"I do not think that theatre is really dead. It's a drawing room conversation for you that theatre is dying and cinema is now taking over," Dattani said at a session at the ongoing Jaipur Literature Festival.
He said cinema, which exerts a powerful control on audience today, is a brilliant medium of artistic expression but theatre continues to hold its place.
Duttani, 56, who is also a screen writer and filmmaker agreed that theatre is likely to be influenced by cinema.
"So in that sense, theatre is likely to be influenced by cinema," he said, while pointing out that theatre has lots of benefits.
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Dattani participated in the session "I, Me and My Plays", which talked about scripts, screenplays and the transformative power of theatre.
When queried by Festival Producer Sanjoy Roy, with whom he was in conversation, Dattani said he found the medium of theatre to be not economically sustainable.
Dattani's published works include "Final Solutions and Other Plays", "Tara", "A Collected Works" edition in two volumes and "Brief Candle and Other Plays."
Unlike books, the playwright said, selling a play script was difficult since it did not have a specific readership.
Discussing the idea of making a film on gay people, Dattani said he was fascinated and stimulated to work on the subject by the growing gay culture in Mumbai in the 90s.
"It was not the sub culture in Bangalore that time but now it is on that way," said the Bangalore-born writer.
A five minute clip of the play was also shown during the session.