Film Producers Face Financial Crisis as Star-Driven Strategies Fail and OTT Deals Dry Up

Film producers have long relied on selling satellite and digital rights to recover their investments, rather than depending on box office earnings. Their strategy often involved paying huge fees to top actors, hoping their star power would lead to financial success. However, this approach backfired as many films flopped at the box office, and producers struggled to sell satellite rights. Streaming platforms have also become more cautious, according to trade experts.

A recent example is Vashu Bhagnani, the head of Pooja Entertainment, who had to sell his office space to pay off employee debts worth several crores, highlighting the financial strain in the industry.

“The film industry is going through a tough time right now,” said Roohi Bhatia, director of strategy and operations at Civic Studios. She explained that OTT platforms have changed traditional revenue models, and the competition has increased with more content available. Rising star fees have made it difficult for independent producers to manage budgets.

Independent producers often focus on important social themes, but these films are not always commercially successful. This has led some producers to take on big projects with large marketing budgets, hoping to capture the audience’s attention. However, with changing audience preferences and demographic shifts, producers are struggling to adapt.

Experts say that financial mismanagement and paying unrealistic fees to stars without considering whether the films will recover their costs have left many producers in trouble. Smaller producers, not backed by large studios, are especially vulnerable. They may not have taken into account how much money similar films were making from OTT and TV rights after the pandemic. Theatrical attendance remains uncertain, and sales of satellite and OTT rights have decreased as broadcasters and streaming platforms become more cautious.

The box office has been disappointing for the past few years, and all platforms are renegotiating deals. Many films that were planned during COVID-19 expected OTT services to help recover costs, but things haven’t gone as planned. Producers who relied on stars and government subsidies without understanding the changing market are facing the hardest times.

Recently, big-budget films like Bade Miyan Chote Miyan, Maidaan, Yodha, Sarfira, and Khel Khel Mein have failed at the box office. However, well-made films with strong stories, like Stree 2 and Kalki 2898 AD, are still finding success with audiences.

“The films that are succeeding are honest, well-told, and reasonably priced, with strong word-of-mouth,” said Tanuj Garg of Ellipsis Entertainment. “It’s not about who stars in the film, but what the film offers.”