There was a time when over-the-top (OTT) platforms were the dumping ground for substandard content – from unreleased movies to obscure reality shows to recorded (non-live) sports clips. Massive eyes and premium advertising dollars have always gone to television. With the boom in smartphone adoption, and the proliferation of low-cost internet powered by Mukesh Ambani-owned Jio, the landscape in India changed dramatically. Today, with OTTs in the mainstream, games are emerging as the ‘Golden Goose’ in this segment. Not only do games make more money, but more loyal viewership and more customer stickiness are also there.
Sports streaming in India has always been dominated by cricket. “more than 90 percent of it” [sports streaming] There is cricket,” says Karan Taurani, senior vice president at brokerage firm Elara Capital. “The rest is non-cricket or what we call the ’emerging sport’, with football being the biggest.”
In terms of viewership, there is no cricket. No wonder the streaming rights of the showpiece tournament Indian Premier League (IPL) were sold this year to Viacom18, backed by Ambani’s Reliance Industries, for Rs 23,758 crore for a period of five years, each match costing around Rs 58 crore. Was.
Key stakeholders in the business believed that the rights sale was mostly “on expected lines”. “In fact, it was 5 percent less than most people expected. And this is due to global market conditions right now,” said Pankaj Chhaparwal, founder, CEO and MD of Cricbuzz (owned by Times Internet, which acquired the digital and broadcast rights of IPL for the US and the Middle East and North Africa, or MENA are) says. , region). “There has been tremendous growth in digital in the last five years. So, it makes sense that digital is now as expensive as TV,” he adds.
Inside Viacom18’s expensive bets
According to Taurani of Elara Capital, however, Viacom18 paid an “extremely high” amount, which would be difficult to recover in five years. “IPL has left many other leagues behind despite not having a global reach. Here ARPU is low. There is no chance of break-even unless it [revenue] It grows at the rate of 25-30 per cent every year.
For example, Disney Star barely made any loss in the last five-year cycle (2017-2022), for which it paid Rs 16,348 crore for the combined TV and digital rights; And this, despite its dominance over subscription and advertising revenue in the sports segment.
Viacom18’s OTT platform Voot is not tied to sports streaming and its current share in the ad video-on-demand (AVOD) segment is only two per cent, compared to Disney+ Hotstar’s 16 per cent.
“It will be very challenging to earn money through subscriptions and advertising. Viacom18 will have to grab 7-10 per cent of all advertising spend to recover the money. And all the media spending during those two months will have to be transferred to the IPL. But, we know that will not happen,” says Cricbuzz’s Chhaparwal.
However, Taurani reasons that all OTT businesses in India are running at a loss, and are inevitably in a race to acquire customers. “For them, digital money is more strategic in nature that turns a blind eye to their platform. They don’t see it as a profit-making exercise just yet,” he says.
method to madness
A source with direct knowledge of the matter says that the entire battle is for the customers. “The investment of Rs 23,758 crore is to get 500 million people to subscribe to Sports18’s OTT platform [Viacom18’s sports channel], Even if you get 10 per cent of 500 million for paying monthly or annual fees, that is a lot of money,” says the source.
Other sources in Viacom18 say that Reliance may move the IPL to a new OTT platform and an “experience-driven super app” where people can watch matches on Ajio (its e-commerce portal), leaving Voot. You can buy merchandise. , buy franchise-based match packs, and get other types of interactive fan experiences.
So, what’s the game plan? “Right now, no one knows which avatar it is going to take, but the synergy between Reliance Retail, Reliance Jio and Viacom18 is going to be massive. The goal is to create a digital-exclusive experience, where you are not only watching IPL but also interacting with it,” explains the source.
Almost everyone in the business is sure that Viacom18 will have a huge strategic advantage due to Jio’s over 400 million customers. All its customers have access to the free JioTV app. “That consumer pool is invaluable. At some point, Jio will want to monetize that huge user base,” says an analyst.
