeted film became a hit, he got an offer for about$14 million from a subscription streamer and turned it down to take no money up front from YouTube in exchange for a revenue share on the rentals. Is that a good deal? It'll depend. It's certainly cheaper for fans to pay$1 than the price of a monthly subscription.

3:38And YouTube has about 500 million users in India. By comparison, Netflix has only about 12 million subscribers growing, though. On-demand movie rentals are not new. The premium video on demand window is increasingly popular in the U.S. But choosing YouTube over a subscription streamer is much rarer, especially in a country like India. So I wanted to have Amir on the show to explain why he did it. Today, it's a real-life Indian movie star and how to skip Netflix and Amazon to use YouTube to distribute your movie. Maybe even make more money in the process. From The Ringer and Puck, I'm Matt Bellany, and this is The Town.

4:16okay we are here with amir khan actor producer entrepreneur now i want to get all your hyphen it's in there make sure welcome thank you thank you matthew okay so i want to be clear on what this strategy is and isn't because you know there's a lot of different distribution strategies these days. I feel like everybody is kind of innovating from a place of what's next. Theaters work for some movies. Theaters don't work for others. Streaming services can be great for a film. Other times, they're not ideal. So explain to us exactly what this is that you are doing with this movie. Well, Matthew, just to take you a little bit further back, for the last 15 years, I've been struggling with one thought, and that is that India, being a large country with a huge population, unfortunately doesn't have enough cinemas.

5:14The density of cinemas is not as much as it ideally should be. U.S. has 35 ,000, I believe. U.S. is roughly one-third our population. China is similar to our population, has about 90 ,000. We have 9 ,000, out of which half are servicing the South Indian states, which have a different language cinema. So essentially, we're dealing with about 5000 screens, 5000 theatres. Wow, I wish we could import some we have too many in this country. So I was I was struggling with this thought that the biggest hits in Indian cinema in Hindi cinema for sure, the number of population that actually gets to see a film in theatres is roughly between two to three percent.

5:58And this is for the biggest successes. So the question that where do the remaining 97 people 97 people get to watch the film it's usually either through piracy or when it comes on satellite satellite is a big big platform that's where a huge number of indians watch the film and that's because of low penetration rates for internet right yeah that was the case but internet penetration has now grown dramatically okay so at that time i was wondering because as a creative person i want to reach my audience i want to reach each and every person i think it's also So it's my responsibility, I feel, in some way that I should make the attempt to reach them.

6:34And for many years, I was trying to figure out how we can go about it. And then three things happened. One is internet penetration grew a lot in India. The other thing that happened is that the government of India came out with something called UPI, which is a payment system, a secure payment system through electronic payments, etc. And that really caught on in India. And in fact, India today is the number one country for electronic payments. So when these two things were in place, I was thinking that now is a time where we can, in fact, if not through brick-and-mortar screens, theaters, at least we can try and reach people through the internet.

7:09And that's when I came up with this thought that perhaps YouTube is the right platform, purely from the point of view that YouTube is almost everywhere. Almost every Indian uses YouTube. It's all over the world, and it's a platform that a lot of people use. So putting these three things together allows my film to now reach everyone. Whether they choose to rent it or not is their decision. But at least from my side, I'm trying to make every effort to reach everyone. So the movie went to theaters. You grossed about$30 million in theaters and U.S. dollars, which is one of the bigger hits of the year.

7:46You have options. You have said in other interviews that one of the platforms offered$14 million to stream the film. I must just warn you, my math is not very good, so I don't know how it converts to dollars. Yeah, this was according to the media coverage of the deal. So 14 million bucks on the table, and you say no, you would like to go to YouTube and take zero dollars and get a revenue share of that money. So it sounds like if you do the math here, and it's a dollar a rental, that you would need to, Let's say you do 50-50 with YouTube. I don't know what the split is. You can feel free to tell us.

8:27But if it's 50-50, you need to sell$28 million worth of rentals to break even here. Is that the goal? Do you think you can do that? Are you on your way? You've been out for a week now. Well, we've been out for about four or five days. There are two, three questions in yours. I'll try and answer all of them. one of the things that I was really keen on is to be able to reach everyone. Today, at the end of this exercise, at least every Indian, almost every Indian, has the ability to see my film. And I think that is one of the biggest barriers I've broken. I think it's also a new thing. I think people are not used to paying on YouTube.

