Indepth: IPL media rights – The contenders, their strengths & the mammoth valuation

The Indian Premier League (IPL) today has grown into a humongous entity. Throughout its 15-year history, the T20 tournament has not just been drawing in cricket fans to the stadiums and the TV and Digital screens, but has also become a major advertising platform for brands, securing multi-crore sponsor partnerships.

With the upcoming media rights – broadcast and digital – for IPL for 2023-27, the battle is expected to be intense. According to media estimates, the broadcast rights alone could earn BCCI Rs 40,000-45,000 crore. In the previous bidding for IPL media rights held in 2017, Disney Star had won the rights for Rs 16,347 crore.

The expected amount is not surprising, given IPL’s growing brand valuation year-on-year. As per a report by Brand Finance, IPL’s brand value has risen by 7% year on year despite 4-month delay and relocation to Dubai, reaching $4.7 billion in 2021. This is after the IPL ecosystem value decreased by 3.6% to Rs 45,800 crore in 2020 from Rs 47,500 crore in 2019, as per a report by Duff & Phelps. The Brand Finance reports further stated that the IPL brand has witnessed a spectacular growth of 134% since its launch in 2009.

This time around, BCCI has separated TV and digital rights and created non-exclusive digital rights for IPL. This has opened up newer possibilities for new entrants, like Amazon for example, to throw in their hat into the IPL ring. For the streamer, it is an opportunity to announce its entry into the lucrative live cricket space. Mukesh Ambani-owned Reliance Jio, with its half a billion subscribers, is competing with Amazon.

Retaining the IPL rights is of paramount importance for Disney Star. , which launched its streaming service in India in 2020 coinciding with the IPL season. Amazon will be looking for a similar strategy in India to increase its base. If the Sony-ZEE merger comes to fruition, the combined entity will bid for the rights and can give a major fight. These apart, Viacom18, which is set to launch its sports channels in SD and HD this month, will also look at capturing a major share of the sports broadcasting pie.

The stakes are very high indeed

“It makes perfect sense for Amazon to bid for digital rights. After all, Hotstar built its subscription model through IPL,” said Vanita Keswani, CEO, Madison Media Sigma.

Keswani has a point; live streaming of sports is hugely popular in India with increased smartphone adoption. That explains the fierce competition between Amazon and Reliance. “Many strong contenders are there – Disney+ Hotstar, Viacom18, and Amazon; and Jio is making a play for non-exclusive content,” noted Keswani.

BCCI will unlock true value through this new way of bidding for rights in four buckets – TV-only India, digital-only India, global TV & digital, and non-exclusive 18 matches rights, informed Keswani, adding, “More people bidding for different platforms and mediums will maximise the overall value.”

CupShup Co-founder Sidharth Singh opined, “I would say that BCCI has seen the writing on the wall well before anybody else could see it.” According to him, “IPL is a huge animal and arguably one of the largest sporting events on the planet; but it has finally run out of steam. Its viewership and TRP has taken a beating, if latest numbers of BARC are anything to go by. It could be due to multiple reasons, but the prominent ones are: one, a deep sense of connection that a fan feels with its favourite team has eroded recently, and two, established names are phasing out and the League needs new heroes. Thus, separating the rights make sense because not only does it make commercial sense to monetise two avenues separately, but also keeping it non-exclusive will help in a wider reach for the sporting league which might help in finding the heroes that fans are desperately looking for.”

“Amazon has launched VOD and has also bought NZ cricket rights. Getting IPL content for three months will be a perfect play for them to get into live cricket. This method of bidding involves sharing of broadcast rights between players, and technically all rights are non-exclusive,” said Keswani.

For brands, she says, this may not be great news as the viewership and selling of inventory will be further fragmented. “Another implication I see is that since IPL ad rates have already skyrocketed, rather than recover steep premiums from advertisers alone, some disruption in the linear content distribution system through channel subscription price could play a role,” maintained Keswani.

According to Anil Suryavamshi, Associate Vice President, Planning, Carat India, the IPL rights owners will not recoup in five years. If TV and digital rights get split between two different groups, it will be a massive task to break even, he feels.

“The right must be exclusive to one player who could handle both TV and digital. With new players coming in for the bidding, the media rights may go beyond 45 to 50 thousand crores, which would question the media's financial feasibility of owning the rights,” says Anil Suryavamshi.
Despite the fact that digital platforms/ OTTS are rapidly catching up, television continue to be a staple of revenue monetisation.

