C&S rights for movies expected to undergo adjustment due to impact of OTT platforms: KPMG

MUMBAI: The pricing of cable & satellite (C&S) rights for movies is expected to undergo adjustment due to the impact of over the top (OTT) platforms, said KPMG in its report on the country’s Media and Entertainment (M&E) sector titled ‘India’s Digital Future: Mass of Niches’.

The report further stated that C&S rights and music rights are expected to grow at a muted rate. It also noted that the digital rights pricing for movies is likely to continue to see an upswing as OTT platforms further penetrate the India audience and scale up their film library.

In FY19, C&S rights showed an improvement and grew by 11.8 on the back of strong demand for some of the larger projects (both in Hindi and regional languages) coupled with box office successes of a number of mid-budget movies.

The report said that a key ongoing change in the film industry has been the growing contribution of digital rights, which has grown by 30 in FY19 in line with the previous year driven by heavy demand by OTT platforms who consider new movies as a key differentiator. Additionally, with a growing emphasis on regional audiences, OTT platforms are also investing in building regional libraries.

According to the KPMG report, the economics of film production has undergone an overhaul as digital rights have tilted the dynamics of film making in favour of production studios.

The number of OTT platforms has grown from nine in 2012 to over thirty in 2019 driven by affordable data. OTTs are investing heavily in acquiring film libraries. For example, Amazon Prime acquired twelve films out of the highest thirty grossing Hindi films this year, followed by Netflix acquiring nine.

It was widely believed that with the rise of OTT platforms, the box office collections of films would be impacted. However, industry players believe they are complimentary to box office and provide an additional stream to monetise for production studios as there is a gap of six to eight weeks between the theatrical release and digital release of films and in today’s times, there are only handful of movies which have extended box office runs.

“Thus, television and OTT platforms may also co-exist, until internet penetration grows which may lead to value of C&S and OTT rights stabilising,” the report noted.

The film industry in India is expected to growth at a CAGR of 7.3% driven by theatrical revenue from India and overseas, digital rights and in-cinema advertising.

The Indian box office performance was remarkable this year and to sustain similar success in the future the studios need to produce quality content to keep pace with changing audience preferences for more innovative thinking in terms of content and contemporary issues, expenditure and execution.

The industry believes that FY20 will repeat the success of this year with big releases such as ‘Avengers Endgame’, ‘Bharat’, ‘Kabir Singh’, ‘Super30’, multi-lingual ‘Saaho’ being lined-up in the first half of the year. Further, multiplex chains are looking for organic expansion into new markets across India.

The regional industry also has strong releases in the next year and the market is only expected to expand further. Also, with China and Saudi Arabia markets opening up, overseas collection of Indian films may continue to conquer box offices across the globe.

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