IPL, THE STAR!
Santosh N, Managing Director, Duff & Phelps India says the months of April and May will stay demarcated as IPL territory, where nothing else sells… Not even Bollywood!
Last week’s Indian Premier League (IPL) broadcasting rights auction was keenly contested among some of the world’s top broadcasting houses. Star TV Network, which already owns some of the marquee properties such as English Premier League, Pro-Kabaddi League, Indian Soccer League, ICC events and matches played by the Indian cricket team within India, now holds the hottest of all those properties, the IPL, for the next five years. In our recently released report, ‘IPL: The Decade Edition - A concise report on brand values in the Indian Premier League’, we had predicted the broadcast rights to go for a minimum of $2.10 billion, whereas Star won it for a massive $2.55 billion with the consolidated bids of all other bidders around $2.47 billion. The numbers, though staggering, are not surprising. In our report, we had mentioned that the deal may follow the precedent set by some of the big-ticket broadcasting deals across the world such as EPL, NBA and Major League Baseball (MLB). These leagues have seen a consistent multi-fold growth in their broadcasting rights and IPL has now followed a similar trend.
The IPL has emerged as the premier sporting event in India with a global viewership and a fanfollowing unmatched by any other cricketing league. In just 10 years, the IPL has morphed into a media beast that could soon rival the decades old major sporting events across the world. In our analysis, we had estimated the IPL business value to be $5.3 billion, which will go up by 10% to 15% post the media auctions. We are now talking about a property worth nearly $6.0 billion! No one could have predicted that IPL would become such a huge hit when it was first conceptualized in 2007 and when the franchises were first awarded to a group of corporates, individuals and celebrities.
The continued unprecedented response from advertisers, broadcasters, sponsors, affiliates, partners and the viewing public year after year, has made the IPL the most keenly awaited event in the campaign calendar for advertisers and the most viewed sporting event for TV viewers in India.
As per BARC, IPL 10 had 1.25 billion impressions across the five Sony television channels broadcasting IPL (an increase of 22.5% over last year when 1.02
billion impressions were recorded). Of the 1.25
billion impressions, nearly 45% of the total viewership came from
rural India which is further evidence of IPL’s
IT WAS ALL OR NOTHING FOR STAR
It was very clear from Star’s auction strategy that it was all or nothing for them and that shows the massive confidence they have in this property. Star was also encouraged by the multi-fold growth in its OTT platform Hotstar’s viewer base, where nearly 27 million people viewed IPL on Hotstar in 2014, which jumped multifold to 130 million viewers in 2017. Also, Hotstar’s advertising revenues from IPL doubled from Rs 60 crore in IPL 9 to Rs 120 crore in IPL 10.
IPL & Hotstar were also hugely benefited by the cheaper and affordable access to Internet and mobile television due to the tug-of-war in India post Reliance Jio’s entry into the market.
This splurge in online streaming of IPL and the gaining momentum of OTT as a medium to watch sports online, was also one of the key reasons for companies to show willingness to acquire digital rights for streaming IPL. Star will be looking to leverage heavily on this model.
Star will also be encouraged to know that IPL 10 was a massive success commercially for Sony. As per BARC, IPL 10 had
1.25 billion impressions across the five Sony television channels broadcasting it (an increase of 22.5% over last year when 1.02 billion impressions were recorded). Of the 1.25 billion impressions, nearly 45% of the total viewership came from rural India which is further evidence of IPL’s pan-India reach. This increase is aligned with the change in demographics, TV ownership and connection type, to name a few factors.
Leveraging on the popularity of the 10th season, Sony Max (the official broadcaster of IPL) became the most-watched television channel across genres during the second week of the season. Star would have also considered that IPL was immune to demonetization where even with businesses suffering, Sony was able to increase their IPL advertising revenue from Rs 1,200 crore last year to Rs 1,300 crore for IPL 10. In fact, Sony’s IPL ad revenue has seen a steady growth from Rs 700 crore during IPL 7 to Rs 1,300 crore for IPL 10. Star, with virtual monopoly of all the marquee sporting assets in India, will be able to command a higher distribution fee from cable distributors now.
The way various sponsorship and media rights renewals have grown multi-fold over the 10 years of
IPL, has provided us with a glimpse of what to expect in the next 25 years. It will be safe to say that for the foreseeable future, the months of April and May will stay demarcated as IPL territory where nothing else sells. Not even Bollywood!