9:07So that is one of the challenges because YouTube is a user-generated platform. And so people are used to consuming free content on YouTube. Right. That's the big thing is they're not used to going to this movies on demand. portion of YouTube. That's right. That's right. So that was one of the challenges pointed out to me. And what I've always felt is that the window after theatrical onto OTT platforms in India, I feel is too short. It's too short a window. And that window doesn't work for me. I feel it also cannibalizes theatrical business. Well, explain that because the streamers obviously don't want any window.

9:43I mean, this is a huge issue in the US. Netflix will not put its movies in theaters. is the theaters won't even play them because they want to go day and date, put them on the streamer the same day. And Ted Sarandos, the CEO of Netflix, has been very clear. He doesn't believe people want movies in theaters. They want them at home. And obviously the artistic community disagrees with him in many ways. So in India, it's the same way where the window is short and you want to elongate that window. How does doing this elongate the window? So there are two things to this. OTT platforms in India, they form a very small subset of the Indian audience.

10:23Yeah, Netflix, according to them, has 12 million subscribers in India. Yeah, but we have a population of 1.4 billion. So it's a very small subset. Prime Video says they have more. But again, as always with Prime Video, we don't know how many of those people are there to watch video or just there for the shopping. Sure, sure. So I felt that the window from theatrical to OTT is too short. I do believe that cinema and the experience in a cinema hall in a theater is very unique. It's collective viewing, you know, when you're laughing or clapping or enjoying something or whatever your emotion is, it's that kind of experience that makes it a magical, you know, experience.

11:06That's my feeling. And I hope theaters never go out of fashion. I do believe that with the smartphone coming in, roughly 2005 is when smartphones started, if I'm not mistaken. And now it's been about 20 years. So with smartphones coming in and this huge force major of COVID hitting all of us has in fact changed habits. And today, almost everything that we consume is purchased on the phone. So if you're not available on the phone, if you're not available on the digital platform, perhaps you're cutting out a huge audience. So I feel that a combination of the two is it gives the audience the choice whether they want to watch it in the theaters, they want to watch it at home, it's entirely the choice of an audience where they want to watch it.

11:50I understand there are a lot of people who love going to theaters, but because of their responsibilities, some of them, some of us are not able to actually go to theaters. And I don't want to deny those people, you know, the possibility of watching the film in the convenience of their home. So I'm not against digital. I just feel that, you know, I mean, I've been here for 35 years as an actor And, you know, I have a very strong bond with film cinema halls and theaters. So that's my first place of, you know, where I would like to sit when my film releases. Then I would like to be on digital. But I would, and one more thing I want to add over here, Matthew, is that the pay-per-view model that existed in the US for so many years was pretty much non-existent in India.

12:33Well, that's a key thing, because I think some people will listen to this and say, well, this is just a VOD window. This is, you know, there is premium VOD in the US where if you want to watch it before it gets to the streaming service, you pay 20 bucks here and you can watch it. So this is just a more democratized version of a VOD window. But you're saying that that window is not an option typically in India. No, it's not. So typically films release in theaters, they straight away go on to OTT channels and then they go on to satellite. They do come and sit. Some of the older movies are on YouTube.

13:09You can rent them or you can buy them. But that's where they sit last. So I'm not trying to eat into anyone's space. I'm just trying to create a space which I think ought to have been there to begin with. Earlier in India, the reason pay-per-view didn't take off is because our electronic payments were not in place at that point of time. So people couldn't pay for it. Now with UPI coming in, that's made a huge difference. and all of us use electronic modes of payment. So I felt that this is a time where we should try and create that window which does exist in the rest of the world. Honestly, I had actually never been to the YouTube Movies on Demand page.

13:48And when you go there, at least in this country, it's like you said, it's a lot of older movies. The first movie that popped up when I went there was Ernest Goes to Jail, which you're probably not familiar with. I can explain to you the Ernest franchise at some point. But the perception is that YouTube is non-premium, that it is not Netflix or Prime Video, that you go there to watch user-generated and maybe some higher quality stuff that people upload. But there is a perception issue that you have to hurdle in this case. And you didn't worry about that? I was worried about that. These were certainly concerns that were thrown at me when I came up with this idea.

