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Netflix, Amazon may contribute to rising production cost in India

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MUMBAI: Netflix and Amazon Prime Video are known for loosening their purse strings when it comes to production cost. The threat of driving up costs is already looming over the Hollywood industry. As the OTT giants have begun to mark their territory in India, there is a concern that production cost may rise here as well.

Recent reports state that Netflix and Amazon are throwing money to lure top talent from Hollywood. In addition to that, Netflix is also driving up Hollywood salaries by offering big pay rises. Traditional players have been sweating it out in competing with the rising cost. Netflix’s $300 million deal to poach Ryan Murphy from 21st Century Fox was a classic example of this development. Robert Kirkman, the creator of the hit show The Walking Dead, signed a two-year deal with Amazon last August.

Both companies have renewed their focus on India and, in order to understand the market, it is likely that they will look to poach talent from rival companies. The quest to offer premium content will also lead to higher production cost.

When Eros Digital COO Ali Hussein was asked if because of Netflix and Amazon’s higher investment the overall cost of Indian ecosystem will go up or not, he said though there’s not a definitive answer to this. But, in general, the cost will definitely go up. Along with that, he also feels that it depends on how smartly the work is being done in the existing ecosystem to have a certain amount of control over the cost.

“If in any business, the demand is high, the supply chain cost will go up. Across all businesses, when there is a large demand for episodic or original web content, how do you ensure you are able to maintain a certain quality of production with a growing talent pool? It’s not just the cost of the celebrities or directors, it is the technical cost and that of the entire process,” says Hussein.

ALTBalaji CMO Manav Sethi thinks the cost has already increased due to international players splurging but the output quality has not increased much. In addition to that, the companies have less understanding of the Indian market, which has unorganised, segmented content making.

According to Bodhi Tree Multimedia founder Mautik Tolia, the increasing number of productions from Netflix and Amazon will not have any short-term impact on overall production costs. This is because the volume of content being produced at the moment by the duo is very limited compared to overall content production in India.  It will only drive the premium talent costs upwards such as A-list actors and directors. But at the same time platforms are providing opportunities for new and fresh talent, making the content creation process more inclusive and might actually bring down the talent costs as a fresh pool of talent will get injected in the system. “It all depends on what path the platforms will take forward whether they emulate the traditional studio systems going for safer bets with established stars and directors or punting in and promoting new talent. This remains to be seen,” Tolia says on the possible future scenario.

However, one of the main reasons for spending more money on production is to increase premium quality content. “Overall, I believe that content quality in digital both for domestic as well as international players is improving and there will be a premium for quality content,” Arre co-founder Ajay Chacko says.

Endemol Shine CEO Abhishek Rege also thinks Netflix is only shelling out money to get premium content. “Costs in digital will be higher than that of what we see in television because digital needs better quality of content,” he says.

Where there’s a fear that Netflix and Amazon may shake up the Indian ecosystem like they are doing in Hollywood, the scenario is less viable in India despite the fact that production cost will definitely go up. Indeed, the streaming giants will aggressively try to acquire top talent from the industry but other OTT players can opt for fresh talent. In the next four to five years, the traditional players, including Bollywood and broadcasters, will face a tough challenge from these international players. However, with new content strategies, the cost can be controlled to a certain level.

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