The bids were invited for seven categories- India television, India Digital, US, Europe, the Middle East, Africa and rest of the world. The surprising fact remains to be debated i.e. the difference between Star’s offer and all the individual bids for different categories was not much; it was just around `500 crore. So should we call Star lucky? Or should we say that Star understood the heft that it will get from online streaming?
Consolidated bid was the Masterstroke
Star India’s bid for the digital rights was the lowest at `1,443 crore, much behind Airtel’s bid of `3,280 crore, followed by Reliance Jio’s bid of `3,075.72 crore and Times Internet’s bid of `1,787.50 crore. Despite this, while Facebook and the others failed to get rights,BCCI awarded the media rights television and digital to the highest consolidated bidder. This was the reason why Star India won the digital rights.
Vivo, the Chinese smartphone maker, still owns the title sponsorship for IPL.
In 2008, Sony bought the media rights in `5000 crore (USD 1 billion) and it earned a revenue of `10, 000 crore from IPL matches in the rights period, a profit of `2500 crore. Then one may ask why it showed a lukewarm response this time; why did it not partner with digital giants such as Facebook and some other player (total bid price of Sony and FB was `14950 crore) to grab the deal? Is Sony now focusing more on Football and other non-cricketing sports? Did it fail to understand the revenue gathering strength on digital medium?
New Media is the future
Nonetheless, Star India knows the tremendous potential of OTT and its OTT vertical Hotstar offering a no time loss seamless match watching experience will add almost equal to the overall revenue generation from advertisements.
Emergence of Star is good or bad will be known fully in near future, but the dynamics of the media markets are fast changing in the country. Experts had already declared that the Indian television broadcast rights were going to fetch the highest bid, but it is the digital rights which saw the highest potential. Let’s have a brief look at what happened on that eventful day.
Sony and Star India are the only two for India TV broadcast rights but they were also eligible to bid for all other rights. Airtel, Reliance Jio, Times internet, Facebook had bid for digital rights. This time the BCCI allowed a global bid, which would only win if it is higher than the sum of all highest individual bids.
Streaming Video is In
We must mention the interest of social media giant Facebook which has been upfront about its intent to disrupt the sport-streaming industry.
According to Dan Reed, the company’s head of global sports partnership, “Sports are inherently social, with the power to build and connect communities around the world. This aligns closely with our mission, and we feel Facebook is a natural home for sports content, including live games.”
Out of 24 interested parties that picked up the tender document for the media rights of the Indian Premier League, 14 have submitted bids.
The list of bidders for digital rights also included big players such Reliance Jio Digital, Times Internet, Facebook, Airtel, IN Sport, SuperSport Interactive, Yupp TV, Econet Media Group, DAZN (Perform Group), FollowOn Interactive, OSN (Gulf DTH) and BAM Tech. While e-commerce giant Amazon and Twitter were absent, as well as Discovery, Yahoo and ESPN Digital.
Although Facebook had lost the auction, it shows how serious a growth market India is for the social media giant. Facebook’s bid of `3,900 crore was the highest for the digital-only rights of the IPL for the next five years. Airtel and Reliance Jio, who bid for the India digital rights, bet lower at ` 3,280 crore and ` 3,075.72 crore respectively.
The social media giant was willing to pay ` 780 crore per IPL season, almost what Sony was paying (` 820 crore on average) for the television rights in the earlier cycle. What could be more worrying for television broadcasters is that Facebook could have a video content plan as part of its growth strategy in the US and other parts of the world including India. The IPL is the first occasion when Facebook has been trying to get its hands on first-tier sports content.
The IPL is the most coveted property in India broadcast industry, and is the biggest advertising properties in India on television as well as digital. If Facebook had won the digital rights, it would have increased ad rates many times.
James Murdoch hopeful of windfall in revenue:
According to Century Fox CEO James Murdoch, Star India is on track to meet its EBITDA target of $500 million by 2018 and $1 billion by 2020 notwithstanding the fact that the rights for the lucrative Indian Premier League (IPL) have come up for grabs. For the new cycle of IPL rights after the 2017 edition, the TV telecast fee is expected to climb big heights.
Junior Murdoch said that awarding IPL rights has been delayed, but he added that the India sports business had grown in breadth with India cricket rights being complemented well by emerging local leagues like Pro Kabaddi and the Indian Super League.
Murdoch also said that Star India’s advertising revenues had returned to double-digit growth year-over-year on a constant currency basis. Hotstar, he said, continued to see exceptional growth with average watch time doubling during June–October.
We will offer complete experience with TV & digital rights: Uday Shankar
Speaking on whether IPL rights gives Star more heft while negotiating with pay TV platforms, Uday Shankar, Chairman & CEO, Star India, said, “Pay TV revenues are highly regulated and whoever wants to earn pay TV revenues have to operate in that framework and we will continue to do the same.”
He also spoke on the difference between the consolidated bid and the individual bid for each category. He said: “It is also a matter of how each company evaluates each segment of the rights. Our view was that we will be able to create a complete experience for cricket fans if we had TV and digital both. And that is why we felt that we were going to make an attempt to get TV and digital both. Otherwise, we have lived without IPL and we were happy to live without the IPL.”
On OTT, he said: “You should see the number of people who bid for digital rights and the number of people who took interest by buying the tender document. So, that should tell you the story. I think it can become a lot more exciting depending on how the data prices behave and how the availability and access to broadband and Wi-Fi continues to grow in this country. But if that happens, it will be one of the world’s most exciting digital markets.”