Lights, camera, acquisition: Why corporates are betting big on Bollywood?

The Hindi film industry is set for a major shift, driven by rising costs and corporate interest in the entertainment sector. Analysts predict consolidation among production houses in the coming months

The Hindi film industry is poised for a major shakeup, with a wave of consolidation among production houses expected in the coming months. Industry experts, as reported by The Economic Times, attribute this trend to rising operational costs and growing interest from large and mid-sized corporations in the entertainment sector.

 

Industry insiders believe that acquisitions and partnerships will reshape the landscape. “The Dharma Productions-Adar Poonawalla deal has paved the way for some consolidation in the industry. We foresee either big companies acquiring well-established production houses or medium-sized companies acquiring a bunch of small boutique production houses,” said Ram Mirchandani, founder of Rampage Motion Pictures.  

   

Mounting costs and shrinking margins   

For many production houses, escalating costs and the prolonged timelines involved in film development are proving unsustainable. From creating scripts to purchasing remake rights and covering high fixed operational expenses, the financial strain is immense. Moreover, projects often get shelved, leading to sunk costs with no returns.  

 

“So, there is a need to fund costs. If you have investments, you can produce a film and leverage better on satellite and digital rights,” Mirchandani said.

 

Adding to the challenge is the volatile box office performance. Girish Wankhede, a movie trade analyst, highlighted the slim margins production houses operate on today. “Earlier, a hit film would recover the losses of four flop films. Today, a flop film wipes out the gains from four hit films. This shows production houses are not making enough money on their investments,” he was quoted as saying by The Economic Times.

 

Corporations see opportunity beyond cinema   

Corporations are showing keen interest in acquiring production houses, not just for their immediate film portfolios but for their potential to drive broader business strategies. Industry veteran Shrirang Nargund shared insights into the corporate vision: “Corporations have a bigger vision than merely investing in the film business. They may want to exploit the creative talent of production houses in launching various business verticals such as gaming, web series, interactive social media content, and leveraging influencers on social media by providing them the required infrastructure,” Nargund said speaking to the financial daily.

 

The lure of intellectual property is another factor attracting corporations. Vishesh Agrawal, producer of films like Dangal and Dream Girl 2, stated, “Corporations do their due diligence. They will buy only those production houses which have strong IPs in their film libraries and a long proven performance across business cycles of the industry.” 

 

Global soft power of Indian cinema   

On a macro scale, the appeal of Indian cinema as a global soft power is influencing corporate decisions. Streaming platforms have opened international markets, and Indian content is gaining unprecedented traction.  

 

“Today, cinema is soft power,” said Girish Johar, a producer and film business expert. “Indian content is consumed globally through streaming platforms. This provides a convincing reason for corporations to invest in the sector as it allows them to market and position a type of content,” he added.