How the Business of Entertainment is Changing in India
A movie on India’s triumph in the 1983 cricket World Cup with Ranveer Singh playing then skipper Kapil Dev was music to the ears of filmgoers. The timing was great as multiplexes were reopening after the pandemic and the initial films had done very well. Everyone in the trade was predicting a super-duper hit with the only debate raging on about how much it would make eventually.
But, guess what? The film tanked. Made on a budget of Rs 125 crore, domestic theatrical revenues were just Rs 107 crore (the expectation was 3x more, say industry sources) and worldwide collections stood at Rs 193 crore. Not enough emotion, said some, while others were clear that the current generation did not relate to it. What transpired in the midst of all this was quite remarkable. Spider-Man: No Way Home and Pushpa: The Rise Part-1 released a week before 83, and hit pay dirt at the box-office. The idea was to get in the money quickly since 83 was expected to walk all over competition. The incident not only confirmed the unpredictability of the entertainment business but threw up a more serious message—the industry was changing and at the centre of it stood a consumer who had several options, among which were films, cricket, gaming, and if the content was not to her liking, it would not make the cut.
India is, in every sense, at a very interesting phase of the entertainment story. Big money is flowing across segments and success is now driven by several factors, many well beyond the comprehension of the creators. Quality and expectations are dynamic, with the consumer pressed for time and low on patience, making the scenario extremely unpredictable. Despite that, the consumer’s wallet is a hugely attractive proposition.
Digital disruption
Industry veteran Punit Goenka thinks the evolution over the past decade has been propelled by “deep-seated mega trends, changing consumer behaviour and a pandemic-caused disruption”. In the process, global trends have affected India, too. The MD & CEO of Zee Entertainment Enterprises identifies a few key areas. “Whether it is the consolidation of large players or streaming platforms spending big on content or creators tapping into new audiences or just the emergence of tech, the internal dynamics of the industry continue to shift,” says Goenka.
To him, the pace of change in the Indian entertainment industry mirrors global markets and he says handheld devices provide a glimpse into the metaverse as a new destination for entertainment. “Affordable data plans and smartphone penetration have opened up new opportunities for consumers and creators. That has led to the proliferation of digital platforms and a surge in consumption.”
Clearly, the emergence of a digital ecosystem has been the biggest catalyst of this transformation. Vivek Menon, Managing Partner at NV Capital, a media and entertainment (M&E) credit fund, says all M&E businesses have a digital presence now. “That will drive a successful business model. Another key disruption is the rise of social media, short-form snacky content and gaming platforms, which have grown exponentially over the last five years.”
Amidst all this, one has a very selective consumer, and not without reason. The pandemic ensured that she was exposed to content across genres and languages. “The big lesson is that the audience will not settle for average content... If the content is good, they will pay for it,” says Shibasish Sarkar, Chairman & CEO, International Media Acquisition Corp. People in the multiplex business maintain that the consumption of cinema will also continue to be on a high-growth trajectory. “Consumers will continue to watch it [cinema] regardless of the platform. One has to understand that the emergence of OTT as an alternate distribution channel is purely a result of the pandemic and not about the inability of the multiplexes to draw crowds. All entertainment options in India will co-exist, since each has a distinct appeal,” insists Alok Tandon, CEO of Inox Leisure, a pan-India multiplex chain.
Of course, more options on digital come with their own set of complications. The heterogeneity of programming means tastes within a home will inevitably vary. According to Vikram Mehra, MD of content major Saregama India, in the current decade, “it is perfectly okay for different members of the family to watch different content on different devices, even if they are sitting in the same room. This has had a massive impact on the entire content ecosystem in terms of what content we create, how we promote that content or how we make money from that content, among other things.” The concept of on-demand content, he explains, has put massive pressure on content creators to up their game. “Obviously, a presence on prime time is no longer a crutch that one can rely on.”
The exposure to global content, thinks N.P. Singh, MD & CEO of Sony Pictures Networks India (SPN), has resulted in the emergence of a mature audience with an appreciation for sophisticated content. “By itself, content has come a long way; from mass production to now catering to a broad audience to storylines plus the entire viewing experience is personalised and tailored to different consumer segments. In this regard, the media companies have not only made wise content choices but also improved the overall viewing experience thanks to superior user interface and services across platforms.”
Globally, gaming is a bigger business than film production. Still at an early stage in India, gaming is expected to take off on the smaller base with high potential for growth.
Profits all the way
Just in terms of actual impact, nothing quite comes close to the Indian Premier League (IPL), a cricket tournament that debuted in 2008. India’s success in the T20 World Cup the preceding year was a trigger. Today, it is the biggest in the game by a distance. Just check out the numbers. This June, the media rights for television over a five-year period were sold for Rs 23,575 crore, with digital at an even higher Rs 23,758 crore. In contrast, Sony had paid Rs 8,200 crore for the rights (for television, since digital did not exist then) for 2008-2017. To Arvinder Singh, COO of Gujarat Titans, the team that won the 2022 edition, the first three years of the IPL were about the tournament evolving. “The big change was in the fourth [edition] when the focus seriously shifted to cricket played on the field rather than the overall ecosystem of Bollywood and entertainment,” he says. It is so big today that advertisers pay Rs 14-15 lakh for a 10-second spot, bettered only by a big-ticket World Cup match involving India. “The IPL is viewer-friendly, intense with an assured, immediate result. That, coupled with the best cricketers, makes it a very compelling proposition for everyone involved with it,” says Arvinder Singh. To his mind, the IPL will only get larger from this point. “The fact is every cricketer wants to be a part of it. There is very little to stop it.”
Regardless of which part of the entertainment world one speaks of, costs have been rising and are unlikely to abate. The challenge is to marry that with a robust return on investment. NV Capital’s Menon takes the case of movies and speaks of how the US spends $150-200 million on a big project, with numbers being substantial even on OTT offerings. “The scale of our movies has risen and that is evident in the instances of RRR, KGF and Vikram. In the US, a well-established studio model like Disney, Universal or Warner means a greater emphasis on production costs and not on talent. In the absence of that in India, talent becomes very expensive,” he explains. That said, Menon anticipates that the success of these big-ticket projects will only propel production houses to cut larger cheques. An interesting point in that context is raised by Sarkar, who points out that just the top 20 per cent of films get disproportionately high prices. “The other 70-80 per cent will either see a severe correction or could just remain unsold. Earlier, even these average films would find a buyer.” Referring to the 2,000-odd releases each year, he anticipates the number to drop with more focus only on the quality of content.
Looking ahead
The future, unsurprisingly, will revolve greatly around technology. In music, for instance, Saregama’s Mehra is clear on the movement of streaming to a subscription-based model. “We will not be reinventing the wheel while doing so. The world over, over 550 million customers subscribe to music services. There will also be a rise in regional music content and the next wave of digitisation will come from smaller towns with a greater affinity towards content in their own languages,” he predicts.
Zee’s Goenka highlights the concept of a personalised experience “in the realm of the metaverse—artificial intelligence, augmented and virtual reality paving the way for delivering [an] immersive experience at a large scale”. That’s not all. According to him, consolidation of both studios and digital platforms could take off as companies build content in the battle against deep-pocketed global technology players. “We estimate double-digit CAGR growth for India as well, led by digital, television, films and gaming, among others,” he sums up.
For the entertainment industry, the show has just begun.
@krishnagopalan
