With the growing number of digital streaming platforms, the percentage of overall film revenue is also growing. However, analysts say that this trend may not hold in the future as streaming platforms realign their spending to increase the profitability of their operations, the Economic Times (ET) reported.
The proportion of movie revenue from the sale of digital rights rose from almost 10 per cent in 2019 to about 21 per cent in 2022, said the report.
On the other hand, the share of revenue through the sale of television broadcast rights decreased from over 11 per cent in 2019 to 5.8 per cent in 2022.
Due to the rise in over-the-top (OTT) usage, production houses were able to make up for poor box-office revenues to a large extent by increasing revenue from the sale of digital rights.
Karan Taurani, senior vice president at Elara Capital, said that major studios and production companies that released films starring big stars demanded high premiums on the sale of digital and OTT rights to streaming platforms. This premium increased the total revenue from films.
Meanwhile, analysts anticipate a possible decrease in the premium for the sale of digital and streaming rights in the upcoming months.
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Taurani stated that since streaming platforms intend to reduce costs by close to 30 per cent, only high-caliber films may command a premium on the sale of digital and OTT rights. These platforms also advise filmmakers to release their films in theatres first in order to evaluate their commercial viability before allocating budget.
