“Content has led people back to the cinemas. There are some big Bollywood releases in the next half of the year such as Dabangg 3, House Full 4, and we are expecting a big response,” he says.
Multiplexes, too, are leveraging on their growth (they already comprise 55 per cent of the total box office revenues from Bollywood) and are opening more screens. PVR, for instance, plans to add 80 more screens in FY20.
But for content companies, OTT is a great new opportunity to bring in the moolah. Dharma Productions, which hitherto produced only for the big screen, has now set up a separate company called Dharmatic to produce content for OTT. “We will do both fiction as well as non-fiction and we have just tied up with Netflix for original content. Many stories cannot be told in three hours and digital provides a great opportunity for them. We are in talks with OTT players to make content,” says Apoova Mehta, CEO, Dharmatic.
What makes OTT attractive is that on an average, its cost of content is three to four times more than that of TV programming. This is because, increasingly, Bollywood stars and directors are being roped in to make shows for OTT platforms
— and naturally, they don’t come cheap. But OTT operators feel that the high cost is worth it. They need to increase their subscription revenues, and one way of doing that is to offer compelling and exclusive content. After all, while there are 300 million active OTT customers, only 10-15 million pay for the service. And this is a big challenge to overcome.
But though content companies
have gained in volumes, the margins have remained stable. Some are now working on a different model — with a higher risk, but better returns.
Gourav Rakshit, COO of Viacom 18 Digital Ventures, which owns the Voot OTT channel, says some companies
are offering content off the shelf and ready to go (the programme has already been produced by them). OTT players, who want to air original content so they can increase subscription viewers but cannot afford the 12 months’ wait to produce collaborative programming, opt for this route. “The margins in this content are as high as 40 per cent to 50 per cent as the production house takes all the risk if the content does not sell. In a collaborative content deal, however, the margins could be a low 20 per cent, because you have a buyer upfront.”
The film content business is also witnessing a sea change. Content that no one would touch earlier, those that were seen as arthouse or too “bold”, are now raking in big bucks. Says Mehta, “Movies set in the heartland with topics which were taboo and those on nationalism are being lapped up by the millennials.” For example, Uri, which is based on the Indian army’s 2016 surgical strike into Pakistan, garnered six times returns on its investment of Rs 45 crore. The success of Kesari or Badhai Ho are also cases in point.
Another source of revenue for movie content makers are the digital rights of films. Last year, OTT players forked out Rs 13.5 billion for the digital rights to movies. According to projections by KPMG-Ficci, the figure is expected to hit Rs 17 billion this year. Clearly, content players in the entertainment space are in a sweet spot right now.