How Do Movies Released on OTT Platforms Make Money?

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How movies released OTT platforms make money
How movies released OTT platforms make money

Most of the Films are made with borrowed money from Financiers who charge between 1.5 – 4% interest per month.

So a movie made for 5 Crores will have interest payments of Rs. 7.5 – 20 Lakhs per month which means the potential for profit will keep diminishing with every passing month.

Besides Movies of small budget struggle to get good dates and adequate screens.

So selling in bulk for exclusive release on Amazon Prime is the best option.

Prime usually pays around 20% Profit as Assured sum and promises a further 0% – 100% Profit depending on how the Movie runs through its VFR rating (Or VCTW or TVOD or any other name) which is called the View Factor Rating and is calculated in a specific formula involving the No. of New Subscribers for 3 / 7 Days from the day the movie was launched on OTT and the No. of Views (A View being defined as 20 Consecutive minutes or 45 Cumulative minutes per user) Ponmagal Vandhal for instance made a good profit.

Lock up also made a decent profit.

Had these films been released in Theatre they would not have made such profits. IN fact their release would have been doubtful in the first place.

For Lock Up Nithin Satya made the film for Rs. 2.5 Crore and sold the movie for Rs. 4 + Rs. 4 Crore (Depending on 3 Day VFR of 3.00 and 7 Day VFR of 2.40). So minimum he makes around 40% profit. Of course they can make profits. They make a minimum of 20% profit which is why smaller films happily sell to the OTT platforms for exclusive release now through roku channel codes

How Does Amazon Prime profit from these Films?

  • New Subscribers – Prime gets new subscribers who become subscribers to watch a particular film. For instance around 2.75 Lakh new subscribers were added after Ponmagal Vandhal was released on OTT in the first 3 days. It is estimated that if Master was released – you could get upto 60–80 Lakh Subscribers in the first 3 days and upto 2 Crore in the first 7 days. 2.75 Lakh Subscribers is around Rs. 27.50 Crore revenue which after an AGR of Rs. 6.50 Crore- still means Rs. 21 Crore of Revenue.
  • Price per GB of Data Streamed– The Jio, Airtel Platforms pay Amazon Prime, Zee 5 – a sum ranging from 15 Paise per 100 MB of Data Streamed to 40 Paise per 100 MB of Data Streamed (Depending on the time of streaming). If Prime Users collectively stream 8000 TB of Data in a single day, That would mean Rs. 3.2 – 3.5 Crores a day or Rs. 110 Crore a month in India alone. Foreign Data Companies also have to pay such monies.
  • Product Interlinks – You will notice that Amazon App for purchasing products and Amazon Prime are from the same company. Many Product owners will pay placement ads ranging from Rs. 47,000/- per month to Rs. 1.50 Crore a year depending on products. These Products will be displayed whenever you go to prime via links. This earns a big revenue to Amazon Prime. The higher the VFR, the more the interlinks will be for the movie. (Interlinks are not Ads or Advertisements). Prime does not depend on Ad Revenues….