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Netflix and Amazon Prime Video under threat of driving up production cost in India

Tuesday May 8, 2018 11:55 AM, Hena Farhat,

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Over The Top (OTT) content giants, Netflix and Amazon Prime Video have begun to mark their territory in India but a concern of rising production costs looms. The two are known to loosen their purse strings when it comes to production cost and the same threat is already prevalent over the Hollywood industry.

As per recent reports, the behemoths are luring top talent from Hollywood by throwing large sum of money. In addition to this, Netflix has been offering higher pay as a result of which Hollywood salaries are also driving up. Traditional players have been sweating it out by competing with the rising cost. And, Netflix’s $300 million deal to attract Ryan Murphy of 21st Century Fox is an appropriate example for this development. Robert Kirkman, director, The Walking Dead signed a 2-year deal with Amazon India last August.

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Poaching talent from rival companies is currently the company’s target in order to understand the market because of the renewed interest of the companies in India. The quest to offer premium content will also lead to higher production cost.

When asked from Ali Hussein, COO, Eros Digital if the overall cost of Indian ecosystem will go up or not because of Netflix, he said that there wasn’t any definite answer to this. However, increment in the cost is likely. He further added that it also depends on how smartly the work is done to have a control over the cost.

Hussein says, “If in any business, the demand is high, the supply chain will go up. Across all businesses where 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 celebrities or directories, it is the technical cost and that of the entire process.”

Another reason of the rise in cost is less understanding of Indian market by the companies which has unorganised, segmented, content making believes Manav Sethi, CMO, ALTBalaji. According to him, the cost has already risen due to international players splurging but the output quality has not increased much.

According to Mautik Tolia, Bodhi Tree Multimedia Founder, the increasing number of productions from Netflix and Amazon will not have any short term impact on the overall production costs. This is so due to the limited volume of content being produced by the duo at present in comparison to overall content production in India. Only premium talent cost as that of A-list actors and directors will be driven by this. But, at the same time it is a platform for injecting a fresh pool of talent in the system making content creation process more inclusive thereby reducing the production costs.

Considering the possible future scenario, Tolia says, “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 or punting in and promoting new talent. This remains to be seen”.

Increasing premium quality of content is however one of the main reasons for spending more money on production. Endemol Shine CEO, Abhishek Rege also thinks that Netflix is only shelling out money to get premium content.

It is feared that Netflix and Amazon may shake up the Indian ecosystem just like they’re doing in Hollywood, the scenario is less viable in India despite the fact that production cost will definitely shoot up. While other OTT players will hire fresh talent, the two streaming giants will aggressively try to acquire top talent from the industry. It seems that the traditional players will have to face a strenuous competition from the international ones. However, with new content strategies, the rising cost can also be controlled.

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