The Indian film industry has long struggled with financing, often seeing capital invested at the riskiest early stages with uncertain returns realized much later. Now, CineNow is introducing a new approach. Its Rs 1,350 crore Secured Participation Fund isn't just another capital injection; it fundamentally rethinks how film intellectual property (IP) is used in a sector known for its complex operations and concentrated market.
Valuing Film IP with Technology
CineNow's main innovation is treating film intellectual property (IP) as a collateralized asset within a group of films. This film-tech strategy aims to better value IP by recognizing its growth from development through production to distribution. By grouping film IPs, the fund allows investors to exit partly or fully before the film is fully released, a big change from traditional models where financiers are tied up until final sales. This staged value creation and use of technology give investors more control over their risk and bring needed cash flow to this capital-intensive industry. The fund's registration in the British Virgin Islands (BVI) uses offshore financial structures known for their tax neutrality and regulatory flexibility.
India's Film Finance Landscape
India's media and entertainment sector is vast, expected to exceed INR 3 trillion by 2027. However, the film segment faced challenges in 2024, with revenues dropping 5% to Rs 187 billion despite over 1,600 releases. Success became more concentrated, with only a few films performing exceptionally well. Buyers of digital and satellite rights became more selective, leading to lower prices. This makes things harder for traditional financiers who invest capital early, facing potential delays, cost overruns, and shifting release dates. Indian film finance has historically relied on informal channels, private money, and distributor advances, often involving hidden financial dealings and high failure rates. While industry corporatization in the 2000s attracted banks, some specialized funds later faced strict regulatory action and winding-up orders due to mismanagement. CineNow's approach differs from corporate investors, venture capital, or government bodies like the NFDC by focusing on using technology to earn from film IP, rather than just project finance or buying content. The growth of OTT platforms has opened new revenue streams, but also requires smart strategies for selling rights in advance and earning from digital distribution, which CineNow's model aims to improve. Regional cinema, in particular, often shows better returns than Hindi blockbusters, highlighting the need for financing models flexible enough for different market conditions.
Key Challenges Ahead
Despite CineNow's new framework, significant structural challenges remain. Film production is naturally volatile, with risks of cost overruns and changing release dates. While digital and satellite rights offer ways to earn money, buyers are becoming more selective, which can lower prices. The success of CineNow's model depends on accurate IP valuation, a reliable technology platform, and good management of film rights. Rules for new financial tools like tokenization in India are still developing, though registration in the UAE offers an additional layer of legal enforceability. Past film funds have faced strict regulatory action for mismanagement and misuse of investor money, showing the critical need for transparency, strong governance, and oversight. CineNow aims to build these through institutional features like outside administration and audits. Being registered in the BVI offers regulatory flexibility but requires CineNow to strictly follow international standards.
Toward Professional Film Finance
CineNow's deliberate inclusion of institutional features—like third-party fund administration, legal oversight, and independent auditing—shows a clear effort to make film finance more professional. Rohit Dalmia noted the market's historical fragmentation and lack of early liquidity, highlighting a strong demand for such structured solutions. The model's appeal is also boosted by the consistent demand for entertainment content, which tends to remain stable even during financial market volatility or global uncertainty. This view positions film IP not just as creative work, but as an asset class driven by consumer spending. It offers various ways to earn money and can stay relevant through economic cycles. The overall industry trend towards institutionalization suggests CineNow's approach could lead to more formal and transparent film finance in India.