In the world of Indian cinema, star power and storytelling often collide but the spotlight is no longer restricted to what happens on the silver screen. A new stage has emerged—one where profits are locked in before a single ticket is sold. The pre-release business model seems to have transformed into a critical financial play for production houses, with non-theatrical revenue streams like OTT rights, music rights, and overseas distributions taking centre stage. “The pre-sales model enables production houses to secure funding and recover a portion or all of their production costs before a movie’s theatrical release by selling distribution rights to various platforms such as OTT, TV, or regional markets. By collaborating with distributors and streaming platforms, filmmakers can finance the production phase without relying entirely on loans or equity investments. This model mitigates risks, secures early financing, validates market demand, and creates organic marketing momentum before release. Pre-sales contracts often act as collateral for production loans, providing financial stability during the filmmaking process,” Chandrasekhar Mantha, partner- media and entertainment leader, Deloitte India, told BrandWagon Online.
Take Pushpa 2, for instance. The much-anticipated sequel has already created ripples in the industry, grossing over Rs 1,000 crore in pre-release business. Reportedly, theatrical rights alone fetched Rs 660 crore across multiple regions, while non-theatrical rights—including a lucrative deal with Netflix—brought in Rs 425 crore. With a production budget of Rs 500 crore, the film has achieved a 117% profit before its theatrical release, showcasing the potency of pre-sales in today’s movie economy.
But how did Indian cinema reach this juncture?
From box office-dependent to pre-sales-dominant
Not too long ago, a movie’s theatrical run dictated its financial success. Box office collections were the barometer of a film’s fate, with ancillary streams like music and satellite rights serving as supplementary sources of revenue. However, as the digital revolution swept through India, the rise of OTT platforms such as Netflix, Amazon Prime Video, and Disney+ Hotstar reshaped the playing field. “The growing popularity of OTTs and the adoption of sophisticated promotional campaigns have prompted producers to explore other ‘pre-release’ business models to recuperate the substantial investments incurred in high-profile projects. The onset of OTTs has fomented a perceptible shift in the pre-release business models of production houses whereby a large share of such revenue now comes from the sale of streaming rights to leading OTTs such as Netflix and Amazon Prime, ahead of the actual theatrical release of the movie(s),” Ranjana Adhikari, Partner, Induslaw, said.
OTT platforms, hungry for premium content, now pay top dollar for streaming rights well before a film’s release. For instance, as per several media reports, RRR, directed by S.S. Rajamouli, secured a Rs 325 crore deal for its digital and satellite rights. This shift not only hedges risks for filmmakers but also validates the market demand for their projects early in the game. “Today, satellite, which used to dominate at one point, has taken a backseat in some cases. There was a time when movies were made primarily for television, but now we see films created specifically for OTT platforms. Despite these changes, theatrical revenue continues to hold its importance. The last six months to a year have shown us that theatres remain a critical component of the overall ecosystem,” Mautik Tolia, managing director, Bodhitree Multimedia, said.
The Pushpa effect: Setting records before release
Pushpa 2 is the poster child of pre-release success. Its performance underscores the burgeoning power of the pre-sales model in India. Beyond OTT rights, the film leveraged its appeal across regional and international markets. Reports suggest that it grossed $852,000 in the U.S. box office from advance bookings—even before the official trailer dropped. This level of anticipation speaks to the strategic importance of non-theatrical revenue streams in maximising a film’s profitability.
Promotional campaigns also play a significant role. Adhikari highlighted how films like Kanguva, starring Suriya, have demonstrated how targeted marketing can bolster pre-release earnings. The film reportedly garnered Rs 2 crore from Kerala alone through such efforts. From region-specific promotions to influencer-driven campaigns, the industry is crafting tailored strategies to extract maximum value.
The revenue jigsaw: OTT, music, and beyond
Experts believe that one of the most significant contributors to pre-release revenue is the sale of OTT rights. For blockbuster films, these deals contribute 6–12% of overall revenues, while for mid-sized productions, the figure can climb to 15–25%. This makes OTT platforms not just distributors but also key financiers in the filmmaking process.
The sale of music rights is another substantial revenue stream. Music labels like T-Series and Sony Music pay hefty sums for rights, monetising tracks across platforms like YouTube and Spotify. For example, as per media reports, Kabir Singh earned over Rs 15 crore solely from music rights, proving that melodies can be as profitable as movies. “Other measures such as sale of music rights (to music labels such as T-Series and Sony Music for them to monetise music videos/songs across platforms), influencer-driven and social media marketing, and brand placements/sponsorships remain viable pre-release revenue streams as well,” Adhikari said.
