Video streaming platforms, which were initially bullish on acquiring ready-made movies (and paying substantial sums for them) are now insisting on a hybrid model – one that involves paying a minimal amount upfront and additional revenue based on either the film’s box-office performance or its views on the platform.
The move has reduced producers’ revenues by 30-40%, industry experts estimate. However, most platforms do not share internal data and how they assess the final performance of a show or movie is often vague, which leaves producers guessing how much they will get for a particular piece of content.
As a result, what was once an assured – and lucrative – source of revenue for producers and fees for actors is now uncertain. Independent trade analyst Sreedhar Pillai said, “Nobody is buying films, including big titles, outright now because there is no way to tell how much they will be able to get out of it (in terms of views or new subscriptions). Producers have no choice but to agree to this.”
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He added that the situation has changed dramatically since the pandemic years, when production houses could easily recover their entire budget from the sale of digital rights alone. Now, he said, streaming platforms are more than willing to see movies go to cinemas first and premier online within eight weeks. Many even insist on this, he added. There is no real push for movies to come to streaming platforms within four weeks of their release in cinemas, as was the case earlier, Pillai said.
Girish Johar, a film producer and trade and exhibition expert, said, “The best-case scenario would be for a film to break even because absurd amounts of money are no longer being negotiated. It is, however, still good for small and independent films that may otherwise have never been released, even if they don’t manage great revenues.”
Data-driven model
A senior executive at a streaming platform, who did not wish to be named, said the new model arose from the analysis of data that platforms have accumulated over the years. “We’ve now been operational for quite a few years in India and have insights into what our audiences are watching. It doesn’t make sense to acquire films at high costs anymore – it’s not something that has worked much,” the executive added.
However, entertainment industry experts such as Pillai pointed out that producers have no way of knowing how their movies and shows have fared on streaming platforms since none of the data is published or even shared with them. The new model also makes it virtually impossible for studios and content creators to negotiate higher sums for their content.
“This (the advent of hybrid models and fall in prices) has also happened because no platform needs more than one or two big movies per month, which barely makes for 24 films a year. About 100-150 films are made in each (major) language in India every year, so it is easy for slates to be full and budgets to be limited,” said Mukesh Mehta, founder of Malayalam film production and distribution company E4 Entertainment.