As one of India's fastest-growing industries, the Media and Entertainment sector is projected to reach INR 3 trillion by 2026. A significant portion of this rapid expansion is attributable to the evolving methods of content distribution that filmmakers employ to maximize profitability after a film's release. Due to the ever-evolving market dynamics, over-the-top (OTT) platforms like Netflix, Amazon Prime, and Disney+ Hotstar have dramatically transformed how audiences consume films, significantly disrupting the traditional windowing model of film distribution.
Traditionally, film distribution models, known as windowing, followed a linear sequence: theatrical release, followed by DVD sales, and then satellite broadcasting. However, the OTT sector emerged as a major disruptor to this established model. Gaining significant traction in early 2019 and becoming indispensable by 2022 due to the pandemic, OTTs introduced a new approach known as accelerated windowing. Filmmakers began employing the direct to digital strategy by skipping theatrical release and started releasing content directly onto digital platforms, thereby reshaping the landscape of film exploitation for profits. This disruption meant that content was now being categorized into those requiring theatrical releases and those suited for direct digital release, depending on the type of content and censorship requirements amongst other factors.
This transformation was not merely a temporary response to the pandemic but marked a lasting shift in the industry's approach to content distribution. According to the 2021 FICCI-EY Report, online gaming and digital subscriptions were the only segments to show growth, with digital subscriptions soaring to 49%. Data trends also predicted a decline in theatre audiences and a shift toward bundled products from broadcasters. Although this trajectory might have continued, data suggests that despite an anticipated decrease in theatre attendance, theatrical collections in India increased by 15% in 2023. Theatres became a nostalgic escape for many eager to return to a traditional viewing experience, leading cinema-goers to carefully choose between watching films in theatres or on OTT platforms. For instance, while Oppenheimer catered to traditional cinema loving audience by virtue of it being an 'Imax' experience, Murder Mubarak was a film released directly on Netflix given the nature of its rated content. This proves that the type of content, censorship requirements, and how a film is packaged and marketed also plays a crucial role in dictating whether to release a film theatrically or to go straight to digital.
The rise of OTT platforms has also led to the fragmentation of both content and audiences. For instance, when a film is released in theatres, data suggests that many youngsters usually decide to skip the theatre experience after making an informed decision and instead wait for the digital release on OTT platforms so that they can watch the film from the comfort of their homes. With more options available, viewers now decide not only what to watch but also through which platform—whether Subscription Video on Demand (SVOD), Pay TV, or other traditional channels. While these new distribution windows have encouraged increased investment in content, they have also complicated the task for film makers to maximize their content's exposure. Instead of reaching a broad audience across multiple platforms, content now competes within fragmented audiences, making it harder to launch new programs and gather large viewership in a single place.
The latest EY FICCI report underscores that broadcast rights are becoming a distant third option after theatrical and digital releases. It also indicates that film viewership will be shaped by content type, with mass-market content appealing to single-screen and television audiences, while multiplex and OTT content cater to different tastes. Films targeted at Tier-III markets and television audiences are expected to be produced with specific themes and lower price points, whereas tentpole films will continue to be released on a broad range of TV channels with staggered windows and pricing options.
In this context, broadcasters should understand that despite the disruptive impact of OTT platforms, fluctuations in the OTT market do not necessarily impact their decisions regarding film distribution rights. OTT platforms like Netflix are focusing more on acquiring and creating regional content and trying to help regional content creators find a home on their platform in hopes of adding another niche group of audience to their existing viewer base. The Competition Commission of India's market study on film distribution notes that niche content often finds its way to OTT platforms when it fails to secure significant theatrical exposure and often perform better on such platforms. Television channels, on the other hand, focus on films with successful theatrical runs and may use OTT acquisitions as a signal of a film's value. Unlike OTT platforms, which prioritize diverse content, television's decision-making remains closely tied to traditional indicators of success.
The rise of OTT platforms has undeniably transformed the traditional film distribution model by introducing accelerated windowing and offering new avenues for filmmakers to monetize their content. This shift has fragmented the landscape, but it also presents fresh opportunities for broadcasters. Despite the significant disruption caused by OTTs, their path to profitability remains complex and evolving. Major players in the OTT space are exploring new revenue models to achieve long-term sustainability, which should be viewed as an opportunity for broadcasters rather than a concern. Importantly, broadcasters are already adapting to this new regime by digitizing their TV channels, integrating advanced technologies to enhance viewer engagement and streamline operations. This digital evolution allows them to remain competitive and responsive in a changing media landscape. Traditional media channels, including television, continue to play a vital role. Films with unsuccessful theatrical runs often find a valuable second life on TV, underscoring the enduring relevance of these platforms. By embracing both traditional and digital methods, broadcasters can navigate the evolving market and achieve success in an enriched media environment.
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