Film Production Houses that are Struggling might Welcome Buyers

In the upcoming months, there will probably be a steady wave of consolidation among film production companies as operating expenses rise and big and mid-sized businesses become more interested in the entertainment industry.

According to producers, independent consultants, and trade analysts, big and medium-sized businesses may buy a large or a number of mid- and small-sized film production companies in the upcoming months because their goals are not limited to the film industry.

"Some industry consolidation has been made possible by the Dharma Productions-Adar Poonawala deal," stated Ram Mirchandani, founder of the production company Rampage Motion Pictures. Either large corporations will buy out established production companies, or medium-sized businesses will buy a number of small, boutique production enterprises.

The time and expense required to develop film projects and acquire the appropriate content is a frequent problem that most production companies nowadays confront. From the beginning of a film's conception until locating the appropriate material, a significant amount of time and money is spent. The development of scripts and bibles, the purchase of remake or other rights, and the significant fixed expenditures associated with operating a production company are all inevitable. These expenses are frequently not recouped when projects are put on hold for a number of reasons.

Therefore, funding is required. "You can make a movie and have more leverage on digital and satellite rights if you have money," Ram Mirchandani of Rampage Motion Pictures stated. Another scourge for production companies has been the shifting dynamics of filmmaking costs and box office results, which have made it impossible for them to recoup their investments.

Production companies have been operating on narrow margins, according to movie trade analyst Girish Wankhede. In the past, a successful movie would make up the losses from four unsuccessful ones. Today, the profits from four successful films are erased by a box office failure. This demonstrates that producing companies are not generating enough revenue from their investments.

These are the reasons why production companies require funding and could be profitable ventures for businesses. According to reports, production companies Excel Entertainment, which was co-founded by actor Farhan Akhtar, and Abundantia Entertainment are also seeking to acquire funds by selling their stakes in Dharma Productions and Adar Poonawalla.

Independent consultants believe that companies' interest in purchasing production companies has purposes outside of the film industry.

Shrirang Nargund, an experienced and independent entertainment adviser, stated, "I believe businesses have a larger vision than simply investing in the film business. They may wish to employ production houses' creative ability to develop various business verticals such as gaming, web series, interactive social media content, and leveraging influencers on social media by providing the necessary infrastructure."

Corporations are interested in the film industry due to the potential to acquire intellectual property (IP) for current and future films.

Vishesh Agrawal, a film producer known for films such as Dangal (2016) and Dream Girl 2 (2023), stated, "Corporations perform their due research. They will only buy production businesses with significant intellectual property in their film libraries and a track record of long-term industry performance. This isn't the first time businesses have expressed interest in production houses. Previously, production houses managed without them. However, production houses require funding since revenues are declining."

On a larger scale, producers feel that multinational corporations may desire to capitalize on the growing popularity of Indian cinema content as a'soft power' in global markets. Girish Johar, a producer and film business expert, stated that "Today, cinema is soft power. Indian material is consumed globally via streaming services. This gives a compelling motivation for firms to invest in the sector by allowing them to market and position a specific sort of content."