IPL Media Rights: Digital rights fetch 70% premium on Day 2 of auction

The Board of Control for Cricket in India (BCCI) has reportedly bagged a staggering Rs 46,700 crore for the television, digital media, and non-exclusive digital media rights for Indian Premier League (IPL) 2023-2027 on day 2 of the auction. The cost per match now stands at Rs 113.9 crore or about $14 million. IPL is now the second most valuable sports league only next to the National Football League (NFL) whose cost per match is $17.36 million.

BCCI is yet to make any announcement about the winning bids and the new official broadcasters of IPL. As per industry analysts, the total bid value might settle around Rs 50,000 crore. The auction will resume at 11 am on June 14.

The final bid for the linear TV rights stood at Rs 23,575 crore (Rs 57.5 crore per match). There has been heavy speculation about which broadcaster has won the linear TV rights. Disney Star and Sony were closely competing in this category. The winning bid is a 30% premium over the base price.

The broadcaster may charge a huge premium over 2022 to recoup costs. In 2022 the TV ad rate was about Rs 13-14 lakh per 10 second spot. "At US$3B, the broadcaster will have to capitalise on TV ad growth of 8-10% per annum though growth in affiliate fees may be challenged due to rate regulation and growing adoption of Connected-TV," says Mihir Shah, vice-president, MediaPartnersAsia.

Viacom 18 has likely emerged as the winner of digital media rights at Rs 20,500 crore (Rs 50 crore per match) paying a premium of 67% over the base price. The final value of digital media rights is about 86% of linear TV rights. Additionally, rights for category C reportedly closed at Rs 18.5 crore per match -- Rs 1,700 crore for 90 matches. In contrast, Star India secured television rights for Rs 54.5 crore per match in 2017.

The limited scope of monetising digital media rights is the main challenge for the platform that wins the digital bid. India’s SVoD subscriber base was about 80 million in 2021 and video streaming subscription revenue amounted to Rs 5,400 crore during the year, as per the 2022 FICCI-EY Media and Entertainment Report.

“The winning bidder for digital has definitely taken a big punt,” says Joy Bhattacharjya, CEO, Prime Volleyball League and ex-team director Kolkata Knight Riders. The premium that the winning bidder will pay for the digital rights might seem humongous at first but it is important to look at the digital rights as a gateway for larger dominance and access to revenue in not just the video entertainment arena but also the telecom and retail domains.

“The new streaming platform from Reliance-controlled Viacom18, will leverage from gaining Day 1 access to Jio’s 400 million broadband customers. Moreover, the rights value could be justified as the venture aims to address a much larger revenue pool of video, data and e-commerce,” adds Shah.

Bhattacharjya further adds that the video streaming platform is also taking into consideration the fine targeting capabilities of digital in not just serving ads but also to curate content for specific audiences. For instance, in 2021 Disney+ Hotstar had stand-up comedians doing commentary for IPL. He expects content and commentary in more languages, thereby reaching a wider audience base. “The ability of digital to talk to different audiences in very different ways is what makes digital a strong offering,” he says.

IPL’s TV reach is about 400 million and IPL on Disney+ Hotstar reached about 300 million people in 2021. In 2021, India’s smartphone user base was 503 million and connected TVs crossed the 10 million mark, as per the FICCI-EY report. And the digital medium is growing at a CAGR of 20%. In comparison, India’s television households will continue to grow at a CAGR 1% till 2025. As of 2021, India had 170 million active TV connections.

“IPL has a sizable audience on digital,” says Shailesh Kapoor, founder and CEO, Ormax Media. He adds, “The TV viewership may not be going up but digital numbers are rising year on year. So, in the long term IPL viewership will have a higher digital share".

From an advertising standpoint, Kapoor expects advertisers who want to be present on both the media to end up spending more as they will have to do two independent deals instead of a bundled deal at a discount.

BCCI had set the reserve price for the media rights at Rs 32,890 crore (Rs 89 crore per match for a total of 370 matches). The IPL media rights have been split into four categories - TV rights for the Indian subcontinent (category A), digital rights for the Indian subcontinent (category B), special matches (category C), and Rest of the World (RoW) rights (category D).

The key bidders are Viacom18, Disney Star, Sony Pictures Networks India, Zee Entertainment Enterprises Limited (ZEEL). Amazon got out of the race after it did not participate in the technical bid valuation on June 10.