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Broadcaster Viacom18, whose majority stakeholder is India’s largest conglomerate Reliance Industries, has acquired the exclusive digital rights for the Indian Premier League (IPL) for US$3 billion. It could be a game-changer for sports broadcasting in India

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Good Evening [%first_name |Dear Reader%],

It’s finally over. After months of speculation, predictions, and probably a few office pools, we finally know who has won the media rights for the next five years of the Indian Premier League (IPL), starting 2023.

Those of you who have been reading Moneyball since the beginning would remember the first edition back in October, when I had written about the cat-and-mouse game being played between the Board of Control for Cricket in India (BCCI) and the International Cricket Council (ICC) over media rights. It’s amazing to think that the 2021 season of the IPL was still going on at the time.

Eight months on, the 2022 IPL season—with two new teams, one of which won the title—is over and BCCI has won the cat-and-mouse game (no surprises). Earlier this week, the IPL media rights auction, which lasted three days, ended up generating Rs 48,390.3 crore (US$6.2 billion) for the BCCI. That’s at the upper end of the Rs 40,000-50,000 crore (US$5.1-6.4 billion) range that was being speculated in the media for months leading up to the auction, and nearly three times the bid that won the last auction in 2017.

The Walt Disney Company has retained the television rights for the Indian subcontinent for Rs 23,575 crore (US$3.02 billion), while Viacom18 is paying slightly higher—Rs 23,757.5 crore (US$3.04 billion)—for the exclusive digital rights for the same region. Viacom18 also won the media rights (TV + digital) for three other regions—Australia and New Zealand, the United Kingdom, and South Africa—while Times Internet bagged the United States and West Asia.

Here’s a handy chart from ESPNcricinfo that you can refer to:

These are just crazy numbers. On a per-game basis, Disney is paying Rs 57.5 crore (US$7.36 million), while Viacom18 will cough up just over Rs 58 crore (US$7.43 million). Including the figures for other regions, an IPL match broadcast is now worth just over US$15 million. Globally, that’s second only to the National Football League (NFL) in the US, which gets US$35 million per game that is broadcast nationally.

Over the last couple of days, you might have read various articles analysing the auction. I did too, and my head went for a spin. So, I decided to not go into the numbers and do yet another piece on what this means for the bid winners in terms of their return on investment. There’s plenty of stuff out there on that. Instead, I decided to focus on what this means for you, the fans, and what you can expect over the next five years.

In this week’s edition, the spotlight is on Viacom18 and its largest stakeholder, Reliance Industries. Winning the IPL digital rights could turn out to be a game-changer, not just for Reliance but for the entire Indian sports broadcast industry.

IPL media rights: the Reliance era begins—and what this means for you

In 2017, when the IPL media rights were last up for auction, social media giant Facebook had made the highest bid of Rs 3,900 crore (US$525 million). However, it lost out to Star India’s consolidated bid (TV + digital) of Rs 16,347.5 crore (US$2.5 billion).

Among the unsuccessful bidders for the digital rights back then was a certain Reliance Jio. The telco, which was just about a year old at the time, had bid a noteworthy Rs 3,000 crore (US$400 million).

That wasn’t really surprising, though, considering its parent company is India’s largest conglomerate, Reliance Industries. Thanks to its might, Jio had launched in September 2016 with free voice calls and dirt-cheap data plans, which helped it garner 100 million subscribers within just six months.

Jio eventually managed to get the IPL rights by sub-licensing them from Star India, which allowed it to show certain matches on JioTV, its exclusive streaming platform for Jio subscribers. Star India probably did this because it figured it wouldn’t be able to recover its money solely via advertisements, distribution, and subscriptions for Hotstar, its streaming service.

Hotstar used to charge Rs 299 (US$4) for an annual sports package back then. Very cheap, yes, but it didn’t include mobile data to watch it on. Jio’s millions of customers, on the other hand, could pay the same amount per month for data and watch the IPL—among other content—for free on JioTV.

Apart from growing its reach, more importantly, Jio was able to build a proof of concept that it could manage sports broadcasting. To get on the BCCI’s whitelist, even for a sub-licensing deal, Jio had to build the whole technology stack needed for sports broadcasting. This included stuff like fingerprinting and watermarking technology that’s necessary for content security. If you want to read more about this, check out the story I had done for The Ken in September about Reliance’s sports broadcast ambitions.

While telco rival Airtel also sub-licensed the IPL rights from Star, Jio went eight steps ahead by sealing sponsorship deals with all IPL teams—eight at the time. If you remember, Moneyball has already covered Jio’s unique IPL sponsorship strategy, which existed till the 2022 edition, by when there were 10 teams. (It remains to be seen whether this strategy will change now that Reliance has won the digital rights all for itself).

