Digital space drives IPL 2023-27 media rights to record price

Express News Service

CHENNAI: Ever since it came into existence in 2008, the Indian Premier League (IPL) has been a cash-cow for the Board of Control for Cricket in India (BCCI). And as the e-auction for the IPL media rights for the next five year cycle went into Tuesday, the Brand IPL has once again established itself as a money-spinner across all sports around the world.

The Package A, which is for television rights, has been sold for Rs 23,575 crore (Rs 57.5 crore per game) and the Package B for digital rights has been grabbed for Rs 20,500 (Rs 50 crore per game), taking the combined tally to a humongous Rs 44,075 crore. With the bidding for Package C (non-exclusive digital content) and Package D underway, the BCCI has overall earned more than Rs 46,000 crore, which is almost two-and-a-half times more than the previous package. For the 2018-22 period, Disney Star paid Rs 16,347.5 crore.

While the BCCI is yet to announce the winner for each package, it is understood that Package A and B have gone to different parties. According to reliable sources, Sony and Disney Star were in for a strong battle for Package A with the former believed to be more aggressive. A newcomer is believed to have won the race in the digital category.

Set at a base price of Rs 49 crore per game, while the television package remained the expensive one at Rs 58 crore per match, it is the digital space which has taken giant steps in terms of growth. In the previous media rights auction held in 2017, the highest bid the BCCI received for digital rights was from Facebook, which had valued it at Rs 3,900 crore. However, this time it touched a whopping Rs 20,500 crore thanks to the stiff competition. With Package C also witnessing heavy competition, the overall value of Package B & C, which are only for digital, could match or even cross the televisions per match value.

Analysts attributed the fact that digital space gives them an opportunity to grow as the main reason why there has been a steady increase in the value.

“When it comes to digital, there are quite a lot of OTT players who are looking for content. It was expected that Package B will have more suitors. But from a number perspective, from dollar/rupee per match perspective, I still had belief that linear (television) will be bigger in this cycle. Beyond 2027, digital could be bigger because linear would have died by then as it is not growing,” Santosh N, managing partner, D and P Advisory said.

In the last five years, Hotstar showed that Brand IPL will help in positioning itself among the leading OTT platforms in India. According to recent reports, in the months January-March Disney+ had nearly 8 million subscribers, with nearly half of it being from Disney+ Hotstar, which benefited from the IPL season. That other OTT platforms, which are far behind Hotstar, are punting on the IPL for similar purposes isn’t surprising and highlights the intense competition for Package B, which witnessed the maximum increase.

“The ability to make investments and buy content is more in digital space than in linear space. It is more like a new-age tech company. Most of the start-ups today focus more on growth than profitability. If you draw the same analogy and perspective here, an OTT platform is willing to add subscribers today and get content. Even if it is at the cost of profitability, they will be making that investment. From that perspective, maybe yes, it is slightly overpaid, but they are looking at adding content and subscribers” Santosh said.

In the next five year cycle, the one who has won the television rights will be paying the BCCI Rs 4,715 crore per annum and the digital rights winner will be paying `4,100 crore per annum. With two different parties in play for television and digital, the question on everyone’s lips is will both the parties be able to take the returns.

“I doubt it,” Santosh, who has studied the brand IPL since its inception, said.

“We are talking about a huge sum. Let’s assume one party has all the rights, and they are paying Rs 8.5000-9000 crore to the BCCI per annum. Going by 2021-22 numbers, ad revenue won’t be more than Rs 3,500 crore per season. Even if we include subscription revenue, even in the best of the cases somebody will be able to make Rs 4-5000 crore per season. There is bound to be a huge gap. Individually they will be making losses. That was expected. It will be surprising if they actually get the returns,” Santosh added.

In a country like India where linear broadcasting (television) still continues to enjoy a majority market space, other than the fans, the general audiences haven’t warmed-up to watch live sports solely on OTT platforms.

With the OTT viewership considerably less than that of television, and ad revenues nowhere close to comparison, a separate broadcaster for digital may find it even more challenging to make the returns. But that hasn’t stopped a different entity from going big for digital rights separately as OTT platforms can always use the IPL to sell other contents.

“Most of the start-ups are bleeding and they continue in the hope that they will become bigger and will get better valuation and make money in the future. This is an opportunity for any OTT platform to actually make numbers. Amazon, Netflix and Hotstar were the top OTT platforms in India. Sony LIV, Zee5, Voot are significantly behind. This will give an opportunity to get to where the top platforms are in four-five year time. Once you get subscribers, your ability to invest in content improves. Your experience of using the interface, the quality of the app, and technology improves because you have the intent to invest. It is not new in this type of business,” Santosh said.