Beyond the soundtrack — music labels look at full-stack entertainment

After Saregama invested ₹325 crore in an initial stake in filmmaker Sanjay Leela Bhansali’s company in December and Universal Music acquired a 30% stake in Excel Entertainment earlier this month, it is clear music labels are taking an interest in film companies, pointing to growing trends and challenges in both ecosystems.

According to industry experts, music streaming continues to deliver weak monetization, with per-stream payouts amounting to only a few paise, making it difficult for labels to generate meaningful long-term value even from large catalogues. At the same time, fragmented rights enforcement limits how effectively music intellectual property (IP) can be monetized beyond traditional distribution channels. In contrast, the film and OTT ecosystem offers deeper, more diversified revenue streams, including content distribution rights, music royalties, performance rights and global syndication.

Meanwhile, studios are grappling with uncertainties in the theatrical and streaming businesses coupled with unreasonable star fee and competition from easily available international content.

“The move is being driven by a convergence of pressures, rather than a single trigger. While the Indian music business continues to grow in scale, it is increasingly exposed to music platform economics, limited pricing power, and a dependence on content created elsewhere," said Anushree Rauta, equity partner (head of media, entertainment and gaming practice) at ANM Global. "The decisions are best understood as a push towards vertical integration, rather than a response to any single downturn."

Film and series content sits at the top of that value chain, Rauta added. By acquiring stakes in production houses, music labels move closer to the point where creative decisions are made as well as what kind of music gets commissioned, what legacy works are adapted, and how soundtracks are positioned.

Simultaneously, large production houses are navigating a difficult phase marked by an unpredictable theatrical market, a steadily declining satellite revenue stream, and an OTT ecosystem where commissioning or licensing is selective and budgets uncertain, she said. In this context, music labels bring stable capital and long-term alignment, while production houses offer certainty of content creation. These investments are therefore as much about managing systemic risk as they are about chasing growth.

The issue is not slowdown, it is dilution of control, according to Rahul Hingmire, managing partner at Vis Legis Law Practice. “Music labels today depend heavily on aggregators and platforms for discovery, pricing and timing. Their assets are valuable, but the trigger points for monetization are outside their hands," Hingmire added. "Film production changes that equation. It puts the label at the start of the IP cycle—script stage, casting stage, marketing design stage. That shift from reactive monetization to planned ownership is the real driver."

According to Charu Malhotra, co-founder and managing director at Primus Partners, a management consultancy firm, this is diversification, but also strategic integration. By investing in film studios, music labels move upstream into content creation instead of only monetising the soundtrack after the film is made. They also gain earlier access to IP, and owning or co-owning films means they benefit from multiple revenue streams and not only music rights.

Meanwhile, studios are grappling with uncertainties in the theatrical and streaming businesses coupled with unreasonable star fee and competition from easily available international content.

Music labels have already been trying to reduce their dependence on downstream licensing by moving closer to content origination and ownership.

Saregama’s older majority acquisition of Pocket Aces, a digital media company alongside the expansion of its in-house film production arm Yoodlee Films, signals a conscious shift from being a passive rights acquirer to an active content stakeholder. The commercial logic is reinforced by recent examples such as Dhurandhar, where several successful tracks are adaptations from Saregama’s existing repertoire, demonstrating how catalogue-led music can outperform freshly commissioned works while significantly lowering risk.

“This shift is often described as diversification. But in reality, it reflects a far more fundamental transition—from being rights holders to becoming ecosystem owners. In India, where streaming payouts remain modest at roughly ₹0.05- ₹0.10 per stream, labels are recognizing that ownership of music alone is insufficient to unlock sustained, long-term value. By investing in film and content studios, labels gain early influence over storytelling, allowing music to be embedded organically into narratives rather than added as a post-production layer," said Gaurav Dagaonkar, chief executive office and co-founder at Hoopr, a music licensing platform. This is where labels’ true strengths come into play: a deep understanding of audience preferences, proven hit-making instincts, and powerful distribution networks, Dagaonkar added. Music-led films consistently benefit from stronger recall, heightened pre-release momentum, and a longer cultural shelf life. Their soundtracks continue to create value across radio, streaming, sync, live performance, and international markets long after the film’s release.

To be sure, going forward, music labels are likely to treat film and content production as a growth engine, while music remains their foundational asset. The catalogue business will continue to be nurtured, especially given the long-term value of evergreen songs in streaming and licensing, said Ashima Obhan, senior partner at Obhan & Associates.

However, content production will be prioritized as a way to secure future-proof relevance in a market where consumer attention is increasingly fragmented across platforms. Labels will likely adopt a dual strategy: safeguarding their music heritage, while aggressively expanding into films and series to ensure they remain indispensable players in India’s evolving entertainment economy, she pointed out.

“We are likely to see a dual prioritization. Music catalogues will remain the bedrock of these companies, given their enduring licensing value across streaming, advertising, and brand partnerships," said Hardeep Sachdeva, senior partner at AZB & Partners. "However, content production will be treated as the growth engine, an avenue to secure relevance and scale in a market where consumer attention is increasingly platform-agnostic. The result is a transformation of music labels into integrated entertainment companies, where music and content reinforce each other rather than compete, ensuring long-term sustainability in India’s evolving media economy."