Non-film conglomerates can revitalize struggling movie production houses

Non-film conglomerates eye film production

Such investments could help independent production houses rich with IP (intellectual property) to scale up, re-energising an industry contending with stagnant revenues for the past few years when even Hollywood studios have slowed their investments in the country. Finding non-film investors from within the country is one solution to the crisis in this market, which has frequently been seen as unpredictable and unsafe, they said.

“It is important that external capital finds its way into the industry for the health of the production sector. It’s not like independent producers cannot survive without it but that is the only way to ensure the film business scales up," said a senior official at a film studio, declining to be named.

According to the Ficci EY media and entertainment report 2024, the film entertainment segment in India grew to ₹19,700 crore in 2023 from ₹17,200 crore in 2022 and ₹9,300 crore in 2021.

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Recent instances of Paramount Global quitting the country, after selling its entire stake in Viacom18 to Mukesh Ambani’s Reliance Industries, or Walt Disney pulling the plug on local film production anyway prove global entertainment firms are refraining from active investment, the official cited earlier added.

Further, producers have been struggling with a sizeable deficit in cash flow over the past few months, as is evident from the lack of releases in cinemas for several weeks, leading to a loss of business of nearly ₹1,000 crore. That said, while fresh investments could mean the ability to make new content easily, the past few years have also revealed the need for price correction as far as star fee and other expenses go.

Need for price correction

To be sure, deals like the one between Poonawalla and Johar are likely to be the future of film business, which despite its volatility and dwindling revenues from theatrical, satellite and digital revenues, can often throw up surprise successes. Recent hits like Stree 2 and Gadar 2 that far surpassed expectations are proof, according to entertainment industry experts.

“There is starting to be an increase in non-film entities looking at the M&E (media and entertainment) industry for potential investments. While it is still largely seen within the alternative investment space and there is cautious treading given the industry's past financial history and funders, it allows investments to diversify their portfolio and be a part of the rapidly growing content consumption story," Anushka Shah, founder and CEO, Civic Studios, said.

Film production houses face challenges in raising funds due to the industry's high risk and unpredictable returns. Large upfront costs and fluctuating box-office revenues make traditional financiers hesitant. At the same time, competition for investment is fierce, and shifting audience preferences, along with digital disruption, make it harder for smaller production houses to provide stable targets that they can commit to and show steady year-on-year growth, Shah added.

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Amrita Pandey, CEO, Junglee Pictures, pointed out that non-film conglomerates entering the entertainment sector is not new, but it is always a positive sign when enterprising, visionary business houses diversify into a dynamic industry like film. “Over the years, real estate, telecom, and FMCG brands have ventured into Indian entertainment. However, the difference now lies in the scale, intent, and strategy—these investments increasingly involve deeper strategic stakes, such as equity partnerships. For production houses, it brings financial security, new revenue streams, and stability in an otherwise volatile market," Pandey said.

Growth potential amid volatility

However, a key challenge lies in finding and aligning with partners who share the same long-term vision, resources, and ambition to develop sustainable IPs and bold content. Moreover, non-conglomerates are used to a structured way of evaluating projects while filmmaking is a very subjective process - at times finding the right balance between creativity and commerce is difficult for those who do not have a creative vision and a complete know-how of the film industry, Pandey added.

An endorsement from outside for a leading film production house is a shot in the arm for the entire industry that has battled predictions of the theatrical business dying over the past few years, according to film industry experts. With the Reliance and Disney merger nearing completion, producers are aware they can’t just rely on one big entity for funds and OTT sales. There is more opportunity for projects to get funded now and for other independent production houses to find investors and scale up.

Aligning visions for sustainable growth

To be sure, industry experts say when two entities come together, each is bringing its own expertise to the table. “The production house focuses on creativity and content, while the corporate partner often contributes a level of professionalism and financial discipline that can enhance the creative process rather than stifle it. 

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The influence from a non-film entity, in most cases, isn’t about control but rather about applying business acumen to ensure that the artistic vision is commercially viable. It’s about making sure that the creative process has the financial backing and strategic direction needed to succeed. For both parties, it's a symbiotic relationship where creativity is nurtured, and the business bottom line is safeguarded," said Sandeep Bansal, founder of Chaupal, an OTT specializing in Punjabi, Haryanvi and Bhojpuri content.