IPL Media Rights: The BCCI auction may open doors for greater viewership

New Delhi, June 17

Digital was the thief of the show in the IPL advertising rights auction, which made the Indian T20 league the second richest sporting event in the world. BCCI won the jackpot at the end of a three-day drama-filled battle and netted ₹ 48,390.5 kroner over the next five years.

While Disney Star retained the television rights to the subcontinent at 23,575 kroner, it was digital rights that made everyone’s eyes stand out, with Viacom 18 doing its best to secure it for 23,758 kroner. Viacom 18 not only received exclusive rights to the subcontinent, but also digital and television rights to Australia + New Zealand, the United Kingdom and South Africa.

Change the game

Analysts believe that the high premium that digital rights receive and the fact that television and online rights are splitting for the first time will be a major change in the league game.

If IPL 15 gets bad press for the reported decline in viewership (some estimates suggest a 30 percent drop in television viewership), Reliance’s aggressive entry into the digital broadcasting platform portends a leap in the game’s eyes – albeit through a different channel. Earlier this year, Reliance Industries and Viacom18 signed a strategic partnership with Bodhi Tree Systems, James Murdoch’s Lupa Systems platform and veteran Media Industry CEO Uday Shankar.

In addition, more money in the hands of franchisees may mean that they open their wallets to buy star players from abroad, thus fueling more interest in the league. Part of the reason for this year’s declining ratings was the lack of stellar appeal and too many fading players in the franchise.

Like Vinit Karnik, Head of Sports, Sports and Entertainment, GroupM South Asia believes that digital rights have definitely unlocked great value for the league. “As a strategy, Viacom has very clearly focused on digital rights. “I believe they will have a proposal to change the game when it comes to monetizing these digital media rights and will add many layers and platforms to their revenue strategy,” he said.

Sources close to Viacom18 confirmed this idea, describing how the company, without the baggage of television, can actually do much better than Hotstar has ever managed with digital rights, despite having nearly 50 million subscribers. But the Viacom 18 network supported by Reliance can reach many times more subscribers by connecting to the Jio network and through innovative programming. The consumer base of smartphones is over 500 million in India and Viacom18 is counting on it to reach 700 million soon. And there is no end to the possibilities, given the scope of the various digital initiatives.

As Carnic says, “Viacom has a huge growth potential from Voot ( its OTT platform) perspective. I also believe that they will take advantage of the telecommunications aspect with Jio’s subscriber base and may add Jio Mart trading in the future. That is why I believe that Viacom will change the game through some radical thinking and take the IPL to the corner of India.

Significantly, the shrewd Uday Shankar, the man responsible for taking away the rights from the success of Sony and Hotstar, is the head of Viacom’s IPL 18 revenue strategy. So you can be sure that there is a great strategy in place.

Karan Taurani, senior vice president of Elara Capital, also believes that the division of rights will give the digital rights holder an advantage. He believes that some verticals such as fintech, trade, ed-tech and EV will shift advertising to digital. “Digital has the potential to generate a 24 percent gross margin in the fifth year, fueled by strong growth prospects, compared to television, whose gross margin will peak at 13 percent,” he said.

Contingency gains for franchisees

Analysts say the sharp rise in media rights revenue will also mean unexpected revenue for IPL franchises. IPL teams receive a 50% share of media rights revenue and central sponsorship, which is called a central revenue fund.

According to Elara Capital estimates, the expected revenue of IPL teams for the 24th fiscal year is expected to increase almost 2.2 times to an average of around Rs 650 – Rs 800 – due to increased media rights revenues and increased number of matches.

A report by Kotak Institutional Equities also expects revenue from the IPL franchise to rise to ₹ 625 crore- ₹ 700 crore (including local sponsorships and entrance fees). The value of the game is in the range of ₹ 118.02 crores.

In a euphoria, Jake Lush McCram, chief executive of Rajasthan Royals, said: “The IPL has become the world’s second most valuable league based on gaming, and the fact that its digital rights have earned more than it is broadcasting is a change that lies ahead. its time. ”

Lining for growth

“What is most exciting about increasing the value of these rights is the opportunity it provides to invest back in the game, especially on a massive scale,” Lush said, adding that the additional funds would allow royal members to expand their mission. of transforming society through cricket. “This will be expanded through our foundation focused on empowering women, or our academies in India around the world, or our investment in sports education, or the support we provide to former IPL players, or our efforts to launch tournaments. for cricket women, ”he said.

Lloyd Matthias, a business strategist and avid follower of IPL, said the huge nearly $ 6 billion media offerings were great news for the ten franchises, whose revenue share will grow significantly. “This will mean that franchisees will be able to invest more in discovering mass talent, as well as strengthen their merchandising and related monetization, which has so far been suboptimal for most franchisees,” he said.

He points out that this is also good news for cricketers down the value chain. The BCCI has announced a 100 percent increase in the monthly pension of former cricketers. “The growing economic influence of IPL portends good for cricket in India as a whole and can only make more young people interested in the game,” he added.

Brand consultant Giraj Sharma and founder of Behind the Moon says: “The money could mean better training facilities and everything you know could become the property of franchisees who own or co-own land, as well as is the case with football leagues. One also hopes that some money will be invested in setting up cricket academies and kindergartens to harness local talent.

Although franchise revenues are increasing, IPL players are unlikely to benefit as there is a limit to the player fee set by the BCCI. However, the ceiling is expected to be slightly raised.

Finally, as Mustafa Ghaus, CEO of JSW Sports, co-owner of Delhi Capitals, summed up: “Two giants in IPL and the digital space have clashed to create something that changes the way sport is consumed in the country. . In just three days, the IPL is second only to the NFL when it comes to scoring a match, and that is what makes the big strikers in world sport sit down and pay attention. That changes the game. ”

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June 17, 2022

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