JioCinema to dominate IPL 2023 ad sales revenue, as digital takes a 60% share: Media Partners Asia report

The Indian Premier League (IPL) 2023 is just around the corner, with the first match scheduled for March 31st. This year's tournament couldn't have come at a more opportune time, as it aligns perfectly with India's current media landscape. The convergence of 4G mobile broadband connectivity, connected TV (CTV) penetration, and fibre broadband adoption is steadily on the rise, promising to bring about a new era of entertainment.

However, this shift towards digital media has put the traditional pay-TV market under pressure, with free satellite TV growth and the affordability of SVOD services in urban markets eating away at its customer base. Even the mighty IPL, which has been a significant driver of pay-TV growth and SVOD scale, is not immune to these changes.

This year, the IPL will be streamed free to millions of mobile broadband users and CTV households for the first time ever, adding a new dimension to the tournament's reach and popularity. Media and entertainment research, advisory and consulting firm Media Partner Asia (MPA) in its latest report on IPL predicted that the digital ad revenue of the tournament will surpass that of television in 2023.

Macro challenges, ad demand and IPL economics.

The Indian economy is facing challenges due to both domestic and global macroeconomic issues. While domestic demand has been strong, it started to weaken after February 2023. The external demand has also slowed down, and global macro issues are expected to continue impacting the economy in 2023.

According to the report, “JioCinema is set to generate INR 24,000 - INR 25,000 crore in ad sales revenue, surpassing the current IPL rights holder, Star India. Star India's estimated ad sales revenue is projected to be between INR 14,800 - INR 16,160 crore. This indicates that JioCinema is expected to earn around INR 8,000 crore more than Star India during the upcoming IPL season.”

Digital advertising is particularly popular, but advertisers are finding it difficult to navigate the crowded and cluttered market, leading to confusion around targeting and reach. Nonetheless, JioCinema's targeting capabilities have received praise from brands, resulting in significant victories for the platform in recent weeks.

“The projected total ad investment for IPL 2023 ranges between Rs. 40,281-49,323 million, while the analysis of committed spends suggests a total of Rs. 45,213 million. While ad budgets are under strain, many advertisers are redirecting their resources towards the event.”

“Rs 55 crore revenue across digital and pay-TV is marginally flat year-over-year and represents a steep loss against annualised 2023-27 IPL rights fees of Rs 98.65 billion, stated the report.

Subscription fees are expected to be very modest this year because of challenges in pay-TV distribution and the lack of a subscription fee on digital.”

Viacom18, owned by Reliance Industries Limited (RIL) in partnership with Bodhi Tree Systems with Paramount having a minority, has exclusive online rights to the IPL for the 2023-27 period at Rs 254.84 billion. Disney’s Star India won the pay-TV rights for Rs 254.84 billion over the same period but lost the online rights that helped it build customer scale and SVOD monetization on Disney+ Hotstar.

FMCG companies are likely to allocate their advertising budgets to both TV and digital media, but with the IPL being streamed on JioCinema, brands owned by RIL, such as retail and FMCG, are expected to focus more on the platform. In contrast, the auto industry has already moved a significant portion of their advertising budget to JioCinema, and emerging sectors like gaming have fully switched to the platform. The shift in advertising expenditure reflects the growing trend towards digital media, as brands seek to engage with audiences across multiple platforms.

JioCinema’s digital promise, targeting and models.

“JioCinema has promised advertisers that this year’s IPL will have a reach of 400 million. and a concurrent user base of 100 million. Having hired a large part of Disney+ Hotstar technical and engineering teams, we suspect that JioCinema will be successfully built for mobile broadband scale and concurrency. Streaming to mobile devices has already started to scale with JioCinema’s live streaming of key events such as Women’s IPL cricket and last year’s Fifa World Cup. Based on our discussions with agencies, the level of targeting available on mobile is a first and is highly evolved,” Media Partners Asia said.

“Conquering CTV will be a challenge given distributor fragmentation and the significant level of customization required. MPA estimates the total CTV TAM in India at 70 million, We forecast that JioCinema IPL 2023 penetration of this base will reach 20-30 mil., driving CPMs and enhancing the consumer bond with multi-camera angles, 12 languages, 4K resolution, live statistics and more,” it added.

Star and the TV universe

Star India, the incumbent rights holder of IPL, is facing challenges due to Jio's competition and a tough economic environment, resulting in a more than 50% decrease in pay-TV ad sales to Rs 16,441-18,085 mil. for the IPL 2023 edition.

“Subscription fees are also expected to be impacted due to NTO regulations, disputes with Reliance-owned cable MSOs, and Star's decision to broadcast 12 important IPL matches over its FTA channel Star Utsav. Additionally, IPL TV viewership dropped to 229 million in 2022 from 267 million the previous year, and the departure of the head of Sports ad sales has added to the challenges for Star India.”

Is Star India losing ground?

Star India may be losing ground in the broadcasting industry as it faces challenges with the revenue and cost economics of linear TV for sports. Meanwhile, Disney+ Hotstar is also facing headwinds with the potential loss of around 15 million paying subscribers by the end of 2023 due to the absence of IPL, the termination of its partnership with Jio, constrained entertainment budgets, and the discontinuation of marquee HBO content.

Zee and Sony have been enhancing their positions in the broadcasting industry through strategic divestments and investments in entertainment and movie segments. With their proposed merger set to take place in May 2023, the two companies are poised to become the most prominent and profitable broadcaster in India, surpassing the current market leader, Star India.

In the upcoming year, the premium VOD marketplace in India is expected to witness a shift in power dynamics, with Prime Video, JioCinema, and Netflix emerging as dominant players. Zee's decision to sell Ten Sports to Sony in 2016 for a sum of Rs. 26,717 million, followed by Sony's withdrawal from the IPL in 2018, has played a pivotal role in shaping the current broadcasting landscape in India.

Meanwhile, “India’s AVOD market reached Rs 164.41 billion in 2022 and is projected to grow at 18% CAGR  over 2023-27 to reach Rs 369.93 billion. A large part of this incremental growth is expected to be fueled by a supply of premium inventory coming from heavyweights like Jio Cinema, featuring IPL and other marquee sports, as well as SVOD powerhouses such as Prime Video introducing AVOD tiers to go deeper.”  India’s AVOD revolution is just getting started.