Tuesday, Sep 27, 2022

IPL Media Rights: 5G Will Change Live Viewership Choice, TV Broadcasters Will Feel The Heat

Digital is in a win-win position as live sports broadcasting looks to ride greater bandwidth and mobility in the 2023-2027 IPL cycle.

IPL’s per-match valuation will only be next to the NFL but ahead of English Premier League.
IPL’s per-match valuation will only be next to the NFL but ahead of English Premier League. Photo: IPL

By the time the Board of Control for Cricket in India made the official announcement of the winners of IPL Media Rights on the evening of June 14, it felt like a keenly contested 3-day Test match. As expected, the domestic television and digital rights, saw intense bids with Disney-Star India and Viacom emerging as the big winners. (More Cricket News)

INR 107.5 Crores per match just for the domestic rights is unheard of, let alone in cricket but even some of the bigger football leagues in Europe struggle to monetise their sporting property the way BCCI has monetised Indian Premier League.

On an overall basis, BCCI will earn approximately INR 118.0 crores per live IPL match. The newest among the most recognised global leagues has moved to the top of the money-spinning charts in less than a decade and half, while other leagues which have been operational for decades are struggling to come close to IPL!

IPL is only second to the NFL and ahead of the hugely popular football/soccer leagues of Europe and the likes of NBA, MLB, etc., in terms of the live per match earnings from broadcasting rights.

Broadcast rights per match, in USD millions.
Figures: Broadcast rights per match, in USD millions.

In some of the earlier media interactions, we had estimated the rights value to double from what Star India paid for the 2017-2022 cycle and the current bids have exceeded those expectations. BCCI and the IPL team owners by way of the revenue sharing arrangement between BCCI and the franchisees, are the big earners of this deal.

Bigger central pool

With BCCI earning approximately INR 48,390 crores for next five years from the media rights and with 50% of that revenue being shared among the IPL franchises, each team will look to earn approximately INR 450 to INR 500 crores each year from the central pool, just from the media rights alone!

Plus, they will earn more from other components of central pool revenue and their own team sponsorships. Players will also stand to gain from the additional revenue inflow to teams. Auction purse will increase in the future and the players will earn more.

More money to IPL ecosystem means fatter salaries for players.
More money to IPL ecosystem means fatter salaries for players. Photo: IPL

If we analyse the winning bids, it will be interesting to see how both Disney-Star and Viacom will look to monetise these rights. This time, advertisers will have an option of advertising on either or both the platforms. Ideally both Star and Viacom would have liked to have won the consolidated bid (TV plus Digital), as then they would have been in a better position to negotiate with their advertising partners.

Leveraging OTT platforms

Historically, advertising has contributed to major chunk of a broadcaster’s revenue for television while subscription revenue has been the major contributor for OTT platforms. Star India was a major beneficiary of winning the consolidated bid last time around as it helped its OTT platform, Disney+ Hotstar to propel into India’s number one OTT platform in a short span.

India is undergoing a digital revolution with Government of India Cabinet clearing the 5G spectrum auction in the near future. 5G network is expected to be 10 times faster than the current 4G network and the way we consume digital OTT content will change forever.

Viewers are also moving away from consuming content on traditional television networks and are watching content on OTT platforms on their smart TVs, tablets and mobile phones, which is more feasible due to the cheaper cost of internet and annual OTT subscriptions and that might be one of the reasons why IPL digital rights were more keenly contested than the TV rights.

Voot’s hot-star moment

The base price of digital rights (Package B) was set at INR 33 crores and it was eventually sold for INR 50 crores per game and that’s a massive 52% more than the base price! This can be Voot’s (Viacom’s OTT platform) hot-star moment. Just like how IPL 2017 rights changed the dynamics for Hotstar, this can change the fortune for Voot.

Domestic TV rights also were sold at a mark-up of approximately 17% over its base price. Though it might not look as substantial as the digital rights, it is still remarkable especially given the concerns of the falling viewership during the IPL 2022.

If IPL captures the imagination of Americans, then more monies will flow in.
If IPL captures the imagination of Americans, then more monies will flow in. Photo: IPL

Changing TRAI regulations under New Tariff Order which can be a disadvantage in terms of long-term subscription under the bundle of channels that subscribers were used to, competition from OTT and multiple avenues of advertising for consumer products, will have longer term impact on TV broadcasting.

Fall in DTH

As per data from TRAI, there has been a drop of almost one million active pay subscribers of DTH in the September quarter of 2021. Given these factors, it would be interesting to see how TV broadcaster will make the additional revenue compared to last year.

Disney-Star, though has lost out on the IPL digital rights, they still have enough sporting content when compared to their competitors. They continue to hold India cricket, ICC, English Premier League, ISL and Pro Kabaddi League rights and these will help them overcome the IPL digital rights loss.

A new era of sports broadcasting has started in India and IPL will only grow bigger and bigger. It should not come in as a surprise if the next cycle of IPL broadcast rights brings in even more money for BCCI.

Afterall, what we saw this time was only for domestic India broadcast rights and there are still global IPL rights which were won by Viacom and Times Internet, which are relatively untapped and will only increase once the IPL craze hits the North American and Europe markets, hopefully before the next renewal!

(Harsh Talikoti is a sports valuation expert and advises companies and sports teams with their valuation needs. Views are personal)


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