The coronavirus pandemic is having a tremendous impact on sectors across India, including the media and entertainment industry. Public meetings have been restricted, and theatres, cinemas, cultural events, plays, and concerts have been closed or cancelled indefinitely as a result of the virus’s deployment of curfews and lockdowns across all states. As a result, our social lives have moved online as individuals have been more restricted to their homes, and entertainment consumption has increased, particularly in the at-home categories of television, online gaming, and over-the-top services (OTT). We can see that there has been a change in the way we consume media and entertainment (M&E). In this article, the major legal challenges faced by the M&E sector along with the future challenges will be discussed.
Legal issues associated with Contracts
In film industry contract plays an important role as it acts as a line of agreement between content owners, production houses, artists, investors, sponsors, promoters, distributors, vendors, production companies, broadcasters, ticketing agencies, theatres, and licensors. Recently, the risk of non-performance, poor performance, delay, and non-payment has increased as a result of the disruptive impact of a global pandemic leading to the shutdown of workforces, closing of borders, and forced work from home arrangements. Hence, physical agreements are proving difficult to implement. The delay or cancellation of films premieres, and events raises a slew of practical issues. The sponsors, broadcasters, and ticket holders who may have invested large sums of money and are now facing uncertainty and losses due to potential refunds, exchanges, and contractual obligations. Although, some contracts directly address these difficulties in their terms, while in others, contractual concepts such as frustration will govern the parties’ rights.
At this point, the parties should analyse their deals for termination and force majeure clauses, as well as determine whether the timetables and obligations may be agreed or changed. The parties must determine whether production schedules and release dates may be postponed in light of crew limitations and consumers’ incapacity to attend theatres. Due to the prohibition of mobility and protracted social distancing measures, it is recommended that future agreements be executed via e-agreements and e-stamping. As genuine agreements, e-agreements are subject to stamp duty at the time of execution. For instance, with effect from April 1, 2008, the Delhi government has implemented e-stamping, which is being carried out by M/S Stock Holding Corporation of India, a public sector operation.
Legal Issues associated with Employment
As we know that the entertainment industry’s workforce is mostly made up of casual workers or contractors who do not have access to paid time off and hence risk losing their jobs. Because production and distribution are almost at a halt, businesses will attempt to cut expenses sooner rather than later, resulting in salary cuts and unemployment for causes beyond the employer’s control. Another critical problem at hand is the management of the workplace environment and guaranteeing the safety of its employees as they return to work.
Regardless of the pandemic, the normal standards of procedural fairness in the workplace should continue to apply. Companies are encouraged to exercise prudence before suspending employee payments, issuing stand-down orders, or dissolving employment arrangements in order to avoid legal liabilities. Further, as the lockdown limitations are being lifted, companies are required to provide a safe and healthy working environment for their employees and to follow WHO, the national government, the Ministry of Health and Family Welfare, and state governments’ requirements. The problem that the sector is facing is a conflict between the desire to start a business and the necessity to preserve the health and safety of its employees. To ensure that on-site and off-site shooting venues, studios, vanity vans, and other locations are free of the coronavirus, a set of industry guidelines will need to be established.
Legal issues associated with Consumer
The suspension of live events may give rise to potential consumer protection claims. Companies may have difficulties in refunding money to ticketholders, putting pressure on the industry’s already sluggish economy. In light of this, the Central Board of Indirect Taxes and Customs (CBIC) has permitted firms to claim refunds of Goods and Services Tax (GST) paid on advances for events or bookings that were cancelled. The government’s move is poised to boost the entertainment business since the increased funds will boost companies’ liquidity positions, which can then be used to keep the economy in shape and keep people employed.
For the future it is suggested that stakeholders in live entertainment events should study ticket terms and conditions, policies, and obligations in respect to providing services under applicable consumer laws.
M&E Sector post COVID – The digital future
As the globe adjusts to a new normal, where social isolation, work from home, and virtual meetings are the norm, consumption patterns are rapidly shifting. As habit development and convenience of access emerge as drivers, demand for at-home digital media is likely to skyrocket. OTT platforms and digital media have already attracted new customers and expanded their reach to new demographics and locales.
In a report by KPMG it was projected that by the year 2030 India would have a billion digital users. However, we can now anticipate the ‘digital billion’ trend to accelerate dramatically as a result of the lockdown, with not just the emergence of new users but also the comfort and trust of the present digital citizenry increasing. Younger people will likely prefer conventional TV material supplied through a digital ecosystem, while elderly people will likely prefer traditional TV content delivered through a digital ecosystem. Once the lockdowns start to lessen, demand for OTT originals, which we recognised as a competitive differentiator in our study, should return, and players should expect to gradually bring out original, targeted content for certain audiences.
The analysis of the current situation suggests that M&E organisations should anticipate increasing their reliance on technology to create cost efficiency and revenue enhancement potential in the area of content development to distribution and monetisation. Greater technology integration, for example, could potentially reduce the gestation period for content, resulting in operational efficiencies. Companies may consider efficiencies in the way they conduct business, even across revenue-generating functions such as sales, as a result of the growing use of cloud and remote working solutions.
The brutal effects of the pandemic are not unknown, and the media and entertainment industry are no exception to the same. In fact, the media and entertainment industry were hit almost immediately by virtue of theatres being shut. Moreover, despite the relaxation of lockdown that followed, the turnaround thereof has almost been dim as it has reduced the attendance at live performances, suspended on -location shootings which has also affected the production houses. However, online platforms have been a saving grace to the industry as consumption of online content has been skyrocketing owing to the pandemic. Having said that, it is about time that contracts binding the individuals of these industries include tightened clauses pertaining to termination and force majeure in order to avoid the harsh effects that the forthcoming waves could bring. Moreover, the legal angle of the said matter requires that new laws be introduced which would govern the censorship and ensure that there is healthy competition in the market.
– Sonam Chandwani, the Managing Partner at KS Legal & Associates.
Conclusion
Even while the entertainment industry’s future appears to be bleak, there appears to be a silver lining, with digital OTT platforms, music streaming services, and radio all witnessing continuous growth in their business models. Due to the risk of getting the contagious virus, people are more likely to turn to in-home entertainment options such as digital, television, and gaming, which scientists predict will eventually lead to habit building. Clearly, the current situation has shifted the priorities among consumers and M&E players alike.
Companies are expected to concentrate their efforts in the near future on maintaining present levels of profitability. Companies’ investment cycles may be drastically reduced, limiting supply and growth in the M&E market in the near future. As firms attempt to migrate to a variable cost model and cut fixed expenses, there may be a renewed emphasis on flexibility. Moreover, the companies will have to comply with the digital norms and legal norms associated with e-contracts and employability.
The pandemic is swiftly bringing a transition in the M&E sector and reimagining the legal compliances associated with it. Technology’s potential and ability to support new models of systems and processes have already been demonstrated. It is recommended that we continue to empower and keep our minds open to responding to new technological changes in our workplaces. Let’s get ready to greet the upcoming Digital Legal Era.
