Understanding the major changes in the Indian Film Industry
Welcome to this week’s edition of TOPICAL WEDNESDAY! Today, we’re diving into the seismic shifts in Indian cinema. From Bollywood’s struggles to regional cinema’s rise and the OTT revolution, let’s explore how 2024 has reshaped the entertainment landscape!
let’s turn the clock back to the early 1900s. A man, trained as a photographer, an amateur magician, and the owner of a successful printing press in Mumbai, went to watch a film. Little did he know that this experience would change his life forever. As he sat in the theater, mesmerized by this new medium of storytelling depicting the life of a deity from another religion, he fell into a sort of trance. The son of a Hindu priest and Sanskrit scholar, he began daydreaming about bringing the lives of Lord Ram and Vishnu to life on screen. The idea took root in his mind, and he decided then and there that he had to make his own film.
But there was one problem—he knew nothing about filmmaking. Undeterred, this man left for London to learn the art of filmmaking. However, his lack of technical skills turned out to be the least of his problems. Back home in India, there was no infrastructure for filmmaking, no readily available equipment, no studios to shoot in, and no societal acceptance for this new medium. Women refused to act in films due to societal norms, and funding for such an unconventional venture was almost impossible to secure.
Yet, our protagonist refused to give up. At every step, he faced challenges with ingenuity and sheer determination. He imported equipment from England and set up a processing lab in his own house. He trained his family members in technical tasks like film development and editing. For costumes and props, he collaborated with local theater groups. When no woman agreed to play the female lead in his film, he cast a man instead. To raise funds, his wife sold her jewelry (except her mangalsutra) and he created a short experimental film titled The Growth of a Pea Plant to showcase his abilities and attract investors.
After a year of relentless struggle, he overcame all odds and finally released his film. That movie was Raja Harishchandra, and the man behind it was none other than Dadasaheb Phalke. Released in 1913, Raja Harishchandra became India’s first full-length feature film and its first commercial hit. It laid the foundation for what would become one of the largest film industries in the world—Indian cinema.
With its release, Indian cinema took off like wildfire. Over the decades, films became the heartbeat of India’s entertainment culture. New technologies like sound and color were introduced, and iconic movies like Kismet, Mother India, Mughal-e-Azam, Sholay, Dilwale Dulhania Le Jayenge (DDLJ), and 3 Idiots defined generations. These films didn’t just entertain; they shaped pop culture as audiences began quoting dialogues, singing songs, and emulating their favorite stars.
For decades, Bollywood was synonymous with fame, creativity, and power, a place where dreams were made. However, today the industry finds itself at a crossroads it has never faced before. While Bollywood has always been criticized for borrowing ideas from Hollywood or other global cinemas during earlier decades (and often getting away with it due to limited exposure), today it struggles with a deeper crisis: creative stagnation.
The industry has become saturated with remixes, sequels upon sequels, and unoriginal content that has left audiences fatigued. Even big stars and renowned directors are no longer enough to draw viewers to theaters consistently. The year 2024 turned out to be one of Bollywood’s worst years yet—a time when even major releases failed to make an impact at the box office. It seems as though something fundamental has shifted in the industry.
So, let’s unpack what has happened in the Indian Film Industry in 2024.
The Changing Landscape
In 2024, the Indian box office raked in a whopping Rs. 11,833 Cr, making it the second-best year ever, just behind 2023’s record of Rs. 12,226 Cr. While that sounds pretty good on the surface, only a slight dip of about 3% the real story is happening with Hindi films, which took quite a hit.
(Source: Ormax Media)
So, here’s the scoop: Hindi cinema faced a challenging 2024, with footfalls plummeting by 16% to 23 Cr, significantly lower than the pre-pandemic average of over 30 Cr in most years. The gross box office collections for Hindi films dropped from Rs. 5,380 Cr in 2023 to Rs. 4,679 Cr in 2024, marking a hefty 13% decline. However, the situation is even more alarming when excluding dubbed South Indian films, which contributed 31% of Hindi box office earnings. Without these dubbed films, the decline in original Hindi-language films was a staggering 37%.
What’s going on? Well, it seems like audiences are shifting their preferences, and the Hindi film industry is feeling the heat. Meanwhile, regional films are stepping up their game. Regional films are making a significant impact this year, capturing an impressive share of the Indian box office market!
(Source: Economic Times)
Let’s break it down:
* Telugu Cinema: The Telugu film industry had a remarkable year, grossing around Rs. 2,348 Cr, which is a solid 4% increase from last year. With major hits like Pushpa 2, they are definitely riding high on success.
* Malayalam Films: Malayalam cinema is thriving! They’ve doubled their market share from 5% to 10%, and for the first time, they surpassed the Rs. 1,000 Cr mark. This achievement is a testament to their growing popularity and the quality of films being produced.
* Tamil Films: Tamil cinema is also holding strong, bringing in over Rs. 1,500 Cr. Although there was a slight decline compared to previous years, they continue to deliver engaging content that resonates with audiences.
* Gujarati Films: Let’s not forget Gujarati cinema! They’ve seen an incredible growth spurt of 66%, reaching Rs. 84 Cr in collections.
* Hollywood: Hollywood films grossed ~Rs. 941 Cr in India, marking a 17% decline compared to 2023. This drop is the steepest Hollywood has experienced in a decade within the Indian market.
Now, let’s understand the impact of this on the different stages of the value chain.
Value Chain
(Source: Bastion Research)
1. Production: Where the Magic Begins
The Indian film industry’s box office struggles have triggered a ripple effect, shaking up the production landscape. From shrinking financing options to big industry mergers, producers are being forced to adapt to tough financial realities.
