The global entertainment landscape is witnessing a profound strategic realignment as major music labels increasingly acquire stakes in film and series production houses, signaling a definitive move beyond traditional auditory content. Recent high-profile investments, such as Saregama’s substantial ₹325 crore initial stake in Sanjay Leela Bhansali’s cinematic venture and Universal Music’s acquisition of a 30% share in Excel Entertainment, underscore a burgeoning trend. This strategic pivot reflects a complex interplay of pressures and opportunities within both the music and visual content ecosystems, driven primarily by evolving monetization models and the imperative for greater intellectual property control.
At the heart of this transformation lies the persistent challenge of monetization within the music streaming sector. Despite a robust growth in subscriber numbers and overall market size – global recorded music revenues surged by 9% to $28.6 billion in 2023, according to IFPI data – per-stream payouts to rights holders remain notoriously low. In emerging markets like India, these figures often dwindle to a mere ₹0.05 to ₹0.10 per stream, translating into negligible long-term value even for extensive and popular music catalogs. This economic reality forces labels to grapple with the paradox of immense scale coupled with limited pricing power. As one industry analyst remarked, "The Indian music business is expanding in reach, but its profitability is increasingly beholden to platform economics, making direct control over content origination a strategic imperative." The reliance on third-party aggregators and streaming platforms for discovery, distribution, and pricing further dilutes the labels’ control over their core assets, pushing them to seek alternative avenues for value creation.
Beyond the challenges of streaming economics, the fragmentation of intellectual property (IP) rights enforcement presents another significant hurdle. Music IP, while inherently valuable, often struggles to be effectively monetized across diverse channels beyond its initial release. This lack of comprehensive control over the lifecycle of musical content means labels often miss out on ancillary revenue streams that could otherwise be captured through more integrated ownership models. Conversely, the film and over-the-top (OTT) content ecosystem offers a multi-faceted revenue landscape, encompassing content distribution rights, performance royalties, global syndication, and merchandise, providing a far more diversified and robust financial framework.
For music labels, the decision to invest in film studios represents a strategic thrust towards vertical integration. By acquiring stakes in production houses, labels position themselves closer to the genesis of creative content. This upstream involvement allows them to influence crucial decisions from the script development phase, through casting, and into marketing strategies. This shift transforms them from passive rights holders, licensing their music for use in pre-existing visual content, into active stakeholders in the entire creative process. As Rahul Hingmire, a managing partner at Vis Legis Law Practice, articulates, "Film production alters the equation entirely. It places the label at the very beginning of the IP cycle – script, casting, marketing design. This move from reactive monetization to planned ownership is the true impetus." This proactive approach enables music to be organically woven into narratives, rather than merely layered on as a post-production element, thereby maximizing its impact and long-term value.
Simultaneously, film and series production houses are navigating their own turbulent waters. The theatrical market, particularly in post-pandemic scenarios, remains unpredictable, grappling with shifting audience preferences and the pervasive influence of direct-to-digital releases. Traditional revenue streams, such as satellite rights, are in steady decline, eroded by the ascendancy of digital platforms. The burgeoning OTT ecosystem, while offering new opportunities, also presents its own set of challenges: commissioning or licensing deals can be selective, budgets often fluctuate, and competition from a torrent of easily accessible international content is intense. Furthermore, the escalating fees demanded by star talent continue to exert considerable pressure on production budgets, squeezing profit margins. In this precarious environment, music labels emerge as attractive partners, offering stable capital, long-term strategic alignment, and a proven track record in creative development and audience engagement. This symbiotic relationship provides production houses with financial certainty and a reinforced content pipeline, mitigating some of their inherent systemic risks.
This convergence signifies a fundamental transition for music labels: from being mere rights holders to becoming comprehensive ecosystem owners. Gaurav Dagaonkar, CEO and co-founder of music licensing platform Hoopr, emphasizes this point: "In markets where streaming payouts remain modest, labels are recognizing that ownership of music alone is insufficient to unlock sustained, long-term value. By investing in film and content studios, labels gain early influence over storytelling, allowing music to be embedded organically into narratives." This strategy leverages labels’ inherent strengths, including their deep understanding of audience preferences, their proven instincts for creating hit content, and their powerful global distribution networks. The benefits are manifold: music-led films often achieve stronger recall, generate heightened pre-release momentum, and enjoy a longer cultural shelf life. Their soundtracks continue to generate value across various platforms—radio, streaming, sync licensing, live performances, and international markets—long after the initial film release. For instance, the strategic acquisition of a digital media company like Pocket Aces by Saregama, alongside the expansion of its in-house film production arm Yoodlee Films, exemplifies this conscious shift. Successes like Dhurandhar, where several popular tracks were adapted from Saregama’s existing repertoire, demonstrate how catalogue-led music can outperform freshly commissioned works while significantly lowering production risks and enhancing return on investment.
Globally, major entertainment conglomerates have long embraced this integrated model, with companies like Universal, Sony, and Warner Music Group having divisions spanning music, film, television, and publishing. This global precedent underscores the inherent advantages of diversification and cross-platform synergy. While the scale and market dynamics differ, the underlying principle remains consistent: owning a broader spectrum of content IP provides resilience against market fluctuations and unlocks multiple monetization pathways. For instance, a hit song can drive viewership for a film, which in turn can boost streams for the soundtrack, creating a virtuous cycle of engagement and revenue.
Looking ahead, music labels are poised to adopt a dual strategy. Their extensive music catalogs will continue to form the bedrock of their business, generating enduring value through licensing across streaming, advertising, and brand partnerships. This foundational asset provides a steady, long-term revenue stream, given the evergreen appeal of classic hits and the consistent demand for background music in various media. However, content production—specifically films and series—will be increasingly prioritized as a primary growth engine. This expansion is crucial for securing future-proof relevance in a market where consumer attention is increasingly fragmented and platform-agnostic. By actively shaping and owning visual content, labels can ensure they remain indispensable players in the evolving entertainment economy, adapting to shifts in consumption habits and technological advancements.
This strategic transformation is not merely about diversification; it is about building integrated entertainment companies where music and visual content reinforce each other rather than competing for resources or attention. The goal is to create a holistic media powerhouse capable of crafting compelling narratives across different formats, maximizing the potential of every piece of intellectual property. This convergence, driven by economic pressures and a vision for greater control, heralds a new era for music labels, repositioning them at the forefront of the comprehensive entertainment value chain and ensuring their long-term sustainability in an ever-dynamic global market.
