Union Budget 2022-23: There is a need to provide OTT industry the same benefits as under the Make in India initiative
Since the Budget is around the corner, the media and entertainment industry has been one of the sectors that have been hit the hardest because of this raging pandemic. It requires government support to get back on its feet and march ahead
India is one of the largest content powerhouses in the works, in excess of 1500 movies being released annually across multiple languages. This trend has the possibility of continuing in the OTT space as we had released in excess of 200 web series in 2021 itself. In the coming years we could share the same feat by unleashing a record number of OTT content pieces too.
Looking at this trend, we should not ignore the soft power status of this industry as well as the tangible possibility of this sector becoming a huge export earner for India. The government should not ignore this possibility and should make efforts in the right direction to support the growth of this industry.
Some of the key sectors that they could highlighted in the Budget:
Extend sops to exhibition industry
The exhibition industry has been the hardest hit and India has a thriving theatrical space. The government should extend sops to this industry in the form of reduced GST/Tax holiday even for cinema equipment’s too since this would really help the ailing exhibitors as well as get cinemagoers back to the theatres in the form of reduced ticket prices. Globally, the exhibition industry was going through its shares of problems before the pandemic because of the onslaught of OTT. However, India continued to buck this trend to a certain extent given our vibrant movie culture, but the pandemic exacerbated the problem with a number of single screens closing down.
Though the opening of cinema screens is a State subject, the Union government should initiate the process of disseminating the value and immense potential of the exhibition sector by having proactive dialogues with various state governments on how they can reignite the growth of the exhibition sector in their respective state in the form of single window clearance, reduced licenses and taxes, etc. The screen density, especially in north India as well as east is limited and this could be an area where the centre and state could Collaborate. Theatrical viewing is considered a social experience and Indians love their movies irrespective of their language (a movie like Pushpa is an example of this), let us ensure that cinematic experience as a family getaway continues to expand
Visual Effects, CGI and post-production services
The OTT industry has truly arrived at the global scene with companies like Netflix, Amazon, Disney+ paying top dollars for content. India continues to mirror US and this trend can be seen in OTT, too. There is an ocean of OTT content being made since all these platforms need at least one content piece made very week. The cost of making this content is considered as the most expensive in the world in terms of hourly cost per employee.
India has the potential to become an exporter in this particular field akin to the success we achieved in the software sector. The government should try to provide the same benefits for this sector too under the ‘Make in India’ initiative.
India has always been a leader in the software services business. This sector is an extension as well showcases the possibility of going up higher in the value chain. India has the potential of becoming the factory of the world for these services
Reduce regulatory burden on Broadcasting
After the stupendous growth of the OTT industry and the Digital industry in general, the Broadcasting industry has been being facing its fair share of issue in the form of Ad dollars going to digital as well as cost cutting. This problem gets compounded with regulatory bodies like TRAI coming up the regulations further stifling the industry. The government should try to reduce the compliance / regulatory burden and give them some latitude in areas where self-regulation would be a better option. We should not go the way of telecom where the market is oligopolistic in the form of three major companies capturing the market
Consolidation is ripe in the industry with the Zee-Sony deal as well as the Lupa systems acquiring stake in Viacom18. M&A would continue to grow in this broadcasting industry since there is an excess of 800 channels as well as numerous local channels launched by cable companies. The government should make this process seamless since this could further aid the onset of private capital to strengthen this industry
Film tourism, unexplored area
This sector and with the advent of OTT has huge potential which has never been touched upon very seriously by the central government. Globally this has been a sought-out sector and creates a huge pull effect for tourism. Just to mention, in the US whenever a movie is greenlit, they look at the film incentives in the form of rebates / reduced taxes, etc., that every country or state is giving them to shoot their movie in their respective country. This opportunity creates a huge pull effect in the form of attracting tourists as well as an enormous employment generation engine. Indian states could learn from their foreign counterparts as to how they have structured their film incentive program to attract movie production in their respective states.
At the central level, the government could have a dialogue with various production houses as to how it can could support the latter domestically as well as internationally through co-production treaties to provide them a platform to shoot their movies. This process has a huge added advantage of showcasing India as a true soft power to the world through their association with various international countries
The TMT sector is the growth engine and bulwark of the US Industry. India will walk the same path with Media and Entertainment playing a huge role in the growth process and the added advantage of our creative space being pivotal in showcasing our soft power to the world.
The author is Co-Founder of NV Capital-credit fund focussed on Media & Entertainment industry. Views are personal.