From theatres to OTT: How India’s film industry has changed after COVID

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The film industry is one of India’s biggest assets. In 1913, the Indian public was treated to a glorious new event – the release of the country’s first full-length feature film. Raja
Harishchandra, a silent, 40-minute film, set the foundation for a powerful new industry. For
over a century, this industry has consistently made massive contributions to India’s economy and “soft power”.

Unfortunately, COVID-19 effectively put the brakes on a hitherto-galloping sector, raising
concerns about its future existence and profitability. Fortunately, OTT platforms came to the
rescue. These platforms created a way for the industry to continue functioning and also for
the movie-mad Indian people to indulge in their favourite pastime.

Indian Cinema Before COVID

Between 2010 and 2019, India’s box office revenues grew consistently. From Rs. 6,860
crores in 2010 to Rs. 14,210 crores in 2019, the industry was poised for even greater
growth.

Until 2017, India released 1,500-2,000 films every year in 20+ languages. At the time, a
report by aggregator platform BnBNation predicted that by 2020, the industry would earn
gross revenues of Rs. 23,800 crores.

And it could have – if COVID-19 had not derailed its output. And now, 2.5 years after the
pandemic hit, we still have many concerns about the future of this beloved driver of popular culture in India.

From theatres to OTT How India’s film industry has changed after COVID

Indian Cinema Post-COVID

Before 2020, India had around 9,527 movie screens. In 2020, this number was down by at
least 1,000. Moreover, the filmed entertainment segment declined by 62%. Apart from
theatre shutdowns; national lockdowns, and social distancing norms also made their
presence felt in the COVID aftermath.

The first blow came early after the outbreak when the shooting for big-ticket films like
Sooryavanshi, 83, and Goodbye were all indefinitely postponed, setting the stage for what
was to come soon after. In 2020 and 2021, production halted on hundreds of movies and
many completed films lay unreleased.

Furthermore, hundreds of thousands of industry workers lost their jobs and total revenue
losses ran into crores. Losses for the South Indian film industry – “Tollywood” – alone were
pegged at Rs. 900 crores. The total loss figure for other regional industries and Bollywood
was much higher. All in all, COVID-19 shook up the Indian film industry in terms of release
schedules and revenues. It has also led to the growth of new film delivery channels – like
OTT.

The resurgence of Indian cinema post-COVID

So far, 2022 has been a great year for the Indian film industry. In the first half, Indian films
raked in a staggering Rs.5,5565 crores at the box office after earning only Rs.1,992 crores in H1 2020 and Rs.1,331 in H1 2021.

The recent resurgence of Indian cinema is not due to Bollywood alone. Other than the Alia
Bhatt starrer Gangubai Kathiawadi and the sleeper blockbuster The Kashmir Files, it is nonHindi films like RRR (Telugu), KGF: Chapter 2 (Kannada), and Vikram (Tamil) that have
earned massive profits at the box office and revived hopes for the industry’s re-growth.
Such recent positive developments notwithstanding, we must acknowledge that OTT has
played a key role in bringing Indian movies to the masses and ensuring the survival of this
industry. Large-scale theatre shutdowns after COVID created a huge opportunity for OTT
platforms to fill the movie demand-supply gap.

Thus, while theatres struggled, OTT platforms witnessed an unprecedented boom. OTT
providers jumped in at the right time and picked up the slack left by theatres. Larger OTTs
also gained the digital rights of several movies that were ready for release but stalled due to COVID. The Salman Khan starrer Radhe is one prime example.

Factors that led to the growth of OTT in India

In the post-COVID era of lockdowns and remote work, millions of Indians embraced the
Internet – and OTT. This explains why OTT platforms gained 29 million subscribers in 2020,
a 49% jump over 2019.

Since 2020, OTT platforms have continued to ride on India’s new digital wave and made it
easier for the Indian public to watch movies. In addition to COVID-fuelled theatrical
shutdowns and increasing Internet penetration, two other key factors are driving OTT growth in India:

Payment Model

Most OTT platforms offer multiple payments models, such as subscription-based
(monthly/yearly), pay-per-view, and advertising-based video on demand (AVOD). Some
platforms also offer hybrid subscriptions, wherein subscribers can choose from a free, adsupported service and a premium, ad-free subscription.
Customers have the flexibility to choose how they want to watch OTT content and pay for it while OTTs are better able to expand their subscriber base, monetize content, and increase
revenues.

Digital Advertising

With the world’s second-largest digital population, India boasts 658 million Internet users.
The online video user base alone has increased to 350 million, a 24% growth from 2018-
2020.

OTT providers in India are leveraging the massive demand for video content by investing
more in digital advertising. They are also constantly acquiring new content and updating their content libraries.

Regional “made for India” content

Many OTT platforms are creating regional content to satisfy the demand of around 90% of
Indians who prefer content in their own language. Homegrown platforms like Voot, SonyLiv,
and Zee5 are leading this charge, with Zee5 already streaming content in 12 regional
languages.

Original content that’s not simply dubbed or subtitled

Many global OTT platforms offer global content that are then dubbed or subtitled for Indian
audiences. However, Indian OTT platforms are focusing more on creating binge-worthy
original content. In 2021, almost 400 originals released directly on OTT platforms in India.
Disney+ Hotstar and SonyLIV were particularly prolific, increasing their output over 2020 by almost 300% and 200%, respectively, which explains their growing popularity in India.
What next for OTT in India By 2030, the OTT industry in India will be worth $15 billion. Content providers are ramping up their efforts to connect with Indian audiences and deliver high-quality content in a simple, low-friction manner. They are also riding the wave to capture new opportunities for monetization and revenue growth.

OTTs will continue to invest in original content for Indian audiences. In 2021, they invested
Rs. 1,920 crores. By 2025, they will invest Rs. 30,000 crores. Moreover, the future of India’s film industry will be defined by coexistence between theatres and OTT platforms.
However, we predict that the rise of OTT may shorten theatres’ eight-week window to
maximise profits. Additionally, film promotion budgets, which once amounted to Rs. 25-30
crores per film, will shrink. Marketing budgets in general will decline by 20-30% as more
films move to OTT platforms.

A Final Word

At CredAble and Upscale, we are constantly watching the disruptions and innovations in
India’s film industry. Over the course of a century, the industry has evolved from silent to
talkies, single-screens to multiplexes, theatres to OTT.

The fact that more people today talk about Pankaj Tripathi or Nawazuddin Siddiqui than
Salman Khan or Deepika Padukone are proof of OTTs’ growing influence in India. Of course,
the future could bring many other changes. The only way for media companies and film
production houses to keep up and avoid obsolescence is to be prepared and closely
manage their liquidity and assets.

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