After having a five-year run as an exclusive media rights owner for the Indian Premier League (IPL), Disney Star India will have to remain content with airing the tournament’s matches on its sports channels as Viacom18 has wrested the digital rights for the next five years (2023-27).

Experts feel that the split in TV and digital rights of the IPL for the Indian sub-continent has major ramifications on how the two parties go about monetising the property in the next cycle. Not only have the media rights got split between two players, but the digital rights value of IPL has also overtaken that of TV.

That said, IPL has an established advertising revenue stream on TV which is also the go-to medium for brand building. It also adds to the distribution muscle of the broadcast rights holder. Disney Star will look to build on its successful monetisation strategy for TV while Viacom18 will be banking heavily on the enviable reach of Jio.

If estimates provided by industry sources are to be believed, the ad revenue earned by Star Sports from IPL has almost doubled from Rs 1800 crore in 2018 to reach a high of Rs 3500 crore in 2022. In contrast, Disney+ Hotstar’s ad revenue from IPL jumped from Rs 300 crore in 2018 to an estimated Rs 800-1,000 crore in 2022. This implies an ad revenue growth of 2.5 to 3 times albeit on a lower base.

Disney Star vs Viacom18: Who will win the monetisation game?

Kurate Digital Consulting Senior Partner Uday Sodhi believes that the going will be tough for TV compared to digital. “It's possible that the split will create challenges for media agencies and brands. Over the last few years, we have seen that Hotstar and Star Sports were selling ad spots separately. While some advertisers are common, many advertisers are unique to either medium. TV will suffer more on monetization over a 4-5 year period,” he stated.

While concurring with Sodhi, ITW Consulting MD Bhairav Shanth said both entities may define Return on Investment (ROI) differently. He also feels that the fight for eyeballs and revenue between Disney Star and Viacom18 for IPL augurs well for consumers.

“Star may be looking to maximise profitability, and even at the price they paid, they have the sales network, the national and regional reach, and the experience to be able to do that. Besides, for Viacom18, the ROI may be defined in terms of growth. Crucially, competition is usually better for consumers so we can expect a better product (in terms of the IPL broadcast), which is a win-win,” he noted.

While digital has overtaken TV in terms of value, the same might not be true when it comes to monetisation since the latter has a mature revenue model. However, the biggest factor that might work in favour of Viacom18 is the fact that it can bank upon Reliance Jio to monetise the IPL rights. Jio is India’s leading telecom operator with over 400 million customers.

“I believe that digital is the media to own and invest in. Revenue opportunities will lag and are not as mature as TV but the medium of the future is digital,” asserts Sodhi. “Jio as a telecom company and Viacom18 as a media company is a great combination to ensure monetisation is maximised. It will positively impact both the brands and adoption.”

Shanth noted that there is a major difference in how the different platforms monetise their viewers. While TV ads are sold on a spot basis, digital ads are sold on the basis of impressions.

“Just as the IPL has maximised its media value by unbundling packages, digital broadcasters unbundle their viewers. This allows them to cut and splice the viewers and target specific groups, thus getting more value from every one of them than possible before when it had to be one size fits all. Also, OTT viewers as a proportion of the total are just going up, and revenues will come from both SVOD (subscriber video on demand) and AVOD (advertising video on demand) models,” he said.

Sports and Live Media Entertainment Chairman Atul Pande, who earlier served as the CEO of Ten Sports, believes that subscription revenue will be an important component of Viacom18’s strategy to monetise IPL digital rights.

“For this bid to make sense, Viacom18 will have to generate Rs 15-18K crore revenue on subscription over 5 years, which is Rs 3.6k crore a year which on Rs 1000 a year of sub revenues allocated to IPL is 36 million subscribers, which is 80% more than the current Hotstar number (20 million subs),” Pande said.

He also noted that IPL digital rights will provide an edge to Reliance Jio vis-à-vis rival telcos. “I think the other play will be that they will significantly increase penetration through Jio, where they have 230 million subs, and can effectively block the other two operators from the current telco deals (which are Rs 12-15 per pop) or take up pricing significantly. This is also a strategic play for Murdoch / Reliance and I think they could have gone higher. I think they should not lose money on this.”

Both Sodhi and Shanth believe that IPL will help Viacom18’s OTT platform Voot to bring the next 100 million users to their platform. “Voot, if it becomes the destination for IPL, will become the largest OTT platform in the next couple of years,” Sodhi said.

“Viacom18 don’t actually have any live cricket on their platform at the moment. This means that they can leverage their IPL rights to promote their relatively new platform Voot. And while they may not make it all back via subscriptions or ad revenue, the remaining cost they can absorb as programming costs. Their longer game might be to tap into the next 100m users for not just the IPL, but making them part of their ecosystem (Apple-style!),” Shanth averred.

Challenges galore for TV and digital rights owners

Triplecom Media iTap Founder-CEO Kunal Dasgupta said that the number of concurrent viewers for IPL on digital is already rivaling TV. He believes that Viacom18’s bid for digital rights proves the point that eyeballs are shifting to digital. In his view, TV will have a tough time despite the fact that it has a strong revenue stream.

“Since Viacom18 is backed by Jio they can offer a lot of freebies. I won't be surprised if digital viewing for IPL goes up to 50 million concurrent viewers in the coming years. If this happens, then the TV will not be able to compete with digital which will lead to a drop in TV ad rates. The challenge is more for TV than for digital because the latter is on the upswing,” he stated.

Dasgupta also feels that IPL monetisation will be driven by advertising because Jio will focus on expanding the reach of IPL. Soon after winning the IPL digital rights, Viacom18 Sports CEO Anil Jayaraj, in an internal email to employees, asserted that the company backed by Jio’s massive reach will aim to take the property to every nook and corner of the country. He also stated that Viacom18 will provide a wider reach and sharper targeting options to advertisers.

According to a top-level official with a leading OTT platform, the going will be tough for Disney Star. However it won’t be easy for Viacom18 either. He feels Disney Star has the advantage that it doesn’t need to invest much in the IPL over and above what it will be paying the BCCI every year for the TV rights since it has the studio and production infrastructure in place.

He added that Viacom18, on the other hand, will have to make additional investments in building a strong video streaming platform that is capable of handling millions of concurrent users. Disney+ Hotstar had built a strong tech stack to offer a seamless viewing experience to cricket fans.

“Viacom18 will need to invest in infrastructure which will be over and above what they will be paying for securing the rights. However, building a stable streaming platform takes a lot of time. Even after considering 5G roll-out, growth in smartphone users, and increasing CTV penetration, it will be tough for them to recover the investments in IPL,” he stated.

The fact that only a handful of advertisers can afford to advertise on the IPL will also make the going tough for IPL rights owners. “New-age tech businesses who have emerged as key advertisers on IPL are facing their own challenges due to funding crunch. Here again, digital might have an edge over TV since new-age brands identify digital as a natural medium to acquire new customers,” the executive stated.

He also noted that the digital rights holders will have an uphill task since they will have to maintain a fine balance between subscription and advertising revenues. “If they go aggressively after subscription, the reach of IPL will take a hit. However, if they take the ad-supported model route then their subscription revenue will take a hit,” he added.

That said, the executive pointed out that the IPL brings strategic value to Reliance Jio since the telco can use it to acquire new customers and reduce churn by retaining existing ones.

“IPL will help Jio to bring 100 million new users to its ecosystem of apps across categories like OTT, telecom, e-commerce, and so on. The data and insights from these new users can be combined with the existing data that sits on various other apps and services of Jio. With all this data, Jio will be in a position to create a marketplace like Google Ad Network and offer targeted advertising to brands,” he pointed out.