cinema requiring huge amounts of investments, the prevailing VPF rate (as agreed between the said Six Hollywood producers and third party equipment aggregators) also became the guiding benchmark for Indian content producers who began paying VPF to Indian exhibitors on a per movie per theatre (not per screen) basis. There was no oral or written agreement pursuant to which the Indian producers began paying VPF to the exhibitors. The agreement and the sunset clause alluded by the Informant refers to the agreement between the Six Hollywood producers and the third-party aggregators. In 2018, the agreement between the Six Hollywood producers and the third- party digital aggregators lapsed. In 2017, OP-1 initiated the process of formalizing the industry practice of VPF payment into formal individual agreements with both Indian and nonIndian content producers. OP-1 is in discussion with many of these producers for signing separate VPF agreements and ‘ Yash Raj Films ’ has already signed an agreement with OP-1 for payment of VPF until December 2024. ‘ Viacom ’ (a Hollywood content producer) and OP-1, also, are in the final stages of concluding a written agreement. It is imperative to note that the benefits of digitization though accruing to both the content producer and exhibitor, is heavily tilted in favour of the content producer. While OP-1 had to install equipment costing Rs. 25,00,000/- to Rs. 2,00,00,000/- with an annual maintenance cost of Rs. 2,00,000/- to Rs. 3,00,000/- per projector, the content producer has seen a drastic drop in print cost from Rs. 60,000/- to Rs. 70,000/per print to approximately Rs. 20,000/-. In addition to the drastic reduction in operational costs, the content producer also benefited from the fact that digital cinema is less prone to piracy. Another benefit of digitization was that it allowed the content producers access to far wider distribution than was possible with physical prints, while the exhibitor ended up incurring higher costs. In light of the above facts, if the Informant has taken a stand not to pay VPF going forward to film exhibitors which is a legitimate source to cover the huge costs being incurred by the film exhibitors, it is a matter to be negotiated and discussed between the parties and the Commission is not the forum for such negotiation.
