IPL media rights done, experts see stiff competition within TV & digital for ad budgets

There is excitement in the air over the dizzying numbers of the IPL media rights for the 2023-27 seasons. The market is abuzz with the mammoth value of the media rights and what it means for various stakeholders.

While Viacom18 bagged the digital rights for the IPL, Disney Star retained the TV rights. Mukesh Ambani-owned Viacom18, flush with cash from the recent fund infusion by James Murdoch-Uday Shankar duo, grabbed the digital rights for Rs 23,758 crore.

The overseas market was shared by Times Internet and Viacom18. Viacom18 won Australia, South Africa, and the UK. Times Internet bagged the rights for Middle East, North Africa and the US.

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“We made disciplined bids with a focus on long-term value. We chose not to proceed with the digital rights given the price required to secure that package. IPL is an important component of our portfolio of television channels in India, providing an incredible opportunity for us to showcase The Walt Disney Company’s powerful global brands and iconic storytelling, as well as Disney Star’s impressive collection of local original content, to millions of viewers in India,” said Rebecca Campbell, Chairman, International Content and Operations, The Walt Disney Company.

Campbell further said that Disney will be exploring other multiplatform cricket rights, including future rights for International Cricket Council (ICC) and BCCI, which it currently holds through the 2023 and 2024 seasons, respectively. “Additionally, we hold Pro Kabaddi League rights, Indian Super League football rights, as well as various international sports rights, including the Wimbledon Championships and the English Premier League. At the same time, we are focused on growing our robust slate of original entertainment content for Disney+ Hotstar and our television channels in the region,” she added.

“ZEE would like to congratulate the Board of Control for Cricket in India (BCCI) for running an extremely efficient and transparent e-auction process. We are grateful to the BCCI, President, Sourav Ganguly, Jay Shah and Treasurer, Arun Dhumal; for their able leadership and unwavering support in enabling ZEE’s participation in the IPL media rights tender process. At ZEE, we evaluate all business decisions through the prism of value creation for all our stakeholders and we will continue to evaluate every sports property with the same prism,” said Rahul Johri, President, Business - ZEE Entertainment Enterprises Ltd, in a statement issued.

Hype justified

Industry observers feel that the hype created thus far has been justified.

One needs to understand that with any asset of this size and scale, the biggest challenge is to establish the right value with a level playing field for all the bidders, said Medi Buddy CMO Ashish Bajaj.

“It is historically proven that when market dynamics are at play and when you have a scenario where all entities are bidding for the rights, which are evenly matched; there is bound to be fierce bidding which does take its own time, and only then does one eventually arrive at a fair price. To know that rights are being sold close to the expected 40k-crore-mark is exciting enough. This means the industry was ready and all the hype created was justified.  IPL is a credible entity with a proven track record, the biggest and most trusted IP; the results via e-auction clearly seem to be a reflection of that. For marketers, this is a safe property, with the highest reach, engagement, and ROI,” Bajaj added.

Will it be financially feasible for the stakeholders and advertisers given the insane value of IPL media rights? 

“First and foremost, it’s a proud moment for us as Indians that IPL as a global sporting property is second to none. We feel that IPL is only warming up and its true potential is yet to be reached. Of course, it will crank up the prices for advertisers and marketing spends will have to be realigned accordingly, as clearly the reach has to go up. However, we don’t see that as a hindrance at all. Marketers do realise the importance of IPL and its enormous reach, and we are sure it will deliver on its numbers as it has always done. I reckon we will see the same level of interest from advertisers come to the next edition of IPL,” says Bajaj.

According to industry expert Gaurav Nijhawan, the approach of breaking down of media rights for IPL 2023-27 into various packages (A-D) will fetch up to $6 billion revenue for the cricket board. “The categorisation of packages into regions, TV, and digital rights will also help broadcasters customise their shows suited to such platforms and markets,” he added.

He further pointed out that IPL’s reach and credibility is definitely attractive and has revenue streams much beyond traditional formats of TV ads.

“It is definitely the ‘Super Bowl’ of India even after the high price point, and it will continue to be a sure shot way of getting maximum eyeballs. The only other cricket events that come close to this extravaganza are World Cup or big India matches. Given various ways of being associated with the brand like jersey branding, digital rights, team associations, etc. it will continue to attract advertisers. Now it will also be a competition among the broadcasters to offer a full spectrum of entertainment to viewers to grab attention with this break down of media rights and a test on how they will tweak their offering across regions and channels they’ve won rights for,” Nijhawan added.

Digital to have the upper hand

According to Karan Taurani, Senior Vice President, Elara Capital, in terms of advertising verticals, key segments like e-commerce, FMCG, auto and banking dominate the overall ad pie across TV and digital (~60% of the ad pie). “However, in case of IPL rights being sold separately, we expect stiff competition within the TV and digital platforms for advertising budgets. We expect some verticals like fintech, commerce, ed-tech and EV to see a rapid shift towards digital, whereas FMCG and auto will continue to rely heavily on TV for their mass campaigns. In terms of break even, we estimate TV medium to attain profitability in the second year itself, as premiums were limited on the same over the base price; for the digital segment, the break-even is estimated to be in the fourth year, due to a hefty content cost, propelled by sharp premiums on package B and C of the media rights. However, digital has a potential to generate a gross margin of 24% in the fifth year helped by strong growth prospects, as compared to TV, whose gross margins will peak at 13%,” Taurani opined.

At the same time, there are skeptics who feel that advertisers won’t be so keen to cough up so much.

An industry expert on condition of anonymity, noted, “Rs 52 crore per match on TV and approximately 2,000 seconds per match on live, it’s approximately 26L/10 secs for break even. Likewise Rs 48 crore for digital – it loosely translates to Rs 12-Rs 14 lakh per insert (not talking about impressions). Next IPL might see lots of fin-tech only. Conventional advertisers might find it out of bounds (May consider some spot buys at best). Simple maths associate @90secs per match @26L/spot will be 2.4 crore per match x 78 matches 180 CR+ almost 3.5X of current ticket size. How many advertisers do we know with that appetite – especially with the current IPL ratings being almost 30% down?”