The production stage is where it all begins—the creation of a film. Production involves independent filmmakers, production houses, and big studios. It covers everything from pre-production (scripts, casting, locations) to principal photography (filming) and post-production (editing, VFX, music). But all this creativity depends on one thing: funding. And right now, that’s where the trouble lies.
The Financing Crunch
Film financing has hit a wall as traditional sources dry up, leaving producers scrambling for alternatives.
- Satellite Rights Crash: Once a goldmine, satellite rights have lost over 50% of their value as TV viewership drops and audiences flock to OTT platforms. Films that once sold for Rs. 20 Cr now barely fetch Rs. 10 cr.
- Costly Private Financing: With fewer options, producers are turning to private financiers—but at double the cost of bank loans, it’s a risky move, especially for mid-budget films.
- Banks Backing Out: Public sector banks now finance fewer than 10 films a year, compared to 20-25 in the early 2000s. Their hesitation stems from the high-risk nature of the business.
- Shrinking OTT Budgets: OTT platforms, which boomed during the pandemic, have slashed their film acquisition budgets by 40-50%, becoming far pickier about what they buy.
With rising costs and limited funding options, producers are being pushed to rethink their strategies just to keep their projects afloat. A clear sign of the challenges being faced the film industry is the recent stake sale by one of India’s leading production houses, Dharma Productions.
Dharma Productions’ Stake Sale
Karan Johar’s Dharma Productions sold a 50% stake to Adar Poonawalla’s Serene Productions for Rs. 1,000 Cr. This move reflects the financial strain on production houses due to declining revenues and rising costs. Dharma’s revenue halved in FY24, while profits plunged by 94.5% YoY. The infusion of capital from Poonawalla is aimed at stabilizing operations and enabling Dharma to invest in big-budget films without relying entirely on external partnerships. This deal underscores how even established production houses are seeking external funding to navigate the turbulent market.
2. Distribution: The Middlemen with the Power
Once a film is ready, distributors step in as the middlemen, buying rights from producers and deciding how and where it will be released. They handle marketing and negotiate deals with theaters or OTT platforms, playing a key role in shaping a film’s release strategy.
Falling Box Office Revenues
The drop in box office collections has directly affected distributors, whose earnings are closely linked to theatrical performance, as they typically receive 30-50% of the total box office revenue throughout a film’s release. When films underperform, distributors often face difficulties in recouping their substantial acquisition costs, putting additional pressure on their profitability.
Fewer Theatrical Releases
The financial strain on producers has led to a sharp decline in the number of films being greenlit, leaving distributors with limited titles to acquire and market. With fewer theatrical releases, distributors are struggling to sustain their operations.
3. Exhibition: The Final Frontier
This is where the audience finally gets to watch the movie—on the big screen! Theaters are the heart of the entire chain.
(Source: Ormax Media)
(Source: Ormax Media)
On the other hand, the growth in Average Ticket Prices (ATP) was limited to just 3% in 2024, a notable shift from the double-digit growth seen over the past two years, signaling stagnation in ticket pricing. This highlights that the box office has increasingly relied on rising ATPs to drive revenue in recent years.
Looks like the industry’s juggling act between ticket prices and audience turnout is getting tricky—and no one feels this balancing act more than the big players like PVR INOX. Let’s take a closer look at how they’re navigating this phenomenon. With a commanding 40% market share and ~1,700 screens across India, PVR INOX has been facing a tough times. Admissions—basically the total tickets sold—have been on the decline. On top of that, the Average Ticket Price (ATP) has also taken a hit,with the drop getting sharper as the year rolled on.
(Source: Company Data, Bastion Research)
The OTT Dominance
OTT platforms like Netflix have completely flipped the traditional film distribution model on its head by offering direct access to consumers. Now, these platforms don’t just stream movies—they’re also producing their own content, blurring the lines between production and exhibition. With box office collections falling and fewer films hitting theaters, producers and distributors are flocking to OTT platforms like never before to monetize their projects. However, these platforms have significantly slashed their budgets and become far more selective as mentioned above, focusing only on high-impact projects that guarantee strong audience engagement.
This growing selectivity and budget tightening among OTT platforms is happening alongside major industry shake ups like the merger between Viacom18 and Disney Star.
The merger of Viacom18 and Disney Star has created a Rs. 70,000 Cr media powerhouse, reducing the number of major players in India’s media landscape from four to three. The combined entity now commands a dominant 43% market share by leveraging Disney’s global expertise and Reliance’s local reach. This consolidation highlights how financial pressures are pushing companies to pool resources which could lead them to command higher power in the market.
Closing remarks
Audiences are no longer swayed by star-studded casts or massive budgets alone—they’re demanding more. The focus has shifted to concept-driven films with engaging storylines, and the numbers tell the story. In 2024, audiences made it clear that they’re all about fresh, engaging stories over star-studded spectacles. Mid-sized Hindi films like Munjya, Stree2, and Shaitaan smashed trade expectations, turning into box office hits with their modest budgets and strong narratives. On the flipside, big-budget films like Bade Miyan Chote Miyan, Maidaan, and Fighter struggled to pull in crowds despite their massive marketing and star power. 2024 has been a year of shifting dynamics—regional cinema is thriving, OTT platforms are dominating, and Hindi films are struggling to keep pace. As the industry evolves, one thing’s clear: the audience is calling the shots!
Disclaimer: This newsletter is for educational purposes only and is not intended to provide any kind of investment advice. Please conduct your own research and consult your financial advisor before making any investment decisions based on the information shared in this newsletter.
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