Active producers reject percentage sharing model

The Telangana Film Chamber of Commerce recently proposed a shift from the traditional rental system to a percentage sharing model for Telugu films in the Nizam area, starting with 23 key theaters in Hyderabad.

According to the proposal, the revenue-sharing model would follow a 60-50-40 pattern over the first three weeks of a film’s run. While such a system is already in practice in markets like North India, Tamil Nadu, and Kerala, the Andhra Pradesh and Telangana regions have largely continued with the rental-based model.

However, the Active Producers Guild has strongly opposed this move, calling it a unilateral decision. The guild made it clear that its members are not willing to release films in theaters that adopt the percentage sharing system.

With producers rejecting the proposal, the situation has effectively returned to square one. The development is being seen as part of an ongoing tussle over control between distributors and producers in the crucial Hyderabad and Nizam territories.

What is the percentage model vs rental model?

The debate between the Telangana Film Chamber of Commerce and the Active Producers Guild revolves around two different exhibition systems:

Rental Model (current system in AP & Telangana):

In this model, the distributor pays a fixed rent (or minimum guarantee) to the theater. After covering this cost, most of the revenue share remains with the distributor, and then flows back to the producer based on their agreement. This system gives producers and distributors better control and a larger share of profits if the film performs well.

Percentage Sharing Model (used in most other states):

Here, the revenue is split between theaters and distributors based on a weekly percentage:

Week 1: 60% to theaters
Week 2: 50% to theaters
Week 3 onwards: 40% to theaters

This means a significant portion of the box office revenue goes directly to exhibitors, reducing the share for distributors and producers. While this system is standard in markets like North India, Tamil Nadu, and Kerala, it has not been widely adopted in Telangana and Andhra Pradesh.

Power tussle in Nizam market

At the heart of this issue is a control battle over the lucrative Nizam distribution territory.

Key exhibitors and distributors, including Suresh Babu, Suniel Narang of Asian Cinemas, and Shirish (associate of Dil Raju), have long held strong influence over theaters in the region. The proposed percentage model is seen as a way to retain that control over exhibition and distribution dynamics.

On the other side, active producers are pushing back, aiming to dilute this dominance by encouraging new distribution players in the Nizam area. Mythri Movie Makers has already entered the distribution space, with Sasi Reddy leading its operations. The company has also begun acquiring theaters, signaling a strategic move to expand its footprint.

This ongoing standoff highlights a larger power struggle between established exhibitors and emerging producer-led distribution networks in one of the most crucial markets for Telugu cinema.