OTT content spending jumps 52% in ’23, led by sports rights
Over-the-top (OTT) content expenditure soared by 52% in 2023, driven by a more than twofold surge in sports rights values, which constituted about 51% of the ₹12,500 crore OTT content spending, according to the latest Ficci EY Media and Entertainment Report.
Moreover, while 24% of total OTT costs were allocated to acquiring film rights, only a quarter was spent on original content. However, streaming platforms saw minimal growth in total content hours, holding steady at 3,000 hours compared with the 2022 levels.
Sports rights, synonymous with high capital expenditure and limited monetization, are seasonal, with audiences spread thin across specific categories, players, and matches. In comparison, the cost of producing non-sport original content, such as shows and movies, are nominal.
Media and entertainment industry experts said streaming services must revamp their strategies, and invest in more compelling content slates before and after tournaments to stay relevant throughout the year.
“Sports is a category that comes with high input costs because of player fees, and expenses of holding the event,” said Sourjya Mohanty, chief operating officer, EPIC
ON, an OTT platform owned by IN10 Media Network.
“However, there are multiple challenges to it, considering that the audiences are sliced based on interest in particular categories, or when a specific name or state is playing, often resulting in pushback from advertisers,” he added.
“The cost of entertainment content is nothing compared with sports. While sports brings in large number of subscribers, it is seasonal, while other content is needed to drive profitability, which should be easy to do,” Uday Sodhi, senior partner, Kurate Digital Consulting, said.
The Disney-Reliance joint venture, too, should have enough leverage to drive entertainment value despite the guaranteed focus on sports, said experts.
“The competition to establish a foothold in the sports genre is clearly evident. Platforms in most cases have a clear strategy of being present or not. Content budgets are limited and investment in sports may leave a lesser pie to focus on original content or movie acquisitions,” said Chandrashekhar Mantha, partner, media and entertainment sector leader, Deloitte India.
“Where sports is momentary, original content and movies provide platforms with remarkable consistency in terms of viewership and longterm loyalty to subscriptions,” he added.
Subscriber turnover is also likely since tournaments are seasonal, and platforms and content creators must prioritize concepts for sustained value, Mohanty said. “In fact, the period (during major tournaments), is a time to rejig strategies.”
With the Reliance-Disney joint venture now going through, it is also likely that sports rights will rationalize as there are fewer players now.