14:30But I really wanted to give it my best shot because I feel that if this does succeed, then off to theatrical, you know, creative people in India would have an additional window of pay-per-view before they go to OTT. And that's what I feel ideally should be the case. Okay. Yeah. And obviously the availability of YouTube in India is just, I mean, it's almost 500 million users. and you say you're not trying to cannibalize or hurt other services, but if I'm Netflix and I'm Amazon Prime Video, that worries me because they have had trouble getting traction in those countries. India is a huge priority for Netflix and there's been challenges.

15:13The audience there because of piracy and because of the options available has been less willing to pay the price that Netflix wants people to pay for the service. And they know that there's a huge opportunity. It's a gigantic country and Indian people love movies and television. But Netflix has had a tough time breaking in. What is the perception of the streamers, the global streamers in India right now? Well, I'll tell you my impression. I think the bulk of India does not subscribe to OTT platforms. But there is a certain section which does, and I'm one of them who subscribes to Netflix or Amazon.

15:54And as a user, I'm very happy with that service. My only issue is that the window is too short and it doesn't allow for a pay-per-view window. We need a pay-per-view window between theatrical and OTT. And that's what I'm really pushing to create. And what was the window here? You released this movie in June. So is this a 45-day window? so we released in theaters on 20th June and then after 6 weeks that's 45 days we released on pay-per-view on YouTube and then I haven't made an OTT sale because when we spoke about when I spoke to the OTT channels I said I would like to come on after 6 months of the theatrical release on to OTT but none of them were comfortable with that period and they said no if it's not 2 months we want to come in 2 months If it's not two months, then we won't like to go ahead with the deal.

16:49Oh, interesting. Well, let's see what they say if this is a gigantic hit on pay-per-view. Yeah. No, but I mean, even if it is, and as time goes by, we'll discover what the depth of the business is. But I still feel that there is an audience which would watch it on Netflix and Amazon when it does come on the OTT channel, if they so decide. I think that window needs to be closer to six months or five months, somewhere there. My first priority is theatres. And I feel that every film needs to be handled differently. A film that's doing really well in theatres and going on for 8 weeks, 10 weeks, 12 weeks.

17:27As a creative person, I can put it on pay-per-view, not just after 6 weeks. Because we put it after 6 weeks in the case of Sitariz Amipat. Because by then, we had pretty much done our business. But had I seen the business going on further, I would have put it after 8 weeks. Or 10 weeks. Or 12 weeks. I want theatres to have their full run without any disturbance. And once the theatrical business is exhausted, that's when I want to come on pay-per-view. And that is a window that can be flexible. It can be eight weeks. It should certainly not be below six weeks, but six weeks, eight weeks, 10, 12, 16, whatever, depending on how the film is doing.

18:03And then you should give pay-per-view a good three months and then the film can come on OTT. That's the ideal window, I feel.

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19:35The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. To learn more, check out Accenture.com slash Spotify. Well, you have some luxury here in that you're controlling your own destiny. I mean, in the U.S., many of the studios also own streaming services. So their incentive is to get as much box office as they can out of theaters and then push the movie to their streaming service as soon as possible. So you see big movies, unless the filmmaker can exert leverage and negotiate a longer window. People like Christopher Nolan, who get a six month window guaranteed.

20:18Tom Cruise gets a six month window on Paramount Plus for Mission Impossible, those kinds of things. But for the most part, if you're doing a movie for Universal, you know that it is going to go to Peacock, their U.S. service and elsewhere around the world after as soon as three weekends. I mean, it can be that early and you don't have much choice in the matter. What's interesting here, and it sounds like it's much more common in India, is that a star of your stature and someone who has a track record is able to control their own destiny a little bit more. Am I right with that? Well, at a price.

