Suraj, 20, an engineering student from Mumbai, watches most of his live cricket on the move on a basic ₹499-a-year Hotstar plan. Next year, he will have to subscribe to Viacom 18’s app to watch IPL and also hold on to Hotstar for the ODI World Cup. Watching it on TV on Star Sports is an option but Gen Z and millennial fans are not always home in the first place.
A churn in cricket’s media rights makes dual
Suraj, 20, an engineering student from Mumbai, watches most of his live cricket on the move on a basic ₹499-a-year Hotstar plan. Next year, he will have to subscribe to Viacom 18’s app to watch IPL and also hold on to Hotstar for the ODI World Cup. Watching it on TV on Star Sports is an option but Gen Z and millennial fans are not always home in the first place.
A churn in cricket’s media rights makes dual subscriptions a must. Disney Star, the one stop destination for big-ticket cricket, lost IPL digital rights to Viacom 18 and sub licensed ICC TV rights to Zee. The BCCI bilateral cricket rights that they hold will also come up for renewal, next year.
In this rapid reshuffle, cricket’s valuations have almost tripled ($9bn, IPL + ICC) from the previous five years. The fear of the cricket economy bubble bursting with advertising revenue failing to cover rising costs has existed since before IPL. But the broadcasters have survived. Their every move, be it a digital push, entrusting faith in linear or even saving cash for another day, is driven by multi-layered, long-term motives.
When Disney Star won the ICC media rights (TV + digital) last week for $3bn ( ₹25,000 cr), eyebrows were raised. But within two days it de-risked the business—industry sources say by an estimated 50%--by handing the TV rights to Zee. If Viacom 18’s IPL acquisition was about business convergence in the new technological era, Walt Disney’s ICC bid indicates a strong push to retain Hotstar’s subscriber base in cricket-crazy India.
Riding on Star’s $2.5bn IPL rights, Hotstar reportedly added 50 bn subscribers in fiscal 2020-22, becoming the leading OTT platform in India. But India’s low subscription rates meant Hotstar’s revenue was nowhere compared to Disney + in US— ₹499 ($6,25) to $80 per year.
In June, Disney Star let go of the expensive IPL rights to Viacom 18, which it knew was going to go all out. This month, Hotstar’s subscription target for March 2024 was scaled down from 100 mn to 80 mn. Walt Disney promised to ‘refine this target’ once subscriber visibility in India became clearer ‘following the ICC and BCCI rights'.
Saving $3 bn from IPL’s digital rights—this value may have shot up if it had kept bidding—it pumped this money to win the ICC rights.
COST RECOVERY
While these rights may help retain subscribers such as Suraj, does Disney Star stand to recover costs? ICC events are heavily dependent on marquee matches—26 India games and 14 knockout matches out of 181. “In digital, the content costs are much higher and it’s more competitive,” said Karun Taurani, media and internet research analyst.
It’s here that Disney will be rooting for the 5G push in India. The launch of air fiber by competitor Viacom 18’s controlling company Reliance could lead to rapid chord cutting trends.
What then explains Disney Star going for IPL’s TV rights? “Despite all the TV-to-digital transition talk, in the here and now digital rights remain a hard sell,” says an industry executive with a skin in the game. “Star has played a smart hand by picking up IPL TV rights at a good price. It will make a profit on it.” Disney Star raised the game in the last IPL by pushing up TV ad rates to the region of ₹15-18 lakh for a 10-second slot. Though those rates would have to go further up to match acquisition costs, there are two ODI world events too where the inventory is more.
Even as Viacom 18 raises the pitch by offering an immersive cricket-viewing experience to future subscribers, few see the end of linear TV in a country as vast and diverse as India. It may be suited for Suraj’s parents and extended family who still watch cricket on TV. “In TV, content costs are more rational, and cricket as a genre accounts for 10 % of total TV ad spends. For cricket viewing, TV will co-exist with digital,” says Taurani.
This is also how Zee, the comeback player, reads the landscape. A senior source said it is prepared to “air ICC matches on its diverse feed of channels across languages” and is “confident of finding success with its strong distribution network” even if the merger with Sony takes longer.
With two broadcasters at play for both IPL and ICC matches, monetisation capability becomes higher. “There is a scientific reason for it on the subscription side. The revenue becomes 120-125 %,” said Harish Thawani, former chairman, Neo Sports. “Assuming the value is $3billion, read it as 2.4-5 because both the broadcasters will monetise it separately.”
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