Film studios find a superhit formula with Netflix, Amazon Prime, other OTT platforms

l Production houses producing movies and web series for OTT platforms, but are the deals lucrative?

By Sonam Saini

Netflix’s recent partnership with Dharmatic Entertainment — the digital content arm of Karan Johar’s Dharma Productions — has taken the over-the-top (OTT) services game up a notch, in what is an exclusive, multiyear partnership. Dharmatic will produce exclusive feature films, long-form and short-form content in both fiction and non-fiction space for the video streaming platform.

Dharma Productions isn’t alone in its quest to tap OTT platforms. In 2016, film director Vikram Bhatt ventured into the digital space and launched digital production arm Loneranger, under which he produced Gehraiyaan and Spotlight for Viu. Then there’s Excel Entertainment — founded by Farhan Akhtar and Ritesh Sidhwani — which has been producing shows for Amazon Prime Video, including Inside Edge, Mirzapur and Made in Heaven. Similarly, JAR Pictures, the film studio behind movies like Gangs of Wasseypur and Qarib Qarib Single, has created shows like Rangbaaz and The Final Call for Zee5.

“We have been keeping an eye on this space for over three years now. The way OTT platforms have grown in India is tremendous and it gives an opportunity to widen the scope of content that we can bring to the audiences through these platforms,” says Apoorva Mehta, CEO, Dharma Productions. “There are many stories that can’t be told in cinema and OTT allows us to deliver those.” The film production house has announced two original films, Guilty and Drive, which are slated to release within a year on Netflix.

“Most filmmakers don’t have a history of creating web series. In India, historically, the concept of making finite shows or originals hasn’t been around until recently,” says Raj Nidimoru, co-founder, D2R Films, the film studio behind movies like Stree, Go Goa Gone and Shor.

This makes the move all the more remarkable for large production houses. D2R Films launched its first web-series, The Family Man, on Amazon Prime Video on September 20 and is working on two more series with the platform.
To maintain high production quality, filmmakers have chosen to work on one web series at a time for a particular platform. This also helps in hedging risks. “We are very selective on which series we want to create. We are jumping into the series world where other countries have worked on them for decades. It is a dramatic leap,” adds Nidimoru.
Production houses can choose from a mix of deals with OTT platforms. For instance, the most popular deal includes a video streaming platform making the investment, owning the IP of the show and assigning a production house to deliver the content. The production fee could be 10-15% of the overall budget of the show, which can even go up to 20-25% of the budget in some cases. Then there is another scenario where a film studio makes the show, bearing the cost, and later sells the rights to an OTT platform.

What also differentiates such web series from TV shows includes cinematic vision, high production value and better quality content. Red Chillies’ show Bard of Blood on Netflix, starring Emraan Hashmi, is estimated to have a production cost of Rs 50 crore. According to a KPMG report, the production cost of shows like Made In Heaven and Mirzapur is Rs 1-2 crore per episode. Compare that to television shows, where, on an average, the cost is Rs 10-15 lakh per episode.

As per KPMG, the economies of scale (cost of sets and other fixed costs) are ascertained over 300+ episodes in case of TV shows as against 8-10 episodes in a series on an OTT platform. While higher production cost on OTT is a challenge, there is also the flipside of higher margins as compared to television shows, which makes such deals more lucrative for a film studio.

“The entire film production fraternity is excited as they can experiment with content whereas a platform can leverage the fresh content and attract viewers,” says Ashish Pherwani, partner, and media and entertainment leader, EY India.

Vijay Subramaniam, director and content head, Amazon Prime Video, says, “Film studios know the cinematic craft and they are able to bring that in this new format of storytelling.” The OTT platform has worked with studios like Excel Entertainment, D2R Films and Abundantia Entertainment. “Working with film studios also helps in expanding the pool of talent both in terms of actors, writers and the crew, which is also good for the overall creative ecosystem.”

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express Telegram Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.