As digital streaming platforms expand, their share of total revenue generated by films is increasing.
In 2022, the proportion of revenue from the sale of digital rights rose to around 21% compared to nearly 10% in 2019. In contrast, revenue from the sale of television broadcast rights decreased to 5.8% in 2022 from over 11% in 2019.
The growing popularity of over-the-top (OTT) platforms allowed production houses to offset poor box-office revenue by increasing revenue from the sale of digital rights.
Studios and production houses demanded high premiums on the sale of digital and OTT rights, which increased the total revenue from films.
However, analysts predict that this trend may not continue in the future. Streaming platforms are realigning their budgets to improve profitability, and the premium on the sale of digital and streaming rights may decrease.
According to Karan Taurani, senior vice president at Elara Capital, only quality films may get a premium on the sale of digital and OTT rights as streaming platforms plan to cut costs by around 30%.
Furthermore, streaming platforms are asking producers to release films in cinemas first to assess their commercial potential before allocating budgets.