Content takedowns leave OTT platforms facing heavy financial, legal costs

The recent take­down of Satluj, the bio­graph­ical film star­ring Diljit Dosanjh based on the Pun­jab insur­gency of the 1990s, high­lights the mul­tiple fronts that OTT plat­forms lose on when con­tent is taken off air.

Plat­forms spend heav­ily to acquire a title before any­one presses play. There is the licence fee, usu­ally the largest cheque, fol­lowed by the trailer, digital and hoard­ing cam­paign, influ­en­cer push, premiere and the prime slot on the home screen.

For a star vehicle, that runs into crores of rupees. When a film is pulled two days in, as Satluj was from ZEE5, none of the money comes back. The licence is sunk, the mar­ket­ing has bought no sub­scribers, and the plat­form is left explain­ing a hole in its slate. In Janu­ary 2024, Nay­anthara’s Tamil film Anna­poor­ani was removed from Net­flix fol­low­ing back­lash and legal com­plaints from reli­gious groups.

“OTTs invest sig­ni­fic­antly in pro­mot­ing acquired films through digital cam­paigns, social media, in-app ban­ners, trail­ers, inter­views and brand part­ner­ships. A take­down shortly after release can make much of this spend­ing unre­cov­er­able, par­tic­u­larly if the cam­paign has already peaked,” said Ankit Rajgar­hia, a part­ner at Bahuguna Law Asso­ciates.

Enter­tain­ment is cap­ital-intens­ive and a film’s costs extend well bey­ond pro­duc­tion, said San­joli Jain, coun­sel, Law SB. Even a rel­at­ively restrained pro­mo­tional cam­paign fea­tur­ing estab­lished act­ors can run into sev­eral crores of rupees, he added.

Rohit Singh, account dir­ector—cli­ent ser­vi­cing at White Rivers Media, agreed that plat­forms com­mit sig­ni­fic­ant cap­ital to film acquis­i­tions.“A sud­den take­down strands these costs. The plat­form loses the value of its ini­tial spend because the pro­mo­tional cycle stops before it gen­er­ates sus­tained sub­scrip­tions. This forces plat­forms to write off these mar­ket­ing invest­ments imme­di­ately while los­ing the anti­cip­ated engage­ment met­rics from the release win­dow,” Singh said.

The harm does not end with writ­ing off one film. A plat­form is wary of everything that resembles a film which is taken down. Sim­ilar movies, espe­cially polit­ical, regional or pro­voc­at­ive ones, face tougher internal scru­tiny and slower approvals and some­times a decision to delay a deal, rene­go­ti­ate it, or quietly let it go.

“That cau­tion then hardens the con­tracts: big­ger indem­nit­ies from pro­du­cers, stricter prom­ises about what the con­tent will and will not con­tain, com­puls­ory insur­ance against legal claims and proper legal vet­ting before any money is com­mit­ted,” said Arjit Ben­jamin, asso­ciate part­ner at Pro­soll Law. “The net effect is that ambi­tious or sens­it­ive cinema costs more to buy and takes longer to clear, so one removal quietly taxes the plat­form’s whole pipeline, not just the film that was pulled.”

Some of these risks are factored into con­tacts in advance in case of con­tro­ver­sial projects. Film pro­du­cer Shariq Patel said deals are often struck in a way that pro­du­cers have to let go of some money if the plat­form is forced to take the film down after launch.

“However, the rev­enue loss comes from the fact that the film is already pir­ated and cir­cu­lat­ing online,” Patel said.

Experts said incid­ents like these may encour­age the gov­ern­ment to intro­duce stricter rules for OTT sites. Although films released dir­ectly on digital plat­forms are gov­erned by a dif­fer­ent reg­u­lat­ory frame­work from the­at­rical releases, dis­putes encour­age stricter review mech­an­isms, includ­ing man­dat­ory film cer­ti­fic­a­tion.

“Such a shift would increase the work­load on the CBFC (Cent­ral Board of Film Cer­ti­fic­a­tion), poten­tially delay­ing releases. It may also encour­age self-cen­sor­ship by plat­forms and pro­du­cers, who could avoid sub­jects per­ceived as con­tro­ver­sial,” Rajgar­hia said. LiveMint