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Music Labels Fund Films for Content Pipeline
9 Jan
Summary
- Music labels invest in film production for consistent content.
- This strategy ensures cost efficiency in acquiring music rights.
- Investments offer better return on capital than direct film production.
Leading music labels Saregama India and Universal Music are making significant investments in film production companies, signaling a strategic expansion beyond their traditional roles. These ventures are designed to ensure a steady stream of content while optimizing costs, moving beyond the standard production house model.
The music industry is currently experiencing subdued growth, prompting labels to seek adjacent diversification. Investing in production houses offers a more economical approach to securing music rights, with multi-year deals proving substantially cheaper than open-market acquisitions. This also allows labels to act as strategic investors, gaining ownership stakes in films.
Experts note these investments differ from consolidation among production houses. They allow labels to leverage their existing cash reserves, secure minimum guarantees for film starts, and obtain music rights and film ownership proportionate to their stakes, enhancing their overall return on capital employed.
