IPL digital rights win a shot in the arm for Viacom18’s OTT ambitions

For Viacom18, getting the IPL digital rights is just the start, experts say. (Representative image)

For Viacom18, the Indian Premier League (IPL) is the crown jewel in its content portfolio which is seeing a significant scale-up in its sports content.

After bagging the rights of sporting properties such as the FIFA World Cup Qatar 2022, National Basketball Association (NBA), La Liga, Ligue 1, Serie A, Abu Dhabi T10, and top ATP (Association of Tennis Professionals) and Badminton World Federation (BWF) events, the platform has won IPL's consolidated digital rights for the Indian subcontinent for Rs 23,758 crore. In addition, it also acquired the rights for Australia, South Africa, and the UK

The consolidated digital rights include the streaming rights for all 410 matches in the 2023-27 cycle for the Indian subcontinent and the rights for a package of 18 matches comprising the opening game each season, four playoff games and 13 evening double header matches. Experts note that the rights for the 18 matches could likely attract 40 percent of IPL's viewership.

Viacom18 is a joint venture of Reliance Industries-owned Network18, which owns 51 percent, and ViacomCBS, with a 49 percent stake.

"Over the last five years, we have seen 15-20 percent year-on-year (YoY) growth in digital consumption of IPL. Hence, it is no surprise that the digital media rights are now almost at the same level as television rights," said Shailesh Kapoor, CEO, Ormax Media.

Indeed, the digital rights for the subcontinent at Rs 23,758 crore have surpassed the TV rights acquired by Star for Rs 23,575 crore.

Cord cutting is a reality, thanks to the wide availability of high-speed mobile internet in India. Disney+Hotstar, the official streaming partner of IPL from 2018-2022 had seen significant growth in subscribers over the years, thanks to IPL. In 2020, the platform saw an addition of around 7.5 million subscribers during IPL 13 to take its total subscriber base to 24 million, according to industry estimates.

This year, Disney+Hotstar took its total base to 50.1 million subscribers, a growth which was led by season 15 of IPL.

The growth in subscriber base has been accompanied by an increase in advertising revenues as well. Disney+Hotstar earned Rs 700 crore from IPL 2021, and this number is expected to increase to Rs 850 crore in 2022, said an Elara Securities report.

A magic bullet for Voot

"IPL is the magic bullet and this property will allow Voot to scale up. Expect high double-digit growth in subscribers of Voot as well as ad revenues," said Nitin Menon of NV Capital, a credit fund for the media and entertainment sector.

Currently, Voot is estimated to have a 2 percent market share in the advertising video-on-demand space (AVOD), according to an Elara Securities report. Also, Voot Select which is the subscription video-on-demand (SVOD) platform that was launched in 2020, on-boarded a million subscribers in a year.

"IPL has been a pivotal driver of subscriptions for Disney+Hotstar over the last few years. Now with digital rights going to Voot (Viacom18), it will help the platform enter the big league as IPL can single-handedly add upwards of 10 million new subscriptions over a couple of years. But one has to wait and see what strategy Voot deploys, both in terms of subscriptions and advertising, to maximise revenue and brand value from IPL," said Kapoor of Ormax Media.

Analysts say that IPL leads to a significant surge in metrics like monthly active users (MAU) and daily active users (DAU) for any OTT platform.

"As the consumer media wallet keeps getting divided into smaller pieces in an overcrowded market, Viacom18 may be approaching it with a consolidate and dominate strategy and the IPL win is a strategic step in that direction. IPL has historically proven to be one of the most reliable properties for driving both conversion and stickiness on a platform," said Utkarsh Sinha, Managing Director, Bexley Advisors, a boutique investment bank firm.

The right people

"Voot is backed by Viacom18, Reliance, and now Lupa Systems. Extremely strong people behind it (the platform). So, no reason why this (IPL) will not take them to top of the game and create new possibilities for the SVOD growth in the country," said Ajit Thakur, CEO of streaming platform aha which offers content in Tamil and Telugu.

In FY22, the revenue split in the Indian OTT industry was 37 percent SVOD and 63 percent coming from AVOD.

Concurring with Thakur, Menon said, "James Murdoch and Uday Shankar are the best combination and with Qatar Investment Authority (QIA) pumping in $1.5 billion, Viacom18’s Voot will only grow from here."

Shankar, former president of The Walt Disney Asia Pacific and chairman of Star and Disney India and Murdoch’s private investment company, Lupa Systems, formed a new investment platform, Bodhi Tree, earlier this year. On April 27 this year, Viacom18 announced a partnership with Bodhi Tree which will invest Rs 13,000 crore in the former.

"James Murdoch is re-entering the media and entertainment sector through Voot. He is looking at India for the long haul. James has the experience since his organisation Fox was a leading broadcaster for various sporting properties in US. Plus, James and Uday have already looked at IPL in Star. So, they know what to do to boost revenues," said Menon.

IPL is just the start

For Viacom18, Murdoch and Shankar, getting IPL is just the start, said experts.

"The fact that we have institutional capital and the likes of QIA which is one of the biggest sovereign funds globally investing alongside James showcases their long-term interests in investing patient capital in the media and entertainment sector," said Menon.

In addition, Sinha noted, "The Jio DNA in Reliance gives them the foresight and the conviction to stay with very long-tail customer acquisition strategies."

Reliance's telecommunications company Jio has over 400 million customers. In addition, around 85 percent of viewership volumes of certain over-the-top (OTT) platforms were generated by telcos, said a FICCI-EY 2022 report. The report expects around 400 million consumers to consume content via telco and aggregator bundles by 2025.

Along with driving subscription and advertising revenue, Menon thinks that IPL will also result in growth in content. "IPL will be an amplifier as it will lead to more content acquisition and green lighting of original projects."

With Viacom18 scaling up its content portfolio and also getting digital rights for IPL, it will be tough time for Disney+Hotstar, said analysts.

"The platform would need to go back to planning with a higher focus on non-sports. Hotstar was getting significant amount of the subscribers and revenues due to IPL," said Abhneesh Roy of Edelweiss.

Disclaimer: Reliance Industries Ltd, which owns 51 percent in Viacom18, is the sole beneficiary of Independent Media Trust that controls Network18 Media & Investments Ltd.