And then there was just one.
Star India will be the sole owner of the Indian Premier League’s media rights for the next five years after submitting a global consolidated winning bid of Rs 16,347.50 crore. That’s Rs 3,269.50 crore per season. The last IPL media rights deal, signed in 2009 with Sony Pictures Networks, was worth Rs 820 crore per season. This means the current deal is worth almost four times more than the previous one.
If you consider 59 matches per season as there were in 2017, Star will be paying Rs 55 crore per game. That’s Rs 12 crore more than what Star currently pays for a single match of the Indian cricket team, although that deal expires in March 2018 and you can expect that figure to rise substantially too.
While you digest those figures, here are some of the other major takeaways from this staggering auction:
Star just sneaked through by a whisker
The first figure that the BCCI mentioned in their press conference after the evaluation of the bids was Rs 15,819.51 crore. This was the sum of the all the highest individual bids across the seven categories in which the BCCI had divided the rights: Indian subcontinent broadcast, Indian subcontinent digital, USA, Europe, West Asia, Africa, and Australia and New Zealand. However, the BCCI then announced that Star had made a consolidated bid of Rs 16,347 crore for the global rights – encompassing all the seven categories.
This means that Star’s winning bid was only Rs 528 crore more than the sum of the highest individual bids. This means that if the 13 other eligible bidders had put in Rs 528 crore more all together, Star would have been left with nothing. Its individual bid for the Indian subcontinent’s broadcast rights was almost Rs 5,000 crore lesser than the highest – Sony’s Rs 11,050 crore. Star’s Rs 1,443 crore bid for the Indian subcontinent’s digital rights was also considerably lesser than Facebook’s Rs 3,900 crore.
Star had pretty much put all its eggs in the consolidated rights basket, and it paid off – by a margin of Rs 500 crore but that’s a pretty tiny amount in the scheme of things. “I think they got lucky because of the consolidated bid,” said Harish Krishnamachar, founding partner of Sportoid Sports Solutions. “They were way off the mark in the individual bids. Clearly, the way the auction was structured, Star was able to use consolidation to its advantage.”
Sony unwilling to come out of its shell
What was surprising was that Star was the only player that submitted a consolidated bid. Sony, which was the only other bidder that could have potentially challenged Star with a consolidated bid, chose not to.
Instead, Sony too put all its eggs in one basket – that of the the Indian subcontinent’s broadcast rights. Apart from this, the company only bid for the rights of one other region. It did not bid for the Indian digital rights at all, in spite of having a presence in the medium in the form of its over-the-top content player, SonyLIV.
However, this isn’t surprising.
SonyLIV is not even among the top five video streaming apps in India in terms of monthly active usage, according to this report in Mint. Star India’s over-the-top content player Hotstar is the market leader, followed by Reliance Jio.
However, this doesn’t mean Sony wasn’t serious about the bid. This time, they have bid Rs 11,050 crore over five years, which is around Rs 2,200 crore per year. That is quite a significant amount – nearly three times the amount they bid in 2009.
“In a consolidated global bid, around 70%-80% of the figure is reserved for the Indian subcontinent,” said Krishnamachar. So if you take Star’s consolidated bid of Rs 16,000 crore, 70%-80% of that number will be around Rs 12,000 crore. This isn’t too far off Sony’s bid of Rs 11,050 crore.
The digital boom
Facebook made the highest bid for the Indian digital rights – Rs 3,900 crore for five years. That’s Rs 780 crore per year. That’s almost equal to the Rs 820 crore Sony paid every year for the television rights between 2009 and 2017. One way of looking at this statistic is that digital is still eight years behind television in terms of impact. But 100 million people watched the IPL on Hotstar in 2016. The figures for 2017 have not been released, but Hotstar’s target for the 10th season was 130 million.
Live sport is a natural player for over-the-top content platforms such as Hotstar, which offer something television can’t – flexible access. Digital’s rise in the last two years could be a game-changer in live sports coverage in India.
The number of video-capable devices and connections in India are expected to grow more than two-fold to 800 million between 2016 and 2021, according to a report by Ficci and KPMG. In 2016, Rs 7,692 crore was raised in India through digital advertising, the report added. This amount is expected to expand at a compounded average growth rate of 30.8% until 2021 because of increased spends on over-the-top content platforms such as Hotstar and a rise in consumption of online video content.
Prepare to pay more to watch IPL
By acquiring the IPL, Star now owns flagship properties across cricket, football, kabaddi, tennis, and badminton, which are arguably the top five sports in India. It’s almost a monopoly. However, Rs 16,347.50 crore is by no means a tiny amount, even for media mogul Rupert Murdoch, whose 21st Century Fox company owns Star India.
“It will be interesting to see how Star plans to recover this amount,” said Vijay Bharadwaj, a sports management professional. “Will they introduce pay-per-view? Will they increase the cost of subscriptions? Can they go back to the players who bid for the rest-of-the-world rights and say, ‘Are you willing to pay me the amount you bid?’ I think that’s a challenge. The bid has exposed what is the maximum amount somebody was willing to pay for a certain category.”
Krishnamachar concurred, saying that Star will need to pull out every trick in the book to try and recover their money. “I think Star have really extended themselves with a bid of Rs 16,300 crore,” he said. “Their break-evens are not going to be easy by my count.”
He added, “They need to get their distribution and subscription numbers up. And now that they have both digital and TV rights, I won’t be surprised if they start charging a flat fee for watching the IPL on Hotstar.”
This in turn means that, whether via paying more to direct-to-home television service providers or directly to Hotstar, fans of the IPL can expect to shell out more for watching the matches.