Taurani elaborates, “Customers are hungry for bundles and most people use OTT apps through telco partnerships. Jio has last-mile delivery advantage and can command a better ARPU than Hotstar. Therefore, Viacom18 sees IPL more as a customer acquisition strategy to cross-sell other content to IPL customers.
According to a FICCI-EY report, at the end of FY22, 85 percent of OTT viewership in India was generated through bundled offers by telecom companies. “If you have major content like IPL exclusively on Jio for two months, people will turn to other telcos to access it,” says Chhaparwal.
According to FICCI-EY, the digital viewership of IPL is estimated to reach 523 million in FY13 and 722 million in FY12, up from 450 million in FY12.
According to experts, Viacom18’s approach towards IPL and other sports rights is going to be different from that of Disney Star. “Voot does not have the technical expertise of Hotstar to telecast live sports. Hence, it should be an entirely new brand path, identity, offering and platform that can become a gateway for non-sports lovers to consume sports content as well,” says a source with direct knowledge of the development.
Interactivity, including new-age technology such as Web 3.0 and the Metaverse, is going to define sports streaming in the future. Industry experts believe that “watch, shop, interact and customize” will be the cornerstone of OTT.
According to industry sources, Viacom18 is looking to actively invest in technologies across video, camera, data and analytics to create new and nuanced customization and experiences for IPL. “We plan to invest in significant surround content for the IPL that can match sports and pop culture. We are looking for plug-and-play solutions for interactive streaming. And this is the battle we are fighting right now with BCCI (Board of Control for Cricket in India)…
Quidditch Innovation Labs, a Mumbai-based sports tech startup that works with various stakeholders in sports broadcasting, including the BCCI, IPL and other platforms, is said to have developed these customizable and interactive experiences in the upcoming season. The construction is in talks with Viacom18. League. “Immediately after the auction, we have had in-depth talks with all the parties. There’s a lot of deep technological innovation that we’re doing with games using AI, ML and player-tracking engines in real-time that’s hard for stakeholders to do on their own. but what is this [costly] RITES has pushed broadcasters towards innovation,” says Rahat Kulshrestha, its founder and CEO.
Globally, sports streaming is increasingly being customized according to each individual’s interest and viewing patterns. Kulshrestha says, “There has been a fundamental shift in thinking and making for OTT. But is there a danger of cricket being overshadowed by all the Razzmatazzas? “Innovations are driven by keeping audience interest in mind. The agenda is always to improve the fan experience, but we are not going to oversell,” he says.
What next for Hotstar?
Disney+ Hotstar, according to some analysts, is facing an existential challenge with almost 50 million subscribers of India’s OTT universe so far. Elara Capital says that in the subscription video-on-demand (SVOD) segment, it has a 22 per cent share, which could fall sharply, as people potentially move to Voot or Jio.
According to Taurani, Hotstar will lose at least 30-40 per cent of its paid subscribers in the next six to eight months as the subscription expires. “IPL runs 60-65 per cent of Hotstar’s numbers. If they don’t fill it with new cricket rights, the decline will be swift. ,
Currently, Hotstar holds the streaming rights for all BCCI cricket matches in India and the rest of the world. It also holds the rights to the Pro Kabaddi League, Indian Super League soccer tournaments and premium events such as Wimbledon and the English Premier League (EPL). Disney Star renewed its exclusive broadcast and streaming rights for the EPL for the next three seasons (2022 to 2025). Same for Wimbledon, it holds the TV and digital rights until 2023.
However, the BCCI rights for the next five-year cycle come up for renewal next year. There is no doubt that Reliance and Viacom18 will work hard to populate their sports library on TV and digital. “One thing we know for sure. Reliance enters the market with one goal in mind – disruption and absolute dominance,” says an industry source. “If the path is clear for the management, they are behind it. I’ll throw my load.”
And, as we know, sports streaming in India could change the course. the game is on!