OTT producers explore external funding to retain IP control

Content producers working with video-streaming platforms, most of whom have to part with IP (intellectual property) ownership of their projects in exchange for financing by these companies, are now increasingly seeking external sources of capital.

This would allow them to put projects together first, and then sell to platforms in order to hold on to IP. While some are collaborating with brands, others are in early stages of looking at mature private equity and financing vehicles. However, the risk of projects remaining unsold looms large in a market where all streaming players are controlling costs.

“IP ownership is increasingly something producers are becoming possessive about, especially if the intention is to build an asset base within their companies to be able to raise institutional funds. Ironically, we are in a chicken-and-egg situation where capital markets are flirting cautiously with this aspect of the sector, with low financial inertia to back IP creation. This impasse fuels a dependence by producers on studios and platforms to fund, which is usually in exchange for up to 100% equity in the created IP,” Monisha Advani, producer at Emmay Entertainment, most recently known for titles such as Rocket Boys (on SonyLIV), said.

Interestingly, most of these entities’ parents or western counterparts operate as largely licensing platforms because the supply chain in those markets has clearly matured to include non-strategic funding, Advani pointed out. She added that the need of the hour is for mature PE, debt and financing vehicles to be incentivised to create project financing means for digital content or investments in production companies.

A network of structured funds and high networth individuals interested in backing projects is gradually emerging in India, said Abhishek Vyas, a director and co-founder of AVS Studios who has previously worked at Netflix and Zee Studios. “Any producer will want to own maximum IP, given that they’re currently making only 10-15% margins after two-and-a-half years of work is put into a project and then sold to an OTT platform,” Vyas explained. In case of films licensed after the theatrical release though, services only own digital rights for five to seven years.

To be sure, entertainment industry experts emphasize that IP ownership by producers is a work in progress at the moment. The model is only followed by studios such as Applause Entertainment and more recently, Yash Raj Films that streamed its first web original The Railway Men, this November. However, many more are attempting funding from other sources to match the scale of OTT platforms. The risk with the same, however, remains that strategies of streaming services keep evolving, and a project that could take up to two years to put together, may not find takers eventually.

Historically, in India, production houses have failed to scale up because of this model that didn’t allow them to retain IP, like in television where most shows are commissioned and funded by broadcast networks. Few producers have managed to hold on to IP, or a share of it, like in the case of Taarak Mehta Ka Ooltah Chashmah, a sitcom that airs on Sony SAB.

“Typically, producers should get a nod from the OTT to make sure all planning goes right and chances of selling are high because ultimately, you’re banking on the platform for reach. However, this is an evolving space and various models are emerging,” said Barin Mukherjee, co-founder and CEO at Digital Refresh Network, a content solutions company that produced The Great Indian Disruptors, a brand-funded show for Disney+ Hotstar. LiveMint