In cricket-mad India the upcoming Indian Premier League tournament could be a watershed for the country’s jostling media empires, according to Singapore-based consultancy and analysis firm, Media Partners Asia.
Video rights for the tournament were split between incumbent pay-TV player Disney Star India, which paid close to $3.1 billion for broadcast rights to the five 2023-2027 editions, and Viacom18, which is backed by Mukesh Ambani’s Reliance Industries Limited (RIL) and Paramount (as a minority stakeholder), in partnership with financier Bodhi Tree Systems. It paid a similar sum for the separate digital rights.
Media Partners Asia estimates that advertising revenues spawned by the two-month 2023 competition will end up around $550 million – representing a clear loss on the annualized cost of $1.2 billion, or roughly $600 million per conglomerate, for the tournament rights. (The analysis firm forecasts that RIL will earn $300-350 million in ad sales, while Star’s best-case scenario is $220 million.)
For deep-pocketed RIL that may be a justifiable loss leader. But for Disney the scale of those losses as well as other headwinds, may force a strategic rethink.
Controlling the digital rights allows RIL to attract customers to its Reliance Jio mobile broadband service and win new viewers for its Jio Cinema platform, while simultaneously offering for free a service that Star is charging for. MPA speculates that RIL will start charging subscription fees for IPL in 2024 using annual passes and dynamic pricing.
(This video strategy is a replica of the playbook that Reliance Industries used to break into India’s cellphone and mobile broadband market – first offering it for free, then a nominal sum and then hiking up the rates after it became the market leader.)
Jio Cinema has promised advertisers that this year’s IPL will have a reach of 400 million users and a concurrent user base of 100 million. The company also gets the opportunity to demonstrate to advertisers how their spots can be targeted and customized via mobile and connected TVs.
Additionally, this will serve as a shop window ahead of the company’s expected launch of SVOD activities in the second half of this year. For these, Jio Cinema will leverage partnerships with Paramount+ and new content and services from potential partners such as Warner Bros. Discovery, including HBO, and NBCU.
The merger and platform integration between Jio Cinema and small SVOD streamer Voot, which had 6 million subscribers at the end of 2022, is also expected to take place after June this year.
Those factors are expected to be damaging for Disney in India. MPA forecasts that Star’s pay-TV ad sales will be more than halved for the IPL 2023 edition, compared with 2022, when they weighed in at $442 million. And the proportion of subscription fees that Star attributes to its IPL business is also expected to be “significantly impacted in 2023,” MPA says.
The Mouse House’s OTT streaming business Disney+ Hotstar is also poised to be shaken by RIL’s assault. The absence of IPL, the termination of its partnership with Jio, constrained entertainment budgets, and the impending loss of marquee HBO content (expected from March 31) “will all significantly diminish value for its subscribers,” MPA says and forecasts that Disney+ Hotstar in India could lose 15 million subscribers.
“Unless Disney swiftly recalibrates, India’s premium VOD marketplace will have a new axis of power next year with Prime Video, Jio Cinema and Netflix ruling the roost,” the analysis firm warns.
Two other shadows may soon be cast on Disney’s activities in India.
One comes from the impending merger of Sony and Zee in India, which was first announced in late 2021 and is now looking likely for regulatory clearance in May. It says that when this is completed, it will “create the most scaled and profitable broadcaster in India, surpassing Star India.”
The other axis is ad-supported VOD (AVOD) services. “India’s AVOD market reached $2 billion in 2022 and is projected to grow at 18% compound annual growth rate over 2023-27 to reach $4.5 billion. A large part of this incremental growth is expected to be fueled by the supply of premium inventory coming from heavyweights like Jio Cinema, featuring IPL and other marquee sports, as well as SVOD powerhouses such Prime Video introducing AVOD tiers to go deeper.”
Variety has reached out to Disney in India for comment, but had received no response by press time.