What the Disney-Fox deal means for Bollywood’s future
New Delhi: The implications of Walt Disney Co.’s purchase of Rupert Murdoch’s 21st Century Fox Inc. in a $52.4 billion deal may take time to play out, but the Indian film industry experts say such consolidation is just the tip of the iceberg for this part of the world. The influx of over-the-top (OTT) video streaming platforms has necessitated major changes in the film world.
“If you see a recent trend, urban, slice-of-life films have seen decreased footfalls. That’s because there is a corresponding increase in streams and availability of similar content on OTT platforms,” said Vikram Malhotra of Abundantia Entertainment, which has co-produced films like Airlift and Toilet: Ek Prem Katha. “So unless films are spectacular, they are not going to call people to theatres. What that does on the content as well as the production side is demand the creation of such spectacular content. Effectively, the consumer side of the equation is what is now going to influence such consolidation or disruption.”
Spectacles, by definition, require investment, with or without stars, Malhotra added. So only those with deep pockets will be able to attempt such projects. Therefore, consolidation becomes that much more important to the film industry.
“As we see the lines between traditional theatrical revenues, television revenues and digital revenues blurring, it will be impossible for companies to survive in any one domain,” said Jyoti Deshpande, group chief executive officer, Eros International, which has explicitly announced a focus on its streaming service Eros Now. “So I think this is just the beginning of large-scale mergers and acquisitions that we are here to see. In the international market, technology or telecommunication companies will look to consolidate with new-age digital media companies. The Indian media and entertainment market is too small and fragmented but I see consolidation happening in some shape or form.”
One will see television or movie companies moving to digital, for example, Deshpande said. Like Eros turned to Eros Now, or large-scale M&A happening between the telcos and some of the content players. On 18 December 2017, Mint reported that Reliance Jio Infocomm Ltd, the telecom arm of Reliance Industries (RIL), is in talks with several web content developers to create content for its users. So far, RIL has Star India’s video streaming app Hotstar and Siddharth Roy Kapur’s production house Roy Kapur Films on board. Last year, it bought 24.9% stake in ALTBalaji, the OTT platform owned by Balaji Telefilms, for Rs413 crore.
The role of independent producers will also change. The main thing that smaller players lack, Deshpande said, is a balance sheet. They’re risk-averse and not putting in their own money currently, a studio is often funding their films.
“If you want to make long-term deals and have some scale, you can’t jump from partner to partner but decide whom you want to work with. Finding that one stable partner and making a meaningful sticky deal is the kind of consolidation that can happen within the film sector,” Deshpande said.
Gaurav Verma, chief revenue officer at Red Chillies Entertainment, said more collaborations are happening between production companies in the last one-and-a-half years. For example, Red Chillies’s mystery thriller Ittefaq was a co-production with Dharma Productions and BR Studios.
“The idea is to create more content and use each other’s capabilities to add more value to films and to each other,” he said.
Such practical, special purpose alliances where studios partner with independent investors or talent also helps offset individual costs and investment, and fund the production and output costs of large-scale movies. But essentially, it all boils down to catering to the hard-to-please consumer who is now exposed to digital platforms and will not be drawn to theatres for sub-standard fare. As Verma said, the audience is evolving with more choices of entertainment, especially the global streaming platforms. “The creative business has to evolve with it, clearly it’s not a template business,” said Verma.
“It’s nothing else but that Netflix fear,” said a film producer, on the condition of anonymity. “It’s that looming fear that Amazon Prime and Netflix which are already taking away talent by the dozen, if tomorrow they start getting into things like news and sports, the traditional broadcast model could be rendered irrelevant overnight.”