Mumbai: India's fast-growing micro-drama industry is beginning to evolve beyond a volume-driven content play, with established film production houses entering the segment as platforms increasingly use short-form storytelling to test intellectual property (IP) and build branded content opportunities, industry executives and entertainment experts told ET.

Recent reports suggest that major production houses such as Yash Raj Films, which plans to invest Rs. 150 crore in micro-drama content, and Red Chillies Entertainment are diversifying into the space. At least 15 apps currently offer micro-drama content in India.

"Like in the West, India's micro-drama space is likely to emerge as a breeding ground for testing the scalability of an IP. Big players such as Yash Raj Films and Red Chillies Entertainment are likely to test the efficacy of their ideas with audiences on micro-drama apps. Based on audience response, they can then decide whether to scale an IP into a web series or a theatrical feature film," said Azim Lalani, co-founder and chief business officer at Bullet, a micro-drama content app.

Artificial intelligence is emerging as one of the tools for testing IPs in the micro-drama space.

In the West, Holywater, a technology entertainment company, operates a four-app micro-drama ecosystem comprising My Drama, FreeBits, My Muse and My Passion.

According to industry executives, the company first tests an IP on My Muse, its AI-based platform. If the content receives a favourable response, it is adapted into a live-action format and released on another subscription-based app. Content that performs well is then scaled into a larger-format web series or feature film, helping the company de-risk investments.

Industry experts expect a similar model to emerge in India.

Executives said the entry of large production houses into the segment could also open new doors for talent.

"When big players such as Yash Raj Films or Red Chillies Entertainment enter the micro-drama space, they increase its attractiveness. Mainstream talent, which has so far been somewhat reluctant to work in the segment, will begin to take it more seriously," said Kunj Sanghvi, SVP, Business, Kuku TV, a leading micro-drama platform in India.

Branded content is another factor making the segment increasingly attractive, film marketing experts said.

"Big players will premiumise offerings in the micro-drama space. At present, mostly local brands are integrated into content because viewers are largely based in tier-2 and tier-3 markets. But with the entry of players such as Yash Raj Films or Red Chillies Entertainment, brands with a national presence will begin to consider the space more seriously," said Neeraj Joshi, film marketing consultant.

Branded entertainment experts also believe the economics of micro-drama content work in favour of production houses.

"The micro-drama space has relatively low entry barriers. It requires less time and capital compared with theatrical feature films. For large production houses, creating micro-drama content with integrated brands can become a meaningful source of revenue. Today, there is significant unpredictability around box-office performance, while the time and investment needed to produce a feature film are substantially higher," said Navin Shah, joint managing director at EMC Solutions Worldwide, a branded entertainment company.

Companies are increasingly hiring law firms to help them handle the legal hurdles of using popular movie characters in advertising, as brands seek stronger associations with such figures to maintain recall and relevance in a crowded, distraction-heavy market, say legal experts.

Character merchandising is growing in popularity, as businesses recognize the commercial appeal of film characters and the need to incorporate them into marketing and promotional campaigns but are unsure about the legal implications.

Law firms say there is a steady rise in queries from clients, especially in the FMCG, telecommunications and consumer electronics sectors, about the legal aspects of character merchandising from popular films.

“They want to know about potential copyright and trademark violations. They also enquire about the necessity of obtaining explicit licences from film producers or rights holders, and the risk of litigation or reputational harm if they proceed without proper authorization,” said Priyanka Sinha, partner at law firm A&P Partners.

Lawyers and brand merchandising experts said companies are becoming more aware of the strong commercial appeal of movie characters and the benefits involved in integrating them into their advertising and promotional activities.

In recent years, movie and web series characters such as Vikram Rathore (Jawan), Vicky (Vicky Vidya Ka Woh Wala Video), Aasmaan Singh and Parvaiz (The Ba***ds Of Bollywood) have been commercially exploited. The latest is the character Jamil Jamali from Dhurandhar, used widely in brand promotions by companies such as India Post and Bharat Sanchar Nigam Ltd.

“We are aware of the widespread usage of characters from the Dhurandhar franchise. It reflects how strongly they have connected with audiences and entered the larger cultural conversation,” said a spokesperson from Jio Studios, producers of the Dhurandhar movie franchise. “While we deeply value this popularity, all associated rights remain with us. We approach such matters with due consideration,” the spokesperson for the media and content unit of Reliance Industries said.

