Since December 2017, there has been a huge conflict between the Producer’s Councils of all the four Southern Indian Film industries and the Digital Service Providers (DSPs) over the exorbitant Virtual Print Fee (VPF) being charged by the DSPs.

With the talks between the Producer’s Councils’ JAC and the DSPs yielding no positive outcome on February 23, a strike seems inevitable and the JAC has reiterated that no new movies will be released across the four Southern film industries from March 2.

Let us delve into the Producer’s Councils-DSPs conflict in detail:

What are these Digital Service Providers (DSPs)?

When the traditional film projection system became obsolete all-over the world around 10 years ago, digital film projection system came into vogue and theaters across the world were equipped with the digital projection technology offered for free by the Digital Service Providers (DSPs).

The Digital Cinema Initiatives (DCI), which was formed to establish uniformity for digital cinema systems, had allowed the DSPs to collect the Virtual Print Fee (VPF) from producers and distributors for the first 5 years to recover their investments. All the DSPs in the US and around the world followed the DCI’s directives, but not in India. Local DSPs like Qube, UFO, PXD and Scrabble came under one roof and continued to charge exorbitant amounts towards VPF. This monopoly is the main reason behind the conflict.

What is the Virtual Print Fee (VPF)?

Since the DSPs invested around 40-60 lakhs per theater to install digital projection equipment and servers, they collect a Virtual Print Fee (VPF) per film to recover their expenses. As per the present market charges, the VPF per film is Rs 22,500 per week (the DSPs offered to reduce it to Rs 14,000 during the Feb 23 meeting, but it was turned down by the Producer’s Councils’ JAC). The VPF is same for both high and low budget movies and A, B and C centres.

The Real Conflict:

When the exhibitors weren’t ready to replace the film projection system with the digital system around a decade ago, the DSPs stepped in and offered to install the digital projection system for free. But the DSPs had convinced the exhibitors to enter into an agreement where the majority of the revenues generated through ads will go straight into DSPs’ pockets until they recovered their investment. It’s been almost a decade but there’s no sign of DSPs terminating that agreement and even the projection system’s ownership is not transferred to the exhibitors. Needless to say, exhibitors are seeing red over this issue.

On the other hand, the exorbitant VPF is a major bane for producers, especially those who make movies with low budgets. Even if a film is screened 2 times per day, the VPF would remain same. This results in a severe dent in the investment recovery for the distributors and producers.

Several big budget movies are slated to hit the screens starting from the last week of March. Hundreds of crores of rupees are at stake on the upcoming summer biggies in all the four languages down South. In this scenario, the Southern film industry cannot afford another stalemate situation and an amicable agreement satisfying all the parties is keenly awaited.

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