According to Suryavamshi, while digital is growing, TV will continue to dominate, at least for the next couple of years. Even today, for IPL, the majority of revenue is being generated by TV, which is close to 80%, he adds. “It will continue to be the same for the next couple of years. Post that, we may see spends slightly skew towards digital 4-5% every year,” he adds.

With big corporations like Amazon, Star, Reliance, Sony-Zee coming into the bidding race, it is not going o be a financially feasible proposition, says Suryavamshi.

“The rights are already at 40,000 crores, which is going to be a massive task if it crosses 50,000 crores. If the rights get split between two players for digital and TV, then the chances of recouping the investment will deteriorate,” he adds.
He feels that ad rates during the IPL will definitely increase and IPL is going to be a sure-shot hit. “This is one of the biggest events which happens in India every year. And we have seen it grow year-on-year! It will definitely increase. IPL is going to be hit with two more teams being added; it is surely going to increase the excitement,” he states.

The IPL ecosystem value has fallen by 3.6% to Rs 45,800 crores post-2020 season from Rs 47,500 crores estimated after IPL 2019.
Regarding this, Suryavamshi said: “Last year, the overall sentiments were low, with IPL being shifted to the UAE, CSK & KKR. The evaluation going down had an impact on the IPL ecosystem. Advertising continues to be remarkable for IPL. With the market reopening and the audience back in the stadium, I don’t think there is any threat on IPL valuation this time. IPL is ready to bounce now.”

More players

According to Jasmine Sachdeva, SVP, Zenith, separating TV and digital rights and creating non-exclusive digital rights for IPL shall allow many more players to bid in. She felt that it would be a bid of strength being played. “Digital will play an important role. Stakes will be high and players will ensure there is a balance for the India rights. Many new players like Amazon, Reliance, and even mobile partners would enter the bid. There are so many avenues for the bidders to ensure they concentrated yet high ROI bids submitted,” Sachdeva added.

According to her, partners in the past have anyways moved away from selling the property across TV + digital platforms for the benefit of pricing and for brands to enter at lower entry costs. There is also another benefit of targetable audience and various engagements possible on digital platforms that drive actionability from consumers.

Sachdeva opined that since there are more individual players, the strength of pricing will lie with the partner; more and more brands are seeing value in the flagship tentpole. Brands want to leverage the platform and have tested out the ROIs, she added.

She affirmed that Amazon absolutely has a good chance.

According to Sidharth Singh, segregating the matches, which garner maximum viewership into a separate bucket, and making them non-exclusive is exactly what the IPL needed at the moment. In his opinion, this is the game changer as bidders that do not have deep pockets like Disney, Viacom18, etc., can now also own a slice of the pie.

“The opening game, playoffs, and finals will be watched by many more due to this game-changing initiative which will help viewership for the league as well as make the smaller broadcaster merry. Needless to say that brands and marketers will put the money where the mouth lies. Thus, I would say this is a win-win situation for all parties involved,” he explained.

According to Singh, it is evident that Netflix’s bets haven’t paid off as expected in recent times and the OTT space is up for grabs. After ‘Sacred Games’, he contended, Netflix has been trying to replicate that success with little success. “Interestingly, Amazon, it seems, has figured out the game and it is buoyed by the string of successes of ‘The Family Man’, ‘Mirzapur’, and ‘Panchayat’. The bid for IPL is an important step in that direction to consolidate its position as numero uno entertainer of Indian masses,” he said.

Strongest contender kaun?

So, who will be the strongest contender/s here? What are the strengths and weaknesses of each major contender, including Amazon?

According to Jasmine Sachdeva, with many different categories open for bidding, (broadcaster, digital OTTs, mobile/ Internet networks), it calls for more participation.

“The BCCI is structuring the same to ensure that they maximize revenue and even the selected partner will do justice to the pricing. Each contender will play on the strength of platforms that have heavy viewership. For example, ZEE has strength in television; Star network is TV + digital, and Hotstar is standing out alone. Or even a premium on Amazon Prime Video with over 25 million paid users.  The ZEE and Sony merger has its own strength playing in TV rights. It will be interesting to see how Reliance plays its card with its Viacom18 strength,” remarked Sachdeva.

While Sony, Disney, and Viacom18 are strong contenders for the TV rights, digital rights will see an addition of Amazon apart from the Big 3, said Sidharth Singh.

“All of them are armoured with deep pockets with the ambition to rule Indian markets and it totally depends upon who is going to go how far in the quest to claim the Holy Grail of ruling Indian consumer TV and mobile,” Singh concluded.

Media
@adgully

News in the domain of Advertising, Marketing, Media and Business of Entertainment