The year of scale and spectacle: Why 2022 was a big deal for media

From spectacle films to large media deals, scale, both on and off screen, remained the central theme in the evolving entertainment landscape

SS Rajamouli’s RRR, the story of two mythical freedom fighters, has as much masala as any eighties film. Rajamouli’s imagination and some beautifully stylised visual effects raise it to high art. At an estimated Rs 1,200 crore in global box-office revenues, RRR is one of the highest grossing films after Aamir Khan’s Dangal (2016).

Ayan Mukerji’s Brahmastra is a gripping fight between good and evil with weapons powered by fire, water, wind, monkeys and bulls, among others. This ode to Harry Potter, The Lord of the Rings and Indian mythology is brought alive with stunning visual effects by Prime Focus. It grossed over Rs 430 crore at the box-office globally.

RRR and Brahmastra, the biggest hits of 2022, are big-budget, large-scale, spectacle films.

Scale then remained clearly the first of the two main themes of 2022 for India’s Rs 161,400-crore media and entertainment business.

The year saw some large media deals going through. At the end of March 2022, India’s largest multiplex chain PVR merged with rival Inox Leisure to create a 1,500-screen film exhibition company. In April, Bodhi Tree Systems, a platform of James Murdoch’s Lupa Systems and former Star CEO Uday Shankar, picked up a 40 per cent stake in Viacom18 for Rs 13,500 crore.
The biggest merger of all, one that would create India’s third-largest media company with Sony and Zee, is still in the making. It was announced towards the end of 2021.

Mukerji took ten years to put together the money, technology and story for Brahmastra, India’s first fantasy fiction trilogy. Much like him, the Sony-Zee merger, too, will test the mettle of Punit Goenka, currently the managing director of Zee. By April 2023, all regulatory clearances should be through. Goenka, the head of the acquiree firm, the son of its founder Subhash Chandra and now a minority shareholder, will be leading this Rs 15,056-crore venture. Which managers will go, what brands will be sacrificed and how many people will lose their jobs are some of the tough decisions he has to take in the coming months.

This pain, however, is inevitable for survival. The combination of the internet, streaming devices and technology has changed the media and entertainment world, irrevocably. Media is no longer about three or five hours of leisure. The ubiquity of the internet means it envelopes every part of our lives — at work, with friends, for entertainment, news and even while exercising.
And there are different brands seeking our attention as consumers in each of these aspects. Apple (1.8 billion users; $366 billion revenue), Alphabet (parent of Google and YouTube; 4.3 billion users, $258 billion revenue), Meta (Facebook, WhatsApp and Instagram, 2 billion users, $118 billion revenue) and Amazon ($470 billion revenue) are the companies that we spend a lot of our time with. These are the new competitors for Disney or Sony or Comcast, globally.

To take them on, scale is critical. For all its gargantuan consumer numbers, the Indian media business is terribly under-monetised. The consolidation and, therefore, scale this round brings should, hopefully, lead to a healthier, more profitable business.

The scale and spectacle of RRR and Brahmastra and the stories that KGF2, Gangubai Kathiawadi or Drishyam 2 tell have revived theatres. This return of audiences to the theatres is the second most important theme.

Theatres are the lifeblood of the media and entertainment business, bringing in over 60 per cent of the total revenues for cinema. They de-risk the business for TV, OTT and all the other formats on which people watch video. When theatres were not functioning during the pandemic, the film business collapsed from Rs 19,100 crore in 2019 to Rs 7,200 crore in 2020. It was clear then that an OTT release can never bridge the revenue gap that the collapse of theatres brings. Just an OTT release would never have helped RRR recover its estimated Rs 550 crore budget, let alone make money.

But 2022-23 has brought good news. Most theatre chains like Inox, Carnival, PVR and Cinepolis made a third of their annual revenue in a normal year in the first quarter itself. This brings back working capital and the ability to invest more in storytelling.

Not just on the business side, on the content side, too, cinema is a critical link in the media and entertainment ecosystem.
About a fourth of all TV viewing, one-third of OTT and 70 per cent of music is from films. The people who make films are the same ones who make OTT and TV shows. It is, therefore, the origin of all value in the entertainment ecosystem.

With scale and content in full play, here is to a happy 2023.