20:57Certainly at a price. You turned out$14 million. So I'm taking a huge risk and I'm the only one doing it. I think the rest of my colleagues are waiting and watching to see how it goes. If it goes well, then this would become the norm. And I'm really hoping it goes well because I think it will be such a boost in the arm for cinema. And not only that, it also is a great opportunity for younger filmmakers who are making indie films which don't have huge stars. They just don't get distribution in theatres. OTT platforms don't want to buy them. And they have nowhere to go, really. At the very least, a YouTube release gives them access to a huge number of people.

21:37and if their work is good, it goes viral, you know, they can earn. Have they given you any stats yet? How's the movie doing? It's doing well. It's doing way beyond what YouTube expected. I'm not allowed to give numbers, so I'm afraid I won't be able to give any numbers right now. I know, Matthew, I would have loved to be able to give you. Oh, you are. Come on. You're the Tom Hanks of India. You can do whatever you want. Do you think ultimately you will make your money back? I hope so. I hope so. I hope so, yeah. I mean, how are you letting people know about this? Are you advertising it? Is YouTube advertising it?

22:11Are you just counting on the algorithm of people who have bought tickets to your movie will get served this on YouTube? No, we have a marketing budget for this and YouTube is putting its strength behind this and YouTube is also putting up a marketing budget for this. So you are spending your own money to market this? Me and YouTube, both of us. YouTube is also marketing it and so am I. So there's a separate budget for the theatrical release and a separate budget for the YouTube release. Okay. Have you heard from other filmmakers in the region that want to try this? Well, all the people I've met are really excited and they're waiting to see how it finally turns out.

22:47Will you then share? No one's going to do this unless you share the numbers. No, of course. I mean, I think that this is something I would encourage. I think that one of the biggest steps that we've already taken is that today, my film is actually available across not just India, but outside of India. And, you know, diaspora Indians, they live all over the world. You know, sometimes theaters are not close to them. So this is a very convenient way. This is finally you have a way to reach people. And I think that's the biggest strength of this idea, that you have the ability to reach people and then it's really always up to the audience whether they want to consume it or not.

23:24Yeah. And just to be clear, what is the revenue share with you and YouTube? You don't have to tell me the number, but what's the split? unfortunately, I can't give all this out yet. But it's a good, let me say, it's a good split. It's a good split. I mean, theaters, typically, they get about 50 % and 50 % goes to the studio. Is that a similar arrangement? It's better than that. It's better than that. Do you think that is because YouTube wants to try this out and popularize it? Or do you think that's going to be a rate that others will be able to get as well? I think others would be able to get a similar rate, if not the same, because I think, being the person who's risked a lot to try and do this for the first time, they might give other producers a slightly less advantageous deal.

24:11But even then, it's a very good deal. And what was the ultimate budget for this film? This film cost us$11 million. Okay, so you've pretty much already made your money back in theaters. Well, I had to pay a price also because I had a partner with me earlier and then they weren't very keen on this rash idea of mine. they didn't like you turning down money they didn't like me turning down money so they preferred that I buy them out and I so therefore the film has actually cost me about 14 million dollars let's say between 14 and 15 million dollars is what the cost of the film for me is so if the split is 50-50 on theaters it made 30 you're about broke even and then there's marketing and distribution costs so you want to make some money on this to make you whole sure yeah yeah but you know the way I'm looking at in Matthew is that I do believe that this is also the future.

25:05Well, it's marketing essentially as well. It's the age old question in entertainment, you are sacrificing dollars for reach. Absolutely right. And the other thing is that I also feel that, you know, in a pre sale, what happens is when I'm selling my film to an OTT channel, I don't know exactly how many people are going to watch it. Neither do they. So they're making a judgment and they're taking a judgment call and they offer a price. I like the price. I say yes. But when the film finally releases, it may do great numbers for them or it may not. I already have my money. Whereas in this model, my film has to be good because each individual has to buy it.

25:45Each individual has to buy into it. So that actually really puts a lot more responsibility on the creative team to really deliver a film that connects with people. Yeah, the pre-sale model, you get your money up front, often to make the movie, and then you have obligations in different territories and wherever the movie plays, someone has those rights. And it doesn't allow you to call an audible, to use a U.S. football term, and do something different here. Yeah. But creatively speaking, what I was trying to point out is that in a pre-sale model, I could make a really bad film. I could still make money.