Disney Star India recently won the TV rights for Indian Premier League (IPL) (2021-27 cycle) at Rs 23,575 crore. The broadcaster had paid Rs 16,347.5 crore in 2017 for a combined bid for TV and digital rights for the 2018-22 cycle, which means they paid approximately 36% more this year.
So, if Disney Star has paid twice as much to secure the media rights, they must raise advertising rates in order to break even. Industry experts say ad rates for IPL are expected to double for the upcoming season. Notably, the ad rates for the previous season (IPL15) were around Rs 14.5 lakh per 10 seconds.
Another media buying head of a leading media agency explained that the broadcaster has paid approximately 20% more for television rights, which means they have to hike rates by 20-25%. “The price gradually rises over the five years, with an average increase of 20%. That doesn't mean they have to raise the price by 20% every year.”
About viewership, he stated that the drop in viewership of IPL 15 will most likely have an impact on the upcoming season's ad deals. “The broadcaster will need to come up with some innovative ideas to get more out of television." He is, however, confident that Disney Star India will succeed. "Don't forget that they had the IPL for five years and made it profitable. It will undoubtedly be difficult, but I am confident that they will break even."
"There is no choice but to raise ad rates now that the bidding price has skyrocketed," said the head of a media buying agency. "IPL is now equivalent to NFL in the US, which is the most expensive media buy that can happen, so it will also take that kind of stature," he added. As part of the launch and marketing strategy, advertisers will run campaigns around this type of event."
He went on to say that in the past, broadcasters would sell 60-65 percent of their inventory to lead sponsors and then sell the rest to casual advertisers (spot buy) at a huge premium. “Those people who thought they could do casual spot buy, will have to go away. The ROI will not justify itself in any case unless they are there for sure to build stature. Therefore, a lot of shifting will happen.”
He also mentioned that because the entry cost has increased, the broadcaster will have to rethink their sales strategy and will try to target the major advertisers. "The profit-making aspect from casual buyers will be undermined."
Disney Star India has secured TV rights for the Indian subcontinent, while Viacom18 has secured digital rights. Viacom18 has also secured media rights in Australia, South Africa, and the United Kingdom, while Times Internet has secured rights in the Middle East and the United States.
Other media experts believe that because the digital rights have been moved to a different party, the broadcaster may face difficulties. "Previously, they could package deals (combining TV and digital), but now that they don't have digital rights for IPL, they might face additional challenges."
A lot will also depend on Viacom18's plans for its digital platform around IPL. However, it significantly reduces the broadcaster's leverage, he added.
The bidding war for IPL has clearly indicated that digital is going to be the future, though TV is here to stay and one can not ignore the fact TV earns more revenue than digital when it comes to IPL. Experts noted that the pay-TV universe is diminishing in the country as people are moving towards digital. “The subscription revenue is also under pressure due to TRAI’s NTO 2.0. Having said that, in the last five years Star has taken IPL to every part of the country in different languages and I am sure they will be able to break even.”
