Why are filmmakers seeking corporate investments?

On October 21, pharmaceutical tycoon Adar Poonawalla sent ripples through both the film industry and corporate India with the announcement of a ?1,000 crore personal investment to acquire a 50% stake in noted filmmaker Karan Johar’s Dharma Productions and Dharmatic Entertainment, aiming to expand Dharma's content on global platforms by leveraging his financial resources.

Within a month, this landmark deal appears to have sparked a trend, with a few prominent film studios exploring similar investment opportunities to scale their operations.

This includes Farhan Akhtar’s Excel Entertainment, Siddharth Roy Kapoor’s Roy Kapur Films (RKF), and Vikram Malhotra’s Abundantia Entertainment. Many more production firms are also trying their luck in order to rope in investors in order to sustain and remain profitable, industry insiders say.

The development has come at a time when Hindi film industry is experiencing a crisis due to fewer theatrical releases and OTT platform saturation. Despite being dominated by major production houses and top actors, there's a lack of good content.

Leading Studios Join the Bandwagon

Farhan Akhtar and Ritesh Sidhwani’s Excel Entertainment, known for hits like Dil Chahta Hai and Zindagi Na Milegi Dobara, is reportedly considering selling up to a 50% stake. Sources suggest ongoing talks with Universal Studios for this acquisition.

Similarly, Siddharth Roy Kapur’s Roy Kapur Films (RKF) is believed to be aiming to raise $50 million by offering a 50% stake. Kapur has already secured commitments for $20 million from private equity funds, sources revealed. Since its founding in 2017, RKF has delivered notable films like Barfi! and Dev D, along with web series such as Matka King for platforms like Netflix and Amazon Prime.

Meanwhile, Vikram Malhotra’s Abundantia Entertainment, known for productions like Baby and Toilet: Ek Prem Katha, is seeking to raise ?200-?250 crore to fund its content slate, which is valued at ?750 crore over the next two years.

According to media reports, Abundantia is in discussions with both Western strategic partners and domestic investment banks. Malhotra will reportedly use funds to support a mix of films and OTT projects, with strong pre-sale commitments boosting investor confidence.

Bollywood's Changing Landscape

While Akhtar, Malhotra and Roy Kapoor couldn't be reached for comments, experts say the push for external capital highlights a larger trend in the Indian entertainment industry. “Escalating production budgets and rising short-term financing costs are squeezing profitability, prompting studios to seek long-term sustainability through strategic investments,” said a top filmmaker requesting anonymity.

India's domestic film industry is estimated at ?20,000 crore, while the streaming sector has surpassed ?70,000 crore in annual revenue, underscoring the growing value of high-quality content. The Indian film industry is one of the largest film industries in the world, producing between 1,500 and 2,000 films each year in more than 20 languages.

This shift has attracted interest from major conglomerates like Reliance, the Adani Group, and the RPG Group’s Saregama, which are reportedly exploring investments in the content space.

However, challenges persist. There are fewer theatrical releases now. Besides, Bollywood has faced uneven box office performance, with big-budget, star-driven films like Dharma Productions' Jigra, starring Alia Bhatt, struggling to recover their production costs domestically.

A recent report by media consulting firm Ormax reveals that 157 million Indians watched at least one film in a theatre in 2023, resulting in 943 million footfalls at the domestic box office. However, this translates to an average of just six films per theatre-goer annually, with Hindi films drawing particularly low numbers—only three per person. In contrast, Tamil and Telugu films see averages of 8.1 and 9.2, respectively.

Adding to the woes is the meteoric rise of the southern film industry, which has delivered consistent blockbusters such as Bahubali, RRR, Pushpa, KGF, capturing both domestic and global audiences.

Filmmaker Kushal Srivastava, says, “The trend of major studios aggressively pursuing investors indicates a greater understanding of challenges which now confront the film business. Even established studios are experiencing pressure to find more money to realise their ambitious projects as audience preferences change and production costs rise.”

“The need for investment highlights several critical challenges. Streaming platforms have revolutionized content consumption, creating intense competition for studios. Traditional box office metrics no longer reliably indicate success due to shifting audience behaviors. Filmmakers also face budget constraints that often stifle creativity," he explained.

Srivastava adds, "By seeking external investors, studios can mitigate the risks of high-budget productions while preserving artistic integrity. Today, filmmaking isn’t just about creating content—it’s about navigating a complex ecosystem where collaboration and strategic funding are vital for growth and survival. Understanding these dynamics is key to addressing the challenges and driving collective success in the evolving film industry.”

Ambarnath Sinha, another filmmaker, has a different perspective though. According to Sinha, “Investment can certainly ease a studio's financial burden, but it often shifts the financial responsibility to someone with deeper pockets—without necessarily benefiting the industry as a whole. While investors may provide funding, they can’t bring innovation. That remains your responsibility. However, pitching an innovative or untested idea to investors might now require even more effort and persuasion."

Future Outlook

As Bollywood navigates these challenges, its willingness to embrace strategic investments and partnerships may prove pivotal. By aligning with deep-pocketed investors, studios can mitigate risks, scale their operations, and position themselves for success in an industry that increasingly values innovation and quality storytelling, industry experts noted.

While some traditionalists may view this trend with skepticism, analysts argue that it marks the dawn of a more robust, globally competitive Indian entertainment sector.