When the Indian Premier League (IPL) gets underway on March 31, a different kind of competition will be witnessed but it will be off the field and not seen by the millions of fans watching the 16th season of the premier T20 tournament. This is a competition for the Rs 5,000 crore IPL advertisement.
Disney has been the undisputed champion with the advertising rights for both digital and television for the past five years. The nature of the advertising game has changed dramatically this season as TV and digital rights are going to different entities.
In June last year, Viacom18 had bought the digital rights of IPL for the years 2023-27 for Rs 23,758 crore. Viacom 18 is a joint venture company between Reliance and US media conglomerate Viacom’s James Murdoch (younger son of media tycoon Rupert Murdoch) and Uday Shankar, former chairman of Disney India.
This means the advertising share is split between Disney-Star and Viacom18, which retained the TV rights for five years for Rs 23,575 crore. Viacom18 has spent a lot, which is around Rs 50 crore per match. It should come as no surprise that this joint venture aims to change the rules of the advertising revenue game yet again.
Firstly, it has set a target of garnering 50 per cent of the total advertising spend in the tournament. To understand its ambitious aim, consider that 80 per cent of Disney Star’s broadcast revenue came from TV, with its over-the-top (OTT) platform Disney+ Hotstar accounting for the rest.
Second, Viacom18 is looking to increase its advertising base by almost four times to the level of around 500 companies and is in talks with some of the leading advertisers as well as small and medium scale companies (SMEs) and regional players.
Third, it is disrupting the established IPL model of Disney+ Hotstar based on subscriptions and advertisements. In the 15th season of IPL, Disney Star’s platform Disney Hotstar had over 50 million paying subscribers.
In contrast, Viacom18 is showing all matches for free on its OTT platform, Jio Cinema (which already has 100 million active users), irrespective of the telecom service or smartphone used by a viewer. It will also seek to connect 7.5 crore TV homes with OTT services.
Viacom18 is confident of achieving a record digital viewership of 550 million in IPL with 750 million smartphone users, which was the highest in 2018 at 330 million.
Critics suggest that the very word ‘free’ is misleading. This is because even though the subscription is free, viewers will still have to pay to telecom service providers, making the digital version much more expensive for viewers than TV.
Based on their calculations, the cost of watching TV during the entire IPL season is only Rs 38, while streaming 10 matches, based on the telecom regulator’s cap of Rs 10 per GB, would cost Rs 360 to Rs 2,640 for those using 4K. (or ultra-high definition) version. This is because streaming a match in Standard Definition (SD) requires a minimum of 3.6 GB, and the 4K version requires even more GB.
Sources in Viacom18 say that such reasoning does not reflect the actual habits of the viewers. They argue that the average daily data usage across various packages used by Jio’s 425 million subscribers is already over 2 GB a day, which can be taken as a proxy for data usage of telecom customers.
This is enough to watch one match, because very few viewers watch one match in its entirety and not all even every day. So an average telecom subscriber may not need to buy additional data to watch IPL matches. All telecom service providers are expected to introduce low cost top-up plans during the IPL season, which will reduce the additional cost.
And experts say that unlike the Disney star, the digital rights of IPL can be used to boost the data game of telecom companies.
The tournament could be used to encourage customers to move from 4G to 5G, which would lead to higher internet speeds (currently at the same cost as 4G), and see improvements in average revenue per user scale for telcos. For example, Jio alone has set a target of 100 million 5G customers by FY2024.
Viacom18’s advertising targets have been criticized by critics, with large advertisers focusing only on the 100 million paid digital subscribers. Free services can get more users that advertisers may not be interested in targeting. In such a situation, free services should not be converted into higher advertising rates.
Advertising agencies have a different take on Viacom18’s strategy. Sandip Goel, managing director, Rediffusion, said, “During IPL, there is a twofold return on digital platform as compared to 2,800-3,000 seconds on TV broadcast. Also, on digital, it is possible to create customized goals. If Viacom 18 has the capability to create customer profiles then a different model can be launched and it will be more likely to be successful. For this reason, the number of advertisers can be up to 500-700.
Advertisers are also seeing a clear shift. A senior official of a leading FMCG company said, “Audience in urban markets has increasingly moved towards digital as more people are using mobiles. It is also cheaper in terms of customer profiles. But this does not mean that we will not invest our money in TV.
Certainly TV is losing its allure, both in terms of viewership and spending. In the year 2022, total digital advertising touched Rs 34,500 crore for the first time surpassing TV which ended at Rs 30,000 crore.
This trend is expected to increase as digital advertising is expected to grow by 25 per cent (though on a smaller base) this year as compared to 6-7 per cent.
However, still about 10.8 crore households watch TV, which was 13.3 crore in 2019 before Covid. But it is also possible that this figure may be temporary, as many households with free-to-air TV may subscribe to paid services while some may watch mobile.
The TV viewership of IPL has come down from 405 million in the year 2021 to around 360 million in the year 2022. Sources in the Disney star said that it was also due to boredom from IPL as the 15th edition of the tournament took place just six months after the 14th edition. But he expects the upcoming IPL to reach 500 million TV viewers, which is in line with Viacom18’s target.
So the lines are clearly drawn when it comes to advertising in IPL. One TV broadcaster admitted that the result of this competition would be advertisers getting better deals and consumers not complaining.
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