Decoding the changing dynamics of sports broadcasting in India

These are exciting times for sports and sports fans. Viacom18 is poised to enter the competitive space with its own sports channel on the one hand, even as the ZEE-Sony merger is upping the game on the other hand. The rights for three marquee cricket properties – ICC, IPL, and BCCI domestic cricket – are coming up for renewal. How will the final value and ownership of each of these rights change business dynamics?

Meanwhile, BCCI intends to double its existing $510 million-per-year rights fee for the Indian Premier League and an increase in the number of matches and teams. Something that is worth rejoicing for advertisers and brands in 2022.

Moreover, we have the entry of streaming giants like Amazon Prime, which has forayed into the live cricket streaming space by offering the New Zealand-Bangladesh Test series. How it will change the dynamics of the Indian sports broadcasting scenario, is an interesting watch.

While stating that sports broadcasting is a competitive field, Megha Ahuja, VP - Digital Media Planning, Carat India, said, “Essentially, you have three big networks – Viacom18, Disney-Star and now Zee-Sony, which will increase the competition. Cricket is also one of the key drivers on the subscription front so it is going to be more competitive now.”

“Viacom18 entering the sports broadcast arena will change the ecosystem in that the value will go up, the content cost for sports will go up because you will see more bidders and competitive intensity increasing,” noted Karan Taurani, Senior Vice President, Elara Capital.

“I think why this is happening is because everybody has seen what Hotstar has done in terms of AVOD and SVOD revenues. They are the largest broadcaster-based OTT today. Every broadcaster has realised that you cannot scale up the digital offering unless you have sports content because a lot of youth eyeballs are on digital and primarily they like to consume sports content. I think that is where things are changing and all this is happening. In terms of three marquee properties, there will definitely be a huge revision in terms of the content cost for these marquee properties; specifically IPL will see a revision of more than 100%-plus because matches are going to increase by 25%. Also, there is a huge competition for that. ICC and BCCI will also see an increase in terms of rights. But that may not be as high as IPL because the number of matches will remain similar but the only factor for incremental content cost or higher valuation of rights would be competitive intensity increasing,” Taurani added.

According to him, BCCI intending to double its existing $500 million rights per year will pan out very favourable. When IPL came up for bidding five years back, the accounting for the digital portion was nothing more than 15-20 per cent.

“But right now, digital is the fastest-growing segment. Digital, specifically the video segment, is growing today almost four to five times. Currently, whatever the rights valuation comes in, a larger share of 40-45 per cent will be towards digital. A large portion of this incremental growth is because of two factors. One is the increased number of matches. The second is the higher amount of money for digital rights. The situation will work favourably because there are brands that want to go very aggressively on digital and they really want to go for platforms which have got a very sticky, large customer base. I don’t think there is going to be a challenge for getting advertisements for digital. As far as TV is concerned, it is more of a mature medium. So, you will see growth in the pricing for the TV media and the same will be for the advertisers’ perspective as well,” he explained.

Amazon foraying into live cricket was very unexpected, Taurani said, adding, which means that they realised the potential of sports for digital.

“New Zealand- Bangladesh is just a beginning for them. The response for this is good enough. They might end up bidding for other cricket properties. The bidding is more and more getting intensified, because you have larger broadcasters like Viacom coming in. Then you got Facebook, Amazon, etc. The war is really going to intensify in terms of bidding. And the content cost will go off the roof. Even on OTT, the original content costs for web series etc. have gone up. So the same for sports will also go up similarly. And that is what the anticipation is all about wherein we talk about IPL rights growing at 40 to 50 percent every year,” Taurani explained.

The lucrative media rights like the IPL or BCCI or other major cricket boards like Australia Cricket Board, and England Cricket Board, both are currently with Sony and all three networks will play their best hand to acquire them, said Megha Ahuja. “To make matters more exciting, each network has deep enough pockets to give the other two a sprint for their money. The IPL media rights will see aggressive bidding from all the key players while the ICC and BCCI rights will see fierce bidding from the players who lose out on IPL rights. The IPL rights will establish a new benchmark. The future of sports broadcasting will be decided in the next couple of months. Once the IPL bid is decided, everything else will double in value because others who have lost out on IPL will go hammer and tongs after BCCI and ICC rights. Disney cannot double all three rights. For IPL, all the big players will go all out which will lead to a bloodbath,” she added.

Navin Khemka, CEO - South Asia, MediaCom, pointed out that investment in sports broadcasting is a long-term game.

Khemka is sounding cautious in this regard. “We have seen large networks move out of this space in the past as it was not making financial sense. I think with more broadcasters entering they will be cautious. Not all formats in India make money or have high advertiser traction given the way interest levels are emerging across various sports,” he added.

Continuing further, Khemka said, “Cricket is the most sought-after property for broadcasters today. We had broadcasters dominate all three formats; but I think going forward, this could become impossible and fragmentation is imminent. This could be split between 2-3 players and also split between analogue and digital. So, in effect, we will have 4-6 players owning these rights in future. It is going to become very competitive and aggressive. This could also drive up the bids and eventually pricing.” He affirmed that in 2022 only the matches are going up, so it could only be a prorate increase.

But 2023 onwards we could see the new pricing come into play. “The real effect will be in 2023 for the IPL,” he said.

According to Venkatasubramanian, President and National Head - Investments, Havas Media Group India, “Star Sports, currently dominating cricket in India (IPL/BCCI/ICC), will face tough competition from Viacom and Sony-Zee in the future. Viacom has already entered the sports genre and they have secured the rights to telecast FIFA.

All three cricketing events, ICC, IPL, and BCCI domestic cricket, are big-ticket properties and high in demand, he said. “There are 10 teams in IPL now; the number of matches will increase from 60 to 74 and with more channels planning to telecast (Hindi, English and regional) the matches, it only means that the value of the deal will go up by 75% to 100% compared to the previous season and will involve huge monies,” he pointed out.

In the case of the ICC tournament, Venkatasubramanian said that the format of the tournament is a league format, which is suitable to the Indian audience. “There will be more matches being played by India which means the viewership will also increase, leading to an increase in the value of the tournament. All three networks will certainly participate to secure its rights,” he added.

BCCI domestic cricket rights depend on the number of matches/ tournaments for the next five years, he said, contending that this is also a premium property because all the matches are being played by India and the match timings will be during prime time. According to him, the business dynamics will change from 2023.

Regarding BCCI’s plans to double its existing rights fee for IPL, he said that Star Sports had closed the deal with BCCI five years ago, including IPL 2022. “Advertisers will have to spend more to get associated with IPL 2022, since the number of matches are also increasing. I am sure that Star Sports will roll out advertiser-friendly packages to get more brands on board.”

Venkatasubramanian felt that it was too early for Amazon Prime Video to compete with or impact the Indian broadcasting sector. It will take more time for them to secure big deals, he said.

Megha Ahuja said that Star is currently ruling sports. She predicts that sports will increasingly become a race with Star being at No. 1 and Sony-Zee being at No. 2. For consumers, it will become a must-have network both on TV and OTT, says Ahuja, adding that on OTT they shall become the second-largest post the merger.

According to her, the biggest benefit of the IPL 2022 is the addition of two new teams and greater number of matches, which means more opportunities for reach. “This also increases buzz around new teams, which will further help create fandoms that will again drive more viewership. BCCI increasing rights fees, etc., doesn’t really impact advertisers,” she maintained.

She further said, “Sony Pictures Networks India is in talks with Amazon’s online video streaming arm, Prime Video, to jointly bid for broadcasting.”