IPL digital rights go to Viacom18, Star keeps TV

Rights for the Indian Premier League from 2023–27 have been sold to Viacom18 and Star for Rs 47,348 crore, the Board for Control of Cricket in India’s Honorary Secretary Jay Shah announced on Tuesday. This is the first time in almost a decade that rights have been sold to digital and broadcast firms separately. The full auction was worth Rs 48,390 crore.

This also means that Disney has lost out on the streaming rights it had held for the IPL for Hotstar, one of its biggest attractions for users in India, and something that propelled it to the leading spot among OTT apps as well. These rights are for streaming and broadcasting the IPL in South Asia.

Rights for a select few matches were also bought by Viacom18. International rights were sold to Viacom18 for Australia, South Africa and the United Kingdom, and to Times Internet for the United States, the Middle East, and North Africa.

The new valuation of the franchise boosts the value of the league considerably, propelling it past the value of the English Premier League it was modeled on. While more people watch the IPL, per-viewer value has remained below the EPL, because marketing spend per viewer is lower in India. But despite this limitation, the IPL’s value has grown comfortably beyond the EPL in this auction.

This auction gives Viacom18, a Reliance and Paramount joint venture, a major boost in its armoury, giving it a fighting chance even as TV revenues diminish across the board and OTT competition — still at a nascent stage with few if any players making a profit — heats up. IPL matches cumulatively have drawn the highest number of online viewers of any sporting event in history.

It is unclear whether JioTV or Voot will stream the games, starting next year, or if the combined entity will create a new service like Star did in 2014. Paramount Plus, which may launch next year, may also stream the games. If one of the Indian apps is in charge, fans will be praying that the glitch happy services are cleaned up by 2023 to ensure a better viewing experience.

2023–27 will likely see digital distribution contribute far more to the overall revenue that the new broadcasters receive from the franchise, as digital viewership has only increased in India over the last few seasons. This reality is reflected in the narrowing gap between broadcast revenues projected per match as well as from streaming. The 2022 season did not match the concurrent online viewer peak of previous years, but Viacom18 will be pressed to make viewers tune in, considering how much it has paid just for the digital rights.

On Disney’s side, this loss wasn’t wholly unexpected. The conglomerate’s CEO Bob Chapek told investors that reaching 260 million subscribers across Disney+ and Disney+ Hotstar was not contingent on IPL viewership, signaling that the company wouldn’t fight to hold on to the rights at any cost. It remains to be seen how prescient Chapek’s claims turn out to be. But the company has still bet big on linear TV rights for the franchise, likely ending — or at least significantly reducing — investor confusion over the split between Hotstar subscribers and Disney+ subscribers.

With Hotstar subscriptions having been sold at a massive discount in India, and through telecom bundles and so on, the fall-off in subscriptions in India will be sharp as the offered value diminishes for multitudes of IPL fans.

The fact that Disney is skipping out on the digital rights is likely a reflection of two things: its less-than-spectacular satisfaction with how it was able to exploit its IPL rights in the last few years, and a dim view of whether advertising and paying subscribers online will give it a reasonable return on investment in the coming five years at the heightened price.

Viacom18 will receive a shot in the arm for its streaming services without question, but it remains to be seen if it will be able to do what Disney+ Hotstar wasn’t — turn a profit on a growing but still fledgling Indian OTT space.

All said and done, as bets on the IPL grow in value, it will take a lot of revenue management talent and marketer interest to ensure the huge commitment draws a return too. Reliance, which has a diversified business presence, can bet more comfortably on the franchise — its revenue is diversified, and a large chunk of Viacom18 is now owned by former Disney executive Uday Shankar’s Bodhi Tree Systems, which invested Rs 13,500 crores in the JV, reducing the financial pinch of these rights even further.