“Character merchandising is an important issue. A film’s producer owns the exclusive rights of the film’s characters. Therefore, companies must obtain a licence to exploit movie characters commercially from producers,” said Rahul Chaudhry, managing partner of law firm Rahul Chaudhry & Partners. “If a company commercially exploits a film’s character without a licence, then the producer can legitimately contend it,” he explained.

Indian filmmakers do not fully realize the commercial potential of movie characters that have become popular and a part of public discourse, said brand merchandising experts.

“The biggest difference between the West and India is that, in India, merchandising and licensing is a part of marketing rather than a revenue stream,” said Navin Shah, joint managing director at EMC Solutions Worldwide, a company in branded entertainment.

“Also, we don't make too many character-based films. In fact, merchandising and licensing in our film industry is largely an afterthought,” he added.

According to brand merchandising experts, merchandising and licensing contribute 20-25% to total film revenues in Hollywood.

In India, the share is less than 1%. At present, merchandising and licensing can contribute 10% to the total film segment revenues of Rs 20,000 crore, which can go up to 25% in the next five years, said Shah.

Mumbai: Bollywood's getting ready for a blockbuster year. Shah Rukh Khan, Salman Khan, Aamir Khan, Ajay Devgn, Sunny Deol, Ranbir Kapoor all have releases lined up, in what's going to be the most superstar-heavy lineup of films since before the pandemic. A broad range of big-budget Hindi titles are scheduled to hit theatres, complemented by a strong slate of regional movies and Hollywood offerings.

Down south, Rajnikanth, Vijay, Yash, Prabhas, and Kamal Haasan have movies coming up, apart from which Mammootty and Mohanlal will be seen together in a movie (Patriot) for the first time in 17 years.

Producers, distributors, and trade analysts are predicting a record haul, extending the buoyant momentum after a reassuring 2025. Net box office receipts may surge 25-30%, reaching Rs. 14,052 crore to Rs. 14,614 crore in 2026, from Rs. 11,242 crore last year, going by some of the more conservative estimates.

"2026 could be the year of highest box office collection for the Indian film industry," said Vikram Malhotra, founder and CEO, Abundantia Entertainment. "Beyond the conventional big-star films, 2026 will be about films which will connect deeply with audiences. I see sleeper hits become monsters at the box office. In addition, genre experiments will find takers."

A key reason for the industry optimism is the wide array of movies lined up this year. These include Ramayana, Love & War, Lahore 1947, King, Battle Of Galwan, Drishyam 3, Dhurandhar 2 and Border 2. Highly anticipated regional films include Jailer 2, Jana Nayagan, Toxic. Hollywood films such as The Odyssey, Dune: Part Three, Moana, Avengers: Doomsday, and Spider-Man: Brand New Day are also expected to boost box office receipts.

"Even by conservative estimates, the Indian box office collection may grow at least in the range of 25-30% in 2026 compared to 2025 because of diverse offerings across Hindi, regional and Hollywood," said Girish Johar, film producer and industry expert.

The number of superstar releases is another reason for the optimism. "2026 is indeed a big year," said Navin Shah, joint MD, EMC Solutions Worldwide, a leading company in branded entertainment. "It is important to note that most superstars such as Ranbir Kapoor, Shah Rukh Khan, Salman Khan, Aamir Khan, and Sunny Deol have either one or two releases in a single year. This is happening after a long time."

Trade analysts predict the share of Hindi films in net box office collection to climb to 45-50% this year, from a historical average of 35-40%. Premium ticket pricing will also drive growth.

"There is at least one notable film which is either VFX-driven spectacle or has a big superstar in every quarter of 2026," said Shaaminder Malik, film distributor and trade analyst. "This provides room for premium ticket pricing, especially for formats such as IMAX and 4DX, thereby boosting total box office collection."

Growing Gen Z attendance at movie theatres is also boosting industry confidence, said producers. "Apart from a fantastic lineup, a big positive for the industry is the theatre attendance of Gen Z audience, which increased by 25% in 2025. This trend is likely to continue in 2026," said Sunir Kheterpal, producer, Athena E&M.