Jio has also grown tremendously over the last five years, overtaking Airtel as India’s largest telco. It currently has around 380 million active subscribers out of a total base of 405 million. And these 380 million subscribers will probably continue to get to watch the IPL for free on JioTV.

Quote
“Live sports predominantly will be an ad-driven model for us. That is the way we are going to keep it as much as we can. We definitely want to give the content free to our users, because that will help them stick with us. The lifetime value of a mobile subscriber is very good because, usually, you don’t change your service provider. So, it leads to good user retention.

Secondly, it allows us to do advertising. We want to grow the whole ad game. And to do that, you really need to churn out those millions and millions of impressions that you can give to the advertisers. That’s only possible if you do not put the content behind a paywall. If this business model does not work, if we’re not able to justify it, we’ll figure out if we want to bring up a paywall and have another source of revenue.”
A Jio executive

The advantage with Jio is that it has several in-built apps, including music streaming, movies, messaging, and video conferencing. These give it a lot more publishing points to sell targeted advertisements to its millions of subscribers. This is unlike Hotstar, which is just a video streaming platform.

“Jio can provide advertisers richer user data, which we can use to segment and target customers, and for which we could charge a premium,” this Jio executive told me. “Instead of, say, Rs 10 per 1,000 impressions, we can charge Rs 20. That’s the way richer targeting works. As an advertiser, you have better odds of selling your products to targeted customers based on their likes rather than throwing it all over the place and seeing where it sticks.”

That’s one piece of the puzzle.

Also in Reliance’s stable of companies is Reliance Retail, which owns India’s largest supermarket chain and is on its way to building a US$6.5 billion consumer goods business.

Reliance, run by billionaire Mukesh Ambani, plans to build a portfolio of 50 to 60 grocery, household and personal care brands within six months and is hiring an army of distributors to take them to mom-and-pop stores and bigger retail outlets across the nation, the sources added.

The consumer goods push under a vertical named Reliance Retail Consumer Brands will come on top of Ambani’s brick-and-mortar store network of more than 2,000 grocery outlets and ongoing expansion of “JioMart” e-commerce operations in India’s nearly $900 billion retail market, one of the world’s biggest.

Reliance is in final stages of negotiations with around 30 popular niche local consumer brands to fully acquire them or form joint venture partnerships for sales, said the first source familiar with its business planning.

The total investment outlay planned by the company to acquire brands isn’t clear, but the second source said Reliance had set a goal to achieve Rs 50,000 crore ($6.5 billion) of annual sales from the business within five years.

"Reliance will become a house of brands. This is an inorganic play," said the person.

I’m sure you’re wondering how this is connected with Reliance Jio and the IPL. Now, imagine this:

You’re watching the IPL on your phone. During the ad break, you see an ad for a packet of chips. Hunger pangs set in and you feel like buying a packet or two. Usually, you’d have to go away from your streaming app and open your grocery app to buy the chips. But what if you could do it all on one screen while watching the match?

Welcome to the world of shoppable media, or content-to-commerce. This isn’t particularly a novel concept, even with the IPL. If you remember, in 2019, food-delivery platform Swiggy had tied up with Hotstar to offer something similar. Swiggy POP, Swiggy’s curated single-serve meals from top restaurants, were integrated on the Hotstar app such that users could buy them with a few taps.

Source: The News Minute

While Swiggy didn’t reveal how this experiment fared, it probably did well, considering the foodtech came on board as an official sponsor of the IPL ahead of the 2022 season. It paid Rs 50 crore (US$6.6 million) for this privilege.

Now, imagine this same shoppable media concept being opened up to India’s fast-moving consumer goods (FMCG) industry, which is expected to be worth US$220 billion by 2025, up from US$110 billion in 2020. Even if Reliance restricts it to its own FMCG brands, that’s still a huge market to play with.

Quote
“I think we will start seeing a lot more preferential spots being given to FMCG brands, which people can literally watch, click, and shop from there directly. And you can only do that if you own the pipe...the entire ecosystem. Then, you just need to figure out things like how many minutes of advertising per game. If you do it right, you can change the entire media-viewing experience.”
A second Jio executive

In a nutshell, Reliance can open up the IPL to hundreds of millions of Jio subscribers for free and allow advertisers to target them based on their likes and preferences, measured by their activity across the Jio ecosystem. Along with that, it can integrate FMCG brands—whether its own or external—and perhaps even restaurants with the live stream, and allow viewers to buy the products while they’re watching the matches.

