Unlike Hollywood, where content creation companies are all-powerful, Indian content houses have traditionally been small mom-and-pop creative outfits riddled with governance issues. Unlike the West, where the balance of power rests with content companies who own the intellectual property (IP), most Indian content studios are commissioned shows either by broadcasters, or streaming platforms. In fact, Ronnie Screwvala-owned UTV was perhaps one of the few to receive corporate funding. It was acquired by The Walt Disney Company for ₹2,000 crore in 2013, with Disney eventually writing off the investment. A decade later, Adar Poonawalla, CEO, Serum Institute of India, bought a 50% stake in Karan Johar’s Dharma Productions for ₹1,000 crore.

While grapevine has it that Poonawalla actually saved Johar from big trouble, Gaurav Mehta, partner and head-India, Raine, the investment banking firm that negotiated the deal, says what worked out in Dharma’s favour was that it owned the IP of 70-80% of the content. “Dharma has valuable IP which can be monetised. Karan has demonstrated the ability to deliver big hits, and Dharma’s content resonates on theatrical as well as on the OTT side.”

“The company is run with a high degree of financial prudence. Even if a particular movie didn’t become a box-office hit on theatrical release, they are able to defray 70-80% of their production cost by pre-selling rights. They would pre-sell smartly, be it digital rights, satellite, or music,” Mehta further explains.

Soon after the Dharma deal was announced, Roy Kapur Films owned by former Walt Disney India MD Siddharth Roy Kapur announced its intent to raise $50 million through equity investment. Vikram Malhotra, founder and CEO, Abundantia Entertainment, also plans to raise ₹200-250 crore to fuel his content creation plans.

The power of IP

A majority of Indian content studios work on a commission model, where the platform commissions the content and owns the IP. “Some production houses have the muscle to own the IP or co-own it, some don’t. A lot depends on your bargaining power, or rather, your level of poverty,” laughs Ram Madhvani, founder, Ram Madhvani Films and Equinox.

The bigger ones, such as Jio Studios and Aditya Birla Group’s Applause Entertainment, follow a licensing model. They first create content and then ink deals with content platforms. They own the IP for the content. “We license our shows and retain the IP. We are a traditional movie studio model rather than a commercial studio model. This gives me creative ownership,” explains Sameer Nair, CEO, Applause Entertainment.

Similarly, Jio Studios, when it greenlights a film, doesn’t decide at once whether to first release the film in theatres and then license it to a streaming platform, says Jyoti Deshpande, president, media and content business, Reliance Industries. “When we do tentpole films with big budget, star cast and production values, we obviously want to monetise across platforms, but when we make a small movie with a heart like Laapataa Ladies, Article 370, Mrs., and Dhoom Dhaam — all made within a range of ₹15-25 crore — we decide how to treat them on a project-to-project basis.”

“We wanted to bring Article 370 to the theatre because we wanted to tell the story of India shining to a large number of people. Laapataa Ladies, on the other hand, was a perfect storm. When we tested the film, we realised both men and women were loving it, so we brought it to the theatres, and then took it to Netflix,” Deshpande explains.

Both Jio Studios and Applause have the power to decide what to do with their content because they own the IP. Their backing by deep-pocketed conglomerates also enables them to operate on a licensing model, unlike smaller content creators.

To take its stories to the world, Jio Studios needs a generous risk appetite and Deshpande is willing to take that bet. “We want to ideally split the global rights into India only and international. Currently, a digital platform takes away global rights, which limits international distribution country by country. We will [now] try to work that film from a Berlin or Cannes, get a sales agent and sell in North America, Germany, France, and other parts of Europe — around 100-135 countries. We will then try to release it theatrically and do deals with local streaming services and broadcasters in those markets. If we do this with a set of films then our stories will start opening up in those markets.”

Investor Interest

The great eyeball chase: How India’s digital storytellers are leaving TV behind

Year Of Reckoning For New-Age IPOs