Last week, film-maker Karan Johar sold 50% stakes of his family-founded studio, Dharma Productions, to Adar Poonawalla, the chief executive officer of Serum Institute of India. On the face of it, a vaccine maker buying stakes in a major Indian film production house may appear to be an unexpected plot twist.
But it shows that production houses are increasingly sensing the need to scale up, with content spread wide and enhanced opportunities to monetise, especially at a time big studios have struggled to get adequate returns for the money spent on Hindi movies.
Poonawalla has spent Rs 1,000 crore, his first investment outside pharmaceuticals since 2021 when he bought stakes in a social media platform. Studios need capital to make films and shows as they hedge their bets not only on theatres but also streaming platforms and television. Therefore, the Dharma deal suggests they are ready for corporate investments — in this case, from a dashing entrepreneur who has profited from vaccine sales during the pandemic, and whose wife is a prominent socialite with proximity to Bollywood A-listers.
Strategic investment, rather than full acquisition, also affords a studio like Dharma Productions autonomy and creative control. The media and entertainment landscape is seeing consolidation at a global level, as well as in India with examples such as Reliance-Disney and PVR-Inox (movie distribution).
These, along with streaming giants like Netflix and Amazon Prime, are the biggest buyers of studio-driven content. Johar has admitted that the Hindi film industry is at its lowest point in terms of regular releases and declining revenues across distribution channels. Dharma Productions’ revenue halved from Rs 1,040 crore in FY23 to Rs 512.2 crore in FY24, with a significant decline in film distribution and exhibition, a lower dip in satellite rights, and gains in digital, according to data from Tofler.
Another legacy studio, Yash Raj Films, enjoyed a top line of over Rs 1,500 crore in FY23—buoyed by the success of Pathaan — and a surge of almost 2.5 times from the previous year. But until the third quarter of FY24, its overall revenue stood at over Rs 600 crore with the numbers for the fiscal year expected to close only in the region of Rs 700-750 crore.
The fluctuating figures of studios reflect the fickleness of the business. With four films earning over Rs 500 crore at the box office, last year lifted the spirits of an industry struggling to lure audiences back to the cinemas after a pandemic-induced lull and tilt towards digital. However, this year has met with a tepid response with just one movie in the Rs 500-crore club so far. Also, even in a good year like 2023, higher ticket prices boosted the numbers rather than footfall which fell, in fact.
A report by EY suggested that mass escapism worked wonders with audiences last year, and that an overwhelming majority of production houses expected an increase in formulaic films with more “masala” content. But, a year later, it would seem tried and tested formulae or serving old wine in a new bottle are not sure-fire ways of succeeding.
Therefore, while studios consider corporate capital and a strategic reboot, one of the most important aspects they should invest in is developing talent to ensure better quality of writing and directing. A diverse bouquet of content will go a long way in steadying the ship for studios.