Has Viacom18 paid over the top for the IPL digital rights?

When the IPL media rights bidding started to be discussed about two months back, I had predicted in my blog in a leading pink paper that the media bids would hit Rs. 45,000 crore. The IPL media rights auction that finally concluded yesterday closed at Rs. 44,075 crore for the next five-year period. My prediction was 99% accurate!

I had predicted in the same piece that the 30-seconder spot would cross Rs. 1 crore during the next five years. If you work the Star TV winning bid backwards where the Rs. 23,575 crore bid compared to Rs. 16,347.5 crore for the previous five-year deal is about 44% higher, but minus OTT earnings, the 30-seconder will by 2027 surely cross the eye-popping rupees one crore mark. Be as it may, Disney Star I think have got themselves a pretty good deal for the broadcast TV rights. 

The figure that is really stirring up a king-sized debate is the Rs 20,500 crore paid by the Reliance-backed Viacom18 for the digital/OTT rights. Viacom18 bid in consortium with Bodhi Tree’s Uday Shankar (ex-CEO of Disney Star) and James Murdoch of Lupa Systems. It also won the non-exclusive Package C by paying Rs 2991 crore more. Package D for overseas rights for various regions was also bagged by Viacom, as also by Times Internet. So Viacom18 now effectively controls all the digital rights all across India, and the world for the IPL till 2027. 

The questions everyone is asking are simply 1. Was the bid excessive? 2. Will Viacom18 be able to recover the bid investment? 3. The digital package effectively sold for more than the TV rights – is that where the future of media is headed? 

Let us try and answer these questions sequentially and logically, but not necessarily in that order. 

What is the current market size? 

As per media reports, Disney Hotstar had a subscriber base of 50 million during the 2022 season of the IPL. At that customer level, Hotstar was said to be earning Rs. 600-800 crore in revenue from IPL.

Where is Viacom’s Voot in comparison? 

Oops! That is really tiny. Probably just more than a million.

But, hey, you forgot that Viacom’s big brother Jio has a whopping 450 million subscribers – potentially 8-900% larger than Hotstar’s installed base. Viacom has obviously banked its bid on this humungous base and not the tiny Voot number. 

Were Jio to make a free IPL offer to its entire customer base, I guess that they would get at least half the subscribers to sign up. So it would have 400% more impressions to serve out. At current rates, the monetisation pie would automatically expand to Rs. 2500-3000 crore in year one itself. Getting to the targeted Rs. 20,500 crore at that first-year revenue starting point would be fairly easy. 

But is there more to it? 

Very few marketers or advertisers actually understand the power of a telco and the wealth of user data that the telecom operator is actually sitting on. All of the performance marketing (the current buzz biz in digital) is actually guesswork – the demand side player (inventory buyer) hardly knows anything much about the user. But in the case of the telco (in this case Jio), it will know almost everything there is to be known about its subscribers – location, handset, ARPU, data usage, apps, and lots more. All of this data can now be shared with IPL advertisers for far better targeting. This will surely help bump up ad rates significantly. And rake in the moolah for Viacom18.

There is also the possible advantage of bringing social commerce very soon into the consumer mix. With the telco KYC done and Jio’s active payment gateway plans, the play with the IPL may actually go beyond cricket – with mobile commerce a sure bet soon.

The possible big surprise 

I don’t know how many readers would remember that both Google and Facebook (read Meta) are both investors in Jio.

Were they too to join forces in the IPL monetisation the numbers would just flow and flow. For Jio, these global partners are aces up its sleeve. 

The Viacom bid is therefore not just a vanity bid

In Uday Shankar, Team Viacom has a seasoned campaigner who built the entire cricketing business of Star TV. No one understands cricket monetisation better than him. Trust him to display his Midas Touch once again in the days to come.

Is digital going to be bigger than television?

Well, the writing is on the wall. It is no longer even a matter of time. The bidding numbers tell a story that you have no choice but to listen to. Thirty years after television started its march to supremacy, trampling over the press that had ruled for a hundred years, this IPL auction has sounded the trumpet for digital’s rise to media leadership. A new era has begun. 

(The author is the managing director of Rediffusion)