Long-time readers will know that I have a deep fascination with sports rights, the value attached to them and the value generated by the companies that buy them. Sports bodies have worked out the most efficient ways to maximise those rights, getting big media giants to spend freely every few years.
The Indian Premier League (IPL) cricket rights have just been auctioned for the period 2022-2027, or the next five seasons. Matches tend to take place across April and May each year, with the best cricketers in the world swarming to India where they get massive paydays for the incredibly popular cricket series. India is the second most populous country on the planet with 1.37 billion people, placing it only just behind China’s 1.43 billion – with India projected to climb past China by 2027.
So this is a vast market, and a market that has seen digital grow spectacularly in recent years as companies like Jio significantly cut the cost of wireless data that has in turn led to colossal growth in the sector.
Last time the IPL’s rights were auctioned was back in 2017, when the combined rights for 2018-2022 were sold for Rs 16,347.50 crore (A “crore” translates to a unit of 10 million, so Rs 16,347 crore is Rs 163,470,000,000 or Rs 163.5 billion).
This time around, the cumulative rights for the four packages available (more on that in a moment) was Rs 48,390 crores – or three times as much money as last time around. That totals around $6.2bn USD over the five seasons of the new deal.
But the devil is in the detail.
The BCCI – the Indian Cricket Board – sells TV rights separately to digital streaming rights. Last time around, Disney’s Hotstar got both both sets of rights, and global rights, by bidding a single amount that was more than the highest bidders for each package. However, last time around, it seemed based on the bidding that TV rights were much more valuable than streaming rights. Over the period of the contract the TV and streaming rights importance relative to one another has changed.
The BCCI actually breaks IPL rights into four packages, one of which is then sub-divided further.
This time around the two sets of domestic Indian rights were sold at the same level. The broadcast TV rights (“Package A”) were retained by Disney’s Hotstar, but the company no longer also has the streaming rights. A consortium called Viacom18 won those – “Package B”. Viacom18 is a joint venture between Reliance Industries (i.e. telecom giant Jio), Paramount Global and Lupa Systems which is backed by James Murdoch.
The third package – “Package C” – was introduced this time around and comprised of a limited set of non-exclusive digital rights. These are 98 games over 5 years (so 18-20 a year) that include select weekend evening games and playoff fixtures. These are non-exclusive since the rights owner to overall digital rights in India also gets these games.
What happened was that Viacom18 bid separately for, and won, Package C to ensure that it had complete exclusivity over all IPL games streamed in India. There wasn’t a requirement that Package C was separately sold to a different provider. But it does feel like a smart move to let the BCCI get some extra cash from the main digital rights holder. (The auction seems to have been structured in such a way as to let the major bidder choose to outbid the smaller bidder – “challenge” – should it have been necessary. As I say, some smart minds were behind maximising revenues at this auction.)
Finally there is the global rights package – “Package D”. These ended up being subdivided between Australia, South Africa and the UK, which was won by Viacom18, and the US and MENA (ROW) which was won by Times Internet (part of the Times Group which also owns The Times of India amongst many other things, and once owned Absolute Radio in the UK!).
Where games actually end up being broadcast both globally and in the UK is probably still up for grabs, since rights can be sub-licenced to local partners. Obviously, since Viacom18 has Paramount Global as a partner, games could end up on the about-to-launch Paramount+, or even Channel 5 in the UK. That said, given that Paramount+ is launching in association with Sky in the UK (next week), I wouldn’t be surprised to see some kind of deal that gives Sky Sports viewers access to the games next season. We’ll see.
But returning to the Indian rights, there are some big fallouts from the bidding.
Disney has been bulking up its global Disney+ subscriber numbers by including those in India who subscribe to a Disney+ Hotstar package. Some 50 million of the 138 million Disney+ subscribers has globally, are Disney+ Hotstar subscribers – just over a third of them. IPL rights has clearly been a key driver for their streaming offer.
While I don’t suppose every one of those subscribers will cancel their subscriptions because of the loss of IPL rights, it’s fair to assume that some consumers will cancel their Disney+ Hotstar subs and move over to Voot – the consumer facing streaming service owned by Viacom18.
Disney had been projecting 230-260m total paid subscribers by September 2024, and a decline in Indian subscribers will hamper their abilities to reach this global target.
That said, Disney is rapidly rolling out new countries and territories right now, with the service launching in Israel today, following other recent launches in South Africa, West Asia and North Africa. They are also rolling out to Greece, Turkey, Poland, Romania, Hungary, Czech Republic and Croatia amidst a total of 42 new countries and 11 new territories.
But Netflix’s recent subscriber numbers and forecasts suggests that there are limits to growth. So a potential loss of subscribers in India could impact on Disney globally, stunting their previously projected growth.
It should be said that “ARPU” (Annual Revenues Per User) are much lower in India compared to other parts of the world, but Disney’s ARPUs everywhere are low compared to its competitive set since Disney+ launched with some very aggressive pricing.
I guess that Disney could fashion some kind of package that incorporates linear Hotstar access with Disney+ streaming, thus bundling up the linear TV viewers of IPL with streaming. But the niceties of satellite and cable distribution in India mean that I can’t be certain how that would work.
It’s also worth noting who didn’t end up bidding. Amazon was certainly in the race, and had been widely tipped to bid. But Amazon to date has been quite conservative in purchasing sporting rights, wanting value from them and not just paying whatever sports bodies are trying to sell. The Premier League package of rights that they first bought were likely bought at a lower rate than the Premier League had originally hoped for, and the tennis rights they have were similarly picked up cheaply. Perhaps only Thursday Night NFL rights have been bid for at a competitive level.
This has been an interesting week for streaming and TV rights. There are continued rumours that Netflix is going to do a deal with Formula One in the US, although it remains to be seen if they can find value from that. It follows the success of Drive to Survive, their F1 docu-series that features lots of behind the scenes footage each season which in turn has reignited North American interest in the sport.
More definite is Apple’s deal with MLS. Apple is buying the rights to every fixture across the league for ten years. They’re paying something like $250m a season for the rights, which are global. They will create some kind of upsell Apple TV+ package for the MLS games, but some games will still end up on other outlets like linear TV channels. That’s probably important for visibility of what is still a growing league. But this package means that a super-fan would only need that single subscription to have access to every single game.
Historically leagues have chosen to break up their rights into different chunks because they can earn more money that way. Whenever someone suggests that NFL or the Premier League might just do their own direct deal with consumers, it’s usually doesn’t take into account the fact that very popular leagues are nearly always going to earn more from selling themselves to as many separate parties as possible. The MLS can do this deal because they’re not a mega-league in that sense. They don’t have all the US networks and all the streaming companies all scrambling for a piece of the pie like they do with the NFL. If that was the case, then breaking up the rights in to smartly bundled packages – as the NFL does – would make more financial sense. Obviously the downside of this is that the consumer has to take out more subscriptions with more services if they want the ability to watch any game they choose.
But those Disney earnings reports are going to be interesting over the next twelve months.