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The share of digital streaming platforms in the total revenue generated by films is on the rise amid expanding presence of such platforms. However, according to analysts this trend may not continue in the future as streaming platforms realign their budgets to improve profitability of their operations.
The proportion of the revenue generated through the sale of digital rights in total revenue of films increased to around 21% in 2022 from nearly 10% in 2019. On the other hand, the share of revenue through sale of television broadcast rights fell to 5.8% in 2022 from over 11% in 2019.
Due to the rising usage of over-the-top (OTT) platforms, production houses were able to compensate to a great extent for poor theatrical revenue by increasing revenue from the sale of digital rights.
Karan Taurani, Senior Vice President & research analyst at Elara Capital noted in a report that major studios and production houses which released films of big stars demanded high premium on the sale of digital and OTT rights to streaming platforms. This premium increased the total revenue from films.
However, in the coming months, analysts believe that the premium on sale of digital and streaming rights may come down. According to Taurani, only quality films may get premium on sale of digital and OTT rights as streaming platforms plan to cut down costs by close to 30%. Such platforms are also asking producers to release films in cinemas first to gauge their commercial merit before allocating budgets.
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