Overseas distribution rights also present a lucrative avenue, particularly for films with broad diaspora appeal. South Indian blockbusters like Baahubali and KGF have capitalised on international markets, fetching multi-million-dollar deals in regions like the Middle East, Southeast Asia, and North America.
The Hollywood parallels
Interestingly, Hollywood operates on a similar pre-sales model, albeit on a global scale. Major franchises like Marvel Studios secure profitability by selling territorial rights across continents. Platforms like the Cannes Film Festival and the European Film Market act as hubs for such deals. Additionally, merchandising and licensing agreements contribute significantly to pre-release revenue, with characters from franchises like Star Wars and The Avengers becoming global brands in themselves. “Both industries operate under similar OTT strategies, with a mix of high-budget spectacle films and direct-to-OTT releases. For example, Hollywood sees big productions alongside films like The Irishman by Martin Scorsese, which was made exclusively for OTT. Similarly, Indian studios also use a blend of theatrical and OTT-specific releases, following a comparable model,” Tolia highlighted.
Indian cinema, however, has yet to replicate this merchandising success. While Bollywood has experimented with merchandising—think Ra.One or Chhota Bheem—the scale and impact remain limited compared to Hollywood’s juggernauts like Marvel and DC. “In contrast, Indian films often limit pre-sales to South Asia or Gulf regions, catering to diaspora audiences. Full territorial pre-sales are relatively rare. Minimum Guarantees (MGs) are common for films featuring A-list actors, helping production houses manage risks effectively. The pre-sales model is a critical financial tool in the film industry, especially with the rise of OTT platforms, as it aids in predicting a project’s commercial success. However, its effectiveness varies widely depending on the scale of the production, the reputation of the production house, and the presence of star power or successful sequels,” Mantha said.
Independent films: A different ballgame
For independent films, the road to pre-release revenue is far more challenging. Unlike star-studded projects, these films lack the bargaining power to command significant OTT deals upfront. Instead, they rely on strong theatrical runs and word of mouth to secure favourable post-release agreements. “Independent films have their own unique set of challenges, and they’re not competing with big-budget productions. For these films, the strategy often involves securing a decent theatrical release, generating good word of mouth, and then leveraging that momentum to secure a favourable OTT deal—if such a deal wasn’t already in place,” Tolia said.
A good example is Lapata Ladies, which had a successful theatrical run with strong word of mouth. This traction at the box office allowed the producers to secure a solid OTT deal.
Experts also believe that for producers willing to take some risks, a strong theatrical performance can add a premium value to the OTT negotiations, especially for independent or lower-budget films. This approach works well for smaller films aiming to maximise their returns.
The risk mitigation factor
According to industry experts, one of the most critical aspects of the pre-release model is its ability to de-risk projects. By securing funding through pre-sales, production houses can cover a significant portion—or even all—of their production costs. Pre-sales contracts often act as collateral for production loans, providing financial stability during the filmmaking process. “Pre-release revenue models depend on the deals struck for individual films. In many cases, the value of OTT rights can be tied to box office performance. For instance, higher box office collections can increase the value of the rights, while underperformance might reduce the pre-agreed value,” Tolia said.
As per industry experts, this approach allows OTT platforms to de-risk their investments. For example, if a pre-sold film underperforms at the box office, OTT platforms may have safeguards in place to adjust the rights value. Studios and platforms have become more creative with their deal structures compared to the pandemic period, where high demand for content meant fewer checks and balances. Now, both sides are implementing stricter terms to mitigate risks.
For OTT platforms, the arrangement is mutually beneficial. Securing exclusive content enhances their library, attracting subscribers and boosting engagement. This synergy ensures a steady revenue stream for production houses while enabling platforms to maintain a competitive edge.
The future of pre-release revenue in India
As Indian cinema continues to evolve, the pre-release business model will likely become even more sophisticated. Emerging technologies such as blockchain could introduce new monetisation avenues, from NFTs to pay-per-view streaming. Additionally, regional cinema is poised to play a more significant role, with industries like Tollywood and Kollywood consistently outperforming Bollywood in terms of pre-release earnings.
However, challenges remain. The model’s success is heavily reliant on the star power and marketability of individual projects. For mid-tier and independent films, cracking the pre-release code will require innovative strategies and strong content. Moreover, the industry must address the growing gap between theatrical and non-theatrical revenue to ensure the ecosystem remains balanced.
The pre-release business model has undeniably transformed Indian cinema, offering production houses a lifeline to recuperate costs and mitigate risks before their films hit the big screen. While it shares similarities with Hollywood’s approach, it remains uniquely tailored to India’s diverse and dynamic market.
