While the Indian box office delivers a string of disappointments and the over-the-top (OTT) streaming market feels saturated, a surprising trend is emerging. Veteran investors are opening their wallets, placing significant bets on the future of content and entertainment. They are, however, looking far beyond the traditional models of film studios and streaming subscriptions.
The New Investment Playbook
The evidence of this strategic shift is mounting. In a notable move this September, stock market veteran Ramesh Damani, Madhusudan Kela's Singularity AMC, and Utpal Sheth collectively acquired a 3.3% stake in Prime Focus, a visual effects firm, for a substantial ₹146.2 crore. This was not an isolated event.
Earlier in May, ReelSaga, a mobile entertainment startup founded just in 2024, secured $2.1 million in a seed funding round. Audio entertainment giants are also attracting massive capital; Pocket FM raised $103 million and Kuku FM secured $85 million this year alone. The list of believers extends to financial luminaries like Enam Securities' Vallabh Bhansali, Motilal Oswal, and Zerodha's Nikhil Kamath, who invested in film producer Mahaveer Jain's firm.
In one of the most decisive moves, Adar Poonawalla acquired a 50% co-ownership stake in Dharma Productions for ₹1,000 crore last year, signaling deep conviction in the content business's long-term potential.
Betting on the 'Picks and Shovels' of Digital India
According to industry experts, this wave of investment is not a gamble on the next blockbuster film. It is a calculated strategy focused on the infrastructure of India's digital content explosion. Varun Singh of Foresight Law Offices explains that savvy investors are targeting companies that own the "picks and shovels"—the talent, technology, and distribution networks that enable content creation.
The focus is on finding scalable, institutional-grade businesses within a largely unorganized creative sector. The real value, experts say, lies in intellectual property (IP) and infrastructure that can generate multiple, diversified revenue streams over time. This shift is powered by several key trends:
- Mobile-First Formats: The rapid penetration of smartphones has made mobile the primary screen for content consumption.
- AI-Driven Production: Artificial intelligence is reshaping how content is created, making production more efficient and data-informed.
- The Rise of Regional Content: Vernacular and regional storytelling are unlocking massive, previously untapped audiences.
This evolution is reflected in the numbers. A Ficci EY report projects the Indian media and entertainment industry will grow from ₹2.5 trillion in 2024 to ₹3.07 trillion by 2027, expanding at a 7% annualized rate.
Navigating Risks and Structuring for Success
Of course, these bets are not without risk. Content revenues are inherently lumpy and irregular; a single flop or a pause in OTT licensing can severely impact cash flows. Furthermore, evolving censorship norms and the complexities of AI-generated content present new legal and IP challenges.
To mitigate these risks, seasoned investors are structuring their deals carefully. Isheta T Batra of TrailBlazer Advocates notes that investments are often non-strategic, token positions of 5-10% equity. This provides enough visibility to influence key decisions without the burden of day-to-day operations. These deals typically include strong exit rights, liquidation preferences, and robust legal protections to cap downside risks.
The post-pandemic landscape has also improved monetization. As Nikhil Sachdeva of Trilegal points out, OTT platforms have moved to premium models, creating multiple revenue channels through subscriptions, satellite rights, theatres, and brand integrations. Consolidation, like Amazon's acquisition of MX Player, provides clear exit opportunities, making the sector even more attractive for capital.
Ultimately, as Ashish Pherwani of EY India asserts, high-quality content IP remains an "extremely profitable" investment. In an era of digital distribution, the longevity and monetization potential of valuable intellectual property are only increasing, proving that for astute investors, content is still king.
