Digital was the show stealer in IPL’s blockbuster media rights auction that made India's T20 league, the world’s second richest sporting event. BCCI hit the jackpot after the three-day drama-filled battle ended and stands to net Rs 48,390.5 crore over the next five years.
While Disney Star retained the TV rights for the subcontinent, bagging it for Rs 23,575 crore, it was the digital rights that made everybody’s eyes pop with Viacom18 going all out to secure it for Rs 23,758 crore. Viacom18 not only got the exclusive rights for the subcontinent but also got the digital and TV rights for Australia +New Zealand, the UK and South Africa.
Analysts feel that the high premium that the digital rights got, and the fact that for the first time the TV and online rights got split, will be a big game-changer for the league.
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If IPL 15 got bad press for the reported drop in viewership (some estimates suggested a 30 per cent drop in TV viewership), Reliance's aggressive entry into the digital broadcasting platform augurs a spike in eyeballs for the game – albeit through a different channel. Earlier this year Reliance Industries and Viacom18 had inked a strategic partnership with Bodhi Tree Systems, a platform of James Murdoch's Lupa Systems and veteran media industry executive Uday Shankar.
Also, more money in the hands of franchises could mean they open up their purse strings to buy star players from abroad, thereby fuelling more interest in the league. Part of the reason for the falling viewership this year was blamed on lack of star appeal and too many fading players in the franchises.
As Vinit Karnik, Head – Sports, Esports and Entertainment, GroupM South Asia believes that digital rights has definitely unlocked great value for the league. "As a strategy, Viacom very clearly went after the digital rights. I believe they will have a game changing proposition when it comes to monetising these digital media rights and will add multiple layers and platforms to its monetisation strategy,” he said.
Sources close to Viacom18 corroborated this thought, describing how the company, without the baggage of TV, can actually do far better than Hotstar ever managed with digital rights, even though it got close to 50 million subscribers. But the Reliance-backed Viacom 18 network could get multiple times the subscriber numbers, piggybacking on the Jio network and through innovative programming. The smartphone user base is over 500 million in India and Viacom18 is banking on it reaching 700 million soon. And there is no end of possibilities given the reach of its various digital initiatives.
As Karnik says, “Viacom has a huge headroom for growth from the Voot ( its OTT platform) perspective. I also believe they will leverage on the telecom aspect with the Jio subscriber-base and may in the future add commerce through Jio Mart. I therefore believe Viacom will change the game by some radical thinking and take IPL to the nook and corner of India."
Significantly, it’s the astute Uday Shankar, the man responsible for Star managing to get the rights away from Sony and Hotstar’s success, who is spearheading Viacom 18’s IPL monetisation strategy. So one may be sure, there’s already a big strategy in place.
Karan Taurani, senior vice president at Elara Capital also feels that unbundling of rights will give an upper hand to the digital rights holder. He feels some verticals like fintech, commerce, ed-tech and EV will shift advertising to digital. “Digital has a potential to generate a gross margin of 24 per cent in the fifth year helped by strong growth prospects, as compared to TV, whose gross margins will peak at 13 per cent,” he noted.
Windfall for franchises
Analysts say the steep rise in media rights' revenues will also mean a windfall for the IPL franchises. IPL teams receive 50 per cent share of the media rights' revenues and central sponsorships, what is called the central revenue pool.
As per Elara Capital estimates, IPL teams' FY 24 estimated revenues is expected to move up nearly 2.2 times on an average of about Rs 650 crore-Rs 800 crore due to surge in media rights' revenues and increased number of matches.
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A report by Kotak Institutional Equities, too expects IPL franchise's revenues to surge to Rs 625 crore-Rs 700 crore (including local sponorships and gate fees).The value per game is in the range of Rs 118.02 crore.
A euphoric Jake Lush McCrum, Chief Executive Officer, Rajasthan Royals said, "The IPL has become the 2nd most valuable league in the world on a per game basis and the fact that its digital rights have fetched more than broadcast is a shift that is ahead of its time.”
Padding up for growth
"What is most exciting about the growth in the value of these rights is the ability it provides to invest back into the game, especially at the grassroots level,” said Lush, adding how the extra funds will allow the Royals to scale its mission of transforming society through cricket. “This will scale through our foundation focused on enabling empowered women, or our academies in India around the world, or our investment in sports education, or the support we provide ex IPL players, or our efforts in launching tournaments for female cricketers,” he said.
Business strategist and keen IPL follower, Lloyd Mathias feels that the whopping bids totalling nearly $6 billion for the media rights is great news for the ten franchises, whose share of revenue will go up in a big way. “This will mean the franchisees will be able to invest more into grassroots talent spotting, and also shore up their merchandising and allied monetization, which has been suboptimal so far, for most franchisees,” he says.
He points out that this is good news for cricketers down the value chain too. “ The BCCI announced a 100 per cent increase in the monthly pension for former cricketers. IPL’s growing economic clout bodes well for cricket in India in general, and can only get more young people interested in the game,” he adds.
Brand consultant Giraj Sharma, and founder of Behind the Moon, says “The money could mean better training facilities and for all you know it could translate into ground ownership ... With franchisees either owning or co-owning grounds as is the case with football leagues. One is also hopeful that some money will get ploughed into creating cricket academies and nurseries for harnessing local talent.”
Though the franchises' revenues go up, it's unlikely that the IPL players will benefit as there is a cap on players fee put by BCCI. However, expectations are that the cap may be raised slightly.
Finally, as Mustafa Ghouse, CEO of JSW Sports, which co-owns Delhi Capitals, sums up, “ Two behemoths in the IPL and the digital space have collided to create something that changes the way sport is consumed in the country. In a matter of three days, the IPL is second only to the NFL when it comes to per-game valuation, and what this does is, it gets the big hitters in global sport to sit up and take notice. This is a game changer."