Cricket is like a religion in India. Every win of the Indian cricket team is celebrated like a festival. BCCI, the governing body of cricket in India is almost like an empire that has been built on the collective fervor and obsession that Indians have for the sport. It is also one of the richest cricket boards in the world with a net worth of 2.25 billion.
The deal worth Rs. 48,390 crores with Disney Star and Viacom 18 which was made in June 2022 is still talk of the town as far as the numbers are concerned. This is an almost 6 times jump from the previous deal of Rs. 8200 crores in 2009. This means that the IPL will be exclusively available on these two platforms!
If we go by numbers then everything seems to be hunky dory, but will BCCI be able to gain from this deal? Or will Disney Star and Viacom 18 get their share of the profit pie? Well, what seems to be a sizable deal on paper might actually be an eyewash as this split viewership deal is literally going to split the viewers.
Disney star, with their TV broadcasting rights, is up against Viacom18 which has now access to digital rights. Jio, in this competitive Indian telecom market, has been able to establish a monopoly as far as internet penetration is concerned. Jio has been hailed as a disrupter in the industry with its cheap data and innovative digital services. With more and more people preferring on-the -go entertainment on their smart phones and OTT platforms, will Disney Star be able to stand its chance against Jio?
It may be possible that Jio gets the major share of the profit pie with the current internet penetration and their plan to stream IPL for free. In addition to this, the news of Jio launching Media cable for IPL is going to be a masterstroke IF it goes as planned. The Jio Media cable allows users to connect their phones to the television and turn it into a smart TV.
The best part is that any internet connection can be used to access this facility. This launch can single handedly give a huge boost to viewership and revenue for Jio. However, there are other factors at play as well, the amount of bandwidth and data that will be required to stream the match is not going to be minimal. People may have to shell out more money to watch IPL on the phone!
On the other hand, Star has already had a bad experience with IPL when they ended FY19 with a loss of Rs.1216 Cr. According to Economic Times, Star had reported expenses of Rs. 4000 Cr for IPL. The loss was attributed to the fact that the total expenditure jumped by 58%, programming and operating cost increased by 66%, 34% jump in employee cost and other expenses in comparison to previous year. Is this IPL season going to be any different for Star?
It should be noted that Ad revenue is what is going to get profit.10 second Ad slots went for close to 15- 18 lakhs which may increase even more this year but the question is would this rate sustain given the global and Indian Ad spends?
With majority of profit coming from ads and not subscriptions, Star and Jio should work towards getting more advertisers on board.
Jio with its irresistible offer of free streaming will definitely rock the boat. In this war for audience attention, working on quality of coverage is something that can help Star sports along with a low subscription plan. As for advertisers they should be ready to bet on both platforms and be able to change their strategy mid-season as per the engagement of the audience!
Another major thing to keep in mind is that BCCI could lose 116 million USD in revenue in case the government charges them a 21.84 % tax surcharge on ICC’s broadcast revenue from the 2023 ODI World Cup. With BCCI already fighting the case against the tax levied (USD 23.5 million) during the 2016 ICC T20 World Cup in the ICC tribunal, there are many factors to be considered.
Not only this, there are global factors at play here, one cannot overlook the fact that there are talks of global recession, with major companies firing their staff for a better bottom line, Jio and Hotstar need to look into the commitment that they have made. BCCI may be doing disservice by overinflating the deal which may not be practical on ground.
While BCCI should also ensure that it doesn’t have to give financially unpremeditated and last minute concessions to the companies in case they are unable to pay back. As of now let us wait and watch how this deal unfolds and enjoy the IPL season!