The battle for media rights for the Indian Premier League (IPL) has been the flavour of the season and tracking it was, in some ways, more exciting than some of the matches themselves.
A lot has been said and written about it and depending on where you stand, you could see it as absurdly extravagant bids or unlocking the value of Indian advertising. Either way, the bids seem very bold.
While the Board of Control for Cricket in India (BCCI)’s sharp acumen (aside: I think the Package C was a masterstroke) has led to this increase in value, it is also indicative of post-COVID buoyancy in the economy and the inherent value of the IPL franchise.
Disney-Star has retained the rights for television broadcast, but Viacom18 has come out very strongly to win almost all the other categories that were on offer.
For the first 10 years (2008-2017) of IPL, Sony had acquired the media rights by paying Rs 8,200 crore while Disney-Star with a bid price of Rs 16,347.50 crore won it for the next five years (2017-2022).
This year, for the first time, TV and digital rights have been won by different entities and hence a monopoly of all the media rights for a single partner has ended. Disney-Star had been offering bundled packages including broadcast and digital to advertisers, but that era has come to an end.
While the numbers are mind-boggling, Disney-Star’s winning bid of Rs 23,575 crore for broadcast (a growth of ~100%) was not as unanticipated as Viacom18’s winning bid for digital which at Rs 20,500 crore, is a dizzying ~400% over the previous bid for digital made by Disney-Star five years back. This clearly speaks of the optimism in the digital domain. Have the bid winners bitten off more than they can chew or is there actually so much money to be made?
Advertising penetration in India is low: The latest BCG-CII report on the Media & Entertainment industry says that India lags behind other markets significantly with regard to advertising penetration as mapped against GDP.
We are behind Indonesia, Brazil, and Philippines, amongst others. So, there is clearly headroom for ad revenue growth. India’s growth story continues to be multi-modal across broadcast, digital, OTT, print and others. This is good news for both Disney-Star and Viacom18, as they step out to seek more marketing dollars from brands.
Viacom’s streaming platform to get a booster shot: Despite some great shows like Time Out, Asur, London Files and Big Boss, amongst others, Voot, the OTT platform from Viacom18, has not been able to make a mark in the Indian OTT landscape in its six years of existence. It has just 1 million paying subscribers.
IPL streaming would provide a much-needed shot in the arm for the streaming platform, with a huge subscriber inflow. It can build on this newly acquired base with an alternate content portfolio, so that even if it loses the IPL rights in 2027, it would have built a formidable base on the back of non-IPL content. This is exactly what Disney-Hotstar hopes to do now, with a large base of paying subscribers (though a lot of subscribers will just churn out).
Digital is on a roll: While television viewership in India is growing at less than 10%, digital consumption is growing upwards of 20% annually. This number can only grow further. Cable and DTH homes haven’t grown much, but broadband and mobile internet penetration continues to grow.
In premium homes, cut-the-cord is already a phenomenon and is slowly creeping down the strata into the general landscape. So, smartphones are now a default video viewing screen for family members, given the fact that over 95% of TV households in India are single TV homes.
The unseen power of a Telco: The Reliance Jio juggernaut is rolling and at last count, had over 410 million mobile subscribers and 4.7 million broadband subscribers, making it the market leader in both categories. Content strategy has been integral to Jio’s plans and it has been offering a very wide range of video and music content, amongst others, to its subscribers to build a preference for its service.
IPL being made available exclusively to Jio subscribers will be quite alluring. It can be a serious acquisition hook and in the prevalent mobile number portability (MNP) regime, can drive customers away from competing telcos by the hordes. At the current Rs 167 average revenue per user (ARPU), lifetime value of these customers is a strong motivation for any revenue manager. And I am not even considering the scenario in which Jio decides to charge a small premium for IPL.
As of now, Jio’s 410 million subscribers are a potent base for ad-monetization and with the kind of rich data that a Telco possesses, the possibilities are immense. Hyper-personalized advertising, which sharply increases engagement, and hence performance matrices, can also help spread the net wider when it comes to type of advertisers.
Similarly, gamification and deep-linked engagements with retail and e-commerce brands can add to the revenue pie, due to the cross-linkages. Disney-Star has shown, with its innovations in the digital arena, that it is doable. Viacom18 and its related entities will just have to up their game.
Jio’s telco grade tech muscle will come in handy, but when you factor the 5G auctions coming up later this year, it all begins to add up. Streaming business, mobile business, broadband business, retail business, e-commerce…. all connecting the dots. See the drift! So, winning the bid for Viacom18 is not just about ad revenues, but much beyond it.
This Viacom18-IPL match has indeed delivered a thriller. What happens in the next five years is going to be watched with bated breath. Whether the winning bid turns out to be a ‘winners’ curse’ is something that only time will tell, but one thing is clear – if anybody can pull this off with digital, it is the Reliance-Viacom18 combo with the added backing of Bodhi Tree Systems, the consortium built by James Murdoch and Uday Shankar, the man who took IPL to digital in the first place.
(The author is a senior professional in the corporate sector and writes on varied topics that catch his fancy. The views expressed here are his own. He tweets at @sandeepbangia)