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Storyboard18 | Why are all the internet giants vying for IPL rights?

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The big Internet companies are all vying for the digital media rights of IPL, which is up for grabs next month. Experts say the winner would hit a jackpot in terms of advertising revenue and subscription-base expansion

Storyboard18 | Why are all the internet giants vying for IPL rights?
The tender for the next cycle of media rights for the cash-rich T20 tournament, the Indian Premier League, is expected to be floated soon and most internet giants have their eyes on it. The likes of Facebook, Jio, Amazon Prime and many others are fighting for the prized ad revenue and subscription base gains that IPL promises.
Media industry executives indicate that the value of the digital rights could be estimated at least Rs 35,000 crore for five years and can even touch Rs 40,000 crore. But the bidders are ready to loosen their purse strings generously for the IPL.
“This is a great opportunity for Facebook and other publishers. They must be looking at it from the perspective of expanding the base, as the penetration of IPL is across markets and regions," says Sujata Dwibedy, group trading director, Amplifi India, dentsu.
Secondly, she explained, "Since it is appealing to masses, they will be able to gather more subscriptions from larger audiences, which means an increase in both length and breadth of demographics and markets. Most importantly, it is a lucrative opportunity in terms of ad revenues."
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When Star India led by then CEO Uday Shankar won the global media rights of IPL in 2017 that included both television and digital after putting in a bid of more than Rs 1,6000 crore, most thought the network had overreached. Little did anybody realize the astronomic gains Star would make out of the rights over the last five years.
While gaining ad revenues on TV was a given, the real surprise came in from Disney+ Hotstar that saw a huge addition of subscriptions specially during IPL every year since 2017.
In 2020, the platform saw an addition of approximately 7.5 million subscribers. The platform had around 16-17 million subscribers already and witnessed an increase to about 24-25 million by the end of the league.
“This year too, we believe that the platform saw a similar growth in the number of new subscribers, the same must have reached 28-30 million,” Dwibedy tells Storyboard18.
“Since Cricket is the most eventful entertainment for Indians, Disney+ Hotstar has been getting a huge advantage over all others. They have had the opportunity to monetize the base inventory and all assets across Cricket. IPL is more of entertainment and tends to add a minimum of 10-15 percent growth in revenue per season, which is excellent given that the base is also huge,” she adds.
As per industry estimates, the overall advertising revenue of Disney+ Hotstar is estimated to be around Rs 800-900 crore out of which 50 percent comes from IPL.
Considering it is the best of both worlds, subscription as well as ad revenues, the digital rights for the tournament is lucrative for all the digital partners and not only independent players like Facebook, Netflix, Amazon, but also other OTTs from the larger broadcast networks which have not been able to reach similar levels otherwise.
According to experts, IPL doesn’t only open advertising options for OTT players but is also a good platform to lure valuable consumers to broaden the base to serve non-cricket content in the future.
The possibilities are endless and Disney+ Hotstar has shown how to play the game, says Rammohan Sundaram, country head & managing partner – Integrated Media, DDB Mudra Group.
The addition of two new teams only enhances the value proposition of the league.
“IPL is red hot with ten teams in 2022 and whoever bags the rights will definitely hit a jackpot. 85 percent of the money should get recovered through advertising and subscription and rest should be perceived as brand building efforts for building a loyal base of consumers who would return to the app even after IPL,” Sundaram says.
Thanks to the growing internet penetration in the country, in the last year and a half, all SVOD (subscription video on-demand) saw an increase in their paid subscriber base by 30-40 percent because of high adoption of streaming making IPL the perfect package to cash on not just for the internet giants but also newbies with deep pockets.
“Different tech and OTT platforms which are in the growth phase can capitalise on this power to generate massive incremental reach (either app downloads or customer registrations) as well as subscription income. Advertising income will also be significant, given the expected growth in lower cost smartphones from Airtel and Jio and continued affordability of data plans,” says Ashish Pherwani, partner and media and entertainment leader, EY India.
Pherwani also expects telcos and digital non-media companies to be interested in the IPL digital rights.
But the digital rights owners would not be only gainers, explains Sundaram: “In a crowded environment, SOV becomes key and therefore any top sponsorship automatically gets requisite mileage and reach, but a smart planner can still match SOV without being a top sponsor by buying specific properties such as Sixes and Fours package.”
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