Recently, Dharma Productions, owned by renowned Bollywood director-producer Karan Johar, sold 50% of its stakes to Adar Poonawalla's Serene Productions for Rs 1,000 crore. While a series of underperforming films at the box office likely contributed to the financial woes faced by Dharma Productions, it's essential to consider another significant factor—the rising cost of film production. Recovering these high production expenses has become increasingly difficult, particularly in an environment where end consumers tend to resort to piracy.
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Piracy has long plagued the entertainment industry, and with the proliferation of digital platforms, illegal access to content has become even more prevalent. As a result, even well-produced content struggles to generate revenue. The size of the Indian piracy economy has been estimated to be Rs 22,400 Crore or $2.7 Bn annually, as per 'The Rob Report' published by Ernst & Young (EY) and Internet and Mobile Association of India (IAMAI).
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Piracy Economy Size
Estimates place the piracy economy as the fourth-largest revenue generator within the Media and Entertainment (M&E) sector. In 2023, Television led the pack with Rs 69,600 crores in revenue, followed closely by Digital Media at Rs 65,400 cores. Print media came in third at Rs 26,000 billion, while piracy, surprisingly, ranked fourth with Rs 22,400 crore in revenue.
The Filmed Entertainment sector, which includes both Bollywood and regional cinema, generated Rs 19,700 crore, placing it in sixth position—just behind the rapidly growing online gaming industry, which earned Rs 22,000 core.
Without the rampant impact of piracy, both the OTT (Digital Media) streaming services and filmed entertainment segments could have been among the leading contributors to M&E revenue. Piracy continues to siphon a significant portion of potential earnings from these sectors, underscoring the industry's ongoing battle with this persistent challenge.
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Reasons Why Users Consume Pirated Content
EY-IAMAI's 'The Rob Report' in its survey tried to understand the need for an end user to consume content from the pirated source rather than sourcing in from the original and three main reasons emerged:
1. Managing Multiple Subscriptions: Respondents found it difficult to juggle multiple subscriptions for different streaming services.
2. Unavailability Of Desired Content: Respondents were unable to find the content they wanted on authorised platforms.
3. Steep Subscription Fee: Respondents found the subscription fees charged by OTT platforms to be too high.
'The Rob Report' on consumer behaviour driving piracy revealed a significant unwillingness by the end user to pay for content, forcing revenue generation to rely on alternative sources.
According to the EY-IAMI survey, 84% of respondents who access pirated content are unwilling to pay for movie tickets, while 70% are not open to paying for OTT subscriptions, even if pirated content is unavailable. 64% of these consumers admitted they would switch to authorised channels, even with ad interruptions, as long as the content is offered free of charge.
The Build Of Pirated Content Consumers
Key demographics driving the piracy market as per 'The Rob Report' suggests a staggering 76% of those accessing pirated content fall within the 19 to 34 age group, with individuals over 45 spending the most time watching such content. Their focus is mainly on TV shows from general entertainment channels (GECs).
Men typically pirate older films, often classic titles that are either out of theatres or unavailable on legal streaming platforms. Meanwhile, women who admitted to watching pirated content tended to access exclusive original OTT shows.
Piracy is notably more prevalent in Tier II cities due to limited access to legitimate content, the easy availability of pirated media, and a lack of awareness about the legal and ethical consequences. Factors like income disparity also come into play, as respondents in these regions often need to travel significant distances to access theatres, leading to higher piracy rates during a film's theatrical run. In contrast, respondents from Tier I cities primarily pirated older films, while those in Tier II cities were more focused on accessing recent releases.
Hindi-language content dominates the pirated downloads, reflecting its widespread popularity. Though English content is also in demand, its lower accessibility fuels piracy further in this segment.
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