And this is just the Jio ecosystem we’re talking about. Non-Jio subscribers will be able to watch the IPL the regular way—by buying a subscription of Reliance’s OTT platform. Reliance already has a streaming platform, Voot, under Viacom18. But as I had reported in an earlier edition of Moneyball, Reliance plans to launch a separate sports-focused OTT platform later this year. This is most likely to be under the Sports18 brand, which is the sports television network Reliance launched earlier this year.

Now, ever since Viacom18 won the IPL digital rights, there have been concerns over whether its streaming platform will be up to the task. Voot is hardly the best streaming platform in India in terms of the user interface (UI), user experience (UX), and overall technology. And there’s no guarantee the yet-to-be-launched sports OTT will be any better.

However, you can expect things to change by the time the next IPL season comes around. In April, an investment platform called Bodhi Tree Systems bought a ~40% stake in Viacom18. Bodhi Tree Systems is a joint venture between Uday Shankar, Disney’s former Asia-Pacific president and former CEO of Star India, and Lupa Systems, a holding company controlled by James Murdoch, former CEO of 21st Century Fox.

Shankar has been credited with turning around the fortunes of Star India and Hotstar—he was at the helm when the broadcaster won the IPL rights in 2017. He quit Star India in late 2020, two years after the company underwent an ownership change as part of Disney’s acquisition of 21st Century Fox. It’s safe to say he knows a thing or two about running an efficient sports streaming platform.

There were also some concerns about whether Reliance’s streaming platform will be able to handle the insane traffic that comes with the IPL. The record is 18.6 million concurrent users, set during the final of IPL 2019. And Hotstar passed the test with flying colours. In fact, it went on to set a global streaming record of 25.3 million concurrent users during the India-New Zealand semi-final of the 2019 cricket world cup.

In theory, handling such traffic should not be an issue for Reliance. Again, because of Jio, which has its own content distribution network (CDN). A CDN is basically a geographically distributed group of servers that work together to provide fast delivery of internet content.

Quote
“Jio has about 49 points of presence—POPs—across India, which is almost two times the number of telecom circles that we have. That’s the widest coverage compared to any other telecom player. Hotstar got access to our CDN as part of the sub-licensing deal.”
The first Jio executive

Apologies for steering towards the technical side, but I’m sure you get what I’m trying to say. Reliance, with all its riches—market capitalisation of Rs 17,57,000 crore (US$225 billion)—and various verticals, has the potential to transform sports broadcasting in India as we know it.

You can probably expect to see a teaser of what will be on offer from IPL 2023 later this year, during the second-most important sports tournament under the Reliance umbrella. Last year, Viacom18 paid Rs 450 crore (US$57 million) for the media rights of the 2022 FIFA World Cup, which will be the guinea pig ahead of the big launch next year.

Strap up.

PS: I did not go into the conflict of interest that arises from Reliance acquiring the IPL digital rights and owning an IPL franchise (and sponsoring all the teams), because a) I’ve written about it before; and b) what’s the point? 🙃

PPS: An earlier version of this piece incorrectly stated that Bodhi Tree’s stake in Viacom18 is 10%. This has been corrected.

Quick singles

🍎⚽️ Apple is pushing forward into sports streaming. After signing an US$85 million-a-year deal with Major League Baseball (MLB) for Friday night matches earlier this year, the tech giant has now announced a groundbreaking partnership with Major League Soccer (MLS). The deal is worth a minimum US$2.5 billion over 10 years, starting 2023. Apple will launch a separate MLS streaming service housed within the Apple TV app. Which means fans can subscribe only to the MLS service and don’t need to buy the full Apple TV+ subscription. A limited number of matches will be available for free. [The Athletic]

⭐️🎮 Star Sports has partnered with gaming company NODWIN Gaming to broadcast esports matches in India. It’s the first time esports will be shown by a mainstream television broadcaster in the country. Earlier, live esports was restricted to streaming platforms. The first tournament that will be broadcast under the new deal will be the Battlegrounds Mobile India (BGMI) Masters Series from 24 June. [The Economic Times]

🏏🌎📺 ​​With the IPL media rights auction now over, it’s the International Cricket Council’s (ICC) turn to get in on the action. The ICC is reportedly planning to float its media rights tender next week for a four-year cycle starting after the 2023 men’s ODI world cup. The governing body is also looking to sell the rights across regions separately for the first time, starting with the Indian subcontinent. [The Times of India]

That’s all from this edition of Moneyball. If you wish to read about any other aspect of the IPL media rights auction—or anything else—do write to me at [email protected]

Take care.

Best,
Jaideep

This newsletter has been discontinued. But you can read The Stack which includes our newsletters around cleantech, fintech, personal finance and e-commerce in India!