Box-office volatility, high star fees, shrinking streaming budgets, a string of big-ticket failures, rapid artificial intelligence disruption, and shifting audience tastes have stalled consolidation among film production houses, even a year after the Adar Poonawalla-Dharma Productions deal worth Rs. 1,000 crore, producers and analysts told ET.

The 50% stake sale to Poonawalla signalled the mounting financial pressure on producers as big-budget releases struggled to recover costs. Excel Entertainment, Sanjay Leela Bhansali Films, and Abundantia Entertainment are among the companies reported to be in early stake-sale talks.

“After the Dharma deal, investors have realized that the Hindi film industry, despite its iconic brands, is a highly volatile and high-variance business,” said Karmic Films co-founder and director Suniel Wadhwa. “The valuation was a premium bet on legacy, not on predictable cashflows.”

“When marquee studios show fluctuating profitability, it impacts flow of capital. Investors today are prioritizing stability, repeatability, and data-driven scalability, none of which Bollywood’s traditional model is guaranteeing,” added Wadhwa.

Executives said weak investor confidence stems from the industry’s inability to exhibit scale and returns, a mood worsened by the partial exits of global studios like Disney and Viacom from India.

“Indian M&E industry needs to work on showcasing and creating awareness,” said Reliance Entertainment CEO Shibasish Sarkar. “The sector is still fragmented, so more consolidation is needed so that mid-size companies can reach a certain scale to attract capital. India also needs to create awareness to recognize IP as a real asset class, strengthen incentives and expand copyright terms.”