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Ahead of the 2023 IPL season, Viacom18 had a decision to make. It had purchased rights to stream the lucrative cricket competition at an eye-watering sum of Rs 23,758 crore, but to break new digital ground, it was felt that barriers to access, pricing and language had to be removed.
And so, the whole tournament was offered free of cost to all internet users on JioCinema, with commentary in multiple Indian languages.
It proved to be a game changer. JioCinema closed the gap with rival Star Sports, the official IPL broadcaster. The former amassed 450 million viewers, while Star Sports had 505 million. Going forward, the digital reach of the property is expected to surpass TV in the coming years, as internet penetration expands and paid TV subscription declines.
The rise of free
Until 2022, it was a different story. The official streaming rights were with Disney+ Hotstar, which kept the property behind a paywall. Doing so made sense for the platform when its subscriber base was growing and it was able to deliver reach to advertisers, but not anymore.
JioCinema’s decision of offering the IPL for free meant Disney+ Hotstar, which was losing subscribers at record numbers, had to do something similar.
And so, the upcoming Asia Cup and the ICC World Cup in October will both be streamed free on the platform. Having lost almost 21 million subscribers between October 2022 and June 2023, Disney India’s top brass has arrived at the conclusion that going free is the best option for the two events.
But it’s interesting to note that while Viacom18 offered the IPL and FIFA World Cup free to all internet users, Disney Star is only offering the ICC World Cup and Asia Cup free to mobile users while placing them behind a paywall on Connected TVs (CTV).
Disney Star, the company that owns Disney+ Hotstar, is also testing the waters with free streaming. Next year onwards, it will hold only digital rights for ICC events, since Zee Entertainment Enterprises Limited (ZEEL), which is in the process of merging with Sony Pictures Networks India (SPNI), will hold TV rights.
An uncertain time
However, industry experts believe that the decision, firstly by Viacom18 and now by Disney Star, of distributing cricket for free, threatens to disrupt a category that has greatly benefited from low data costs and rising smartphone adoption.
Making cricket viewing free of cost will expand the over-the-top (OTT) ad pie, but it will also immediately affect the growth of OTT subscribers. The subscriber numbers have plateaued recently, while ad spending has continued to grow. With total revenues of $3 billion in 2022, the streaming OTT video industry in India is predicted to more than double by 2027, to over $7 billion, according to Media Partners Asia.
“Creating disruptions to gain a large share of the audience’s time with big-ticket properties seems to be the name of the game. The final objective is to penetrate 100% of potential audiences and dominate their time on content across markets in years to come,” said TAM Media CEO LV Krishnan.
Ad-led vs subscription-led
In the long run, however, offering cricket for free isn’t sustainable, feel experts. This is because acquisition costs have gone through the roof and generating revenue from advertising alone is an uphill task. “Just depending on advertising is not feasible in the long run considering the skyrocketing cricket acquisition prices,” said Kurate Digital Consulting’s senior partner Uday Sodhi.
Media players have collectively committed $9 billion in rights fees for cricket properties like ICC events and the IPL. The Indian team’s bilateral media rights, for which the BCCI has issued a tender, is expected to fetch another $1 billion.
Additionally, experts also said JioCinema’s move to provide cricket for free is a short-term strategy, because the company is still in the process of developing the platform’s content and product offerings beyond live sports.
Sodhi described Viacom18’s strategy as a passing phase. “They are acquiring territory at Disney+ Hotstar’s expense. There is a clear swap of customers, and JioCinema wanted the swap to happen in the first year of the IPL itself. So, the quick and easy way of doing it was to offer IPL for free,” he explained.
Over-dependence on ad revenue is an unsustainable strategy for any OTT player, he said. “Once JioCinema gets enough customers and their content is strong enough, they will probably figure out a way to charge them,” he added.
In an earlier interview with Economic Times, Anil Jayaraj, CEO of Viacom18 Sports, had sounded optimistic about the ad-led strategy. “In India, the ad-led model is the most effective method of revenue generation because of the expansion of the digital audience. For all digital players, we anticipate a sharp increase in free audiences,” he had said.
Cricket provides an unparalleled reach irrespective of the platform, since it is the biggest impact property in the country, said Vishal Chinchankar, CEO, Madison Media Alpha and Madison Digital. “Free cricket will be a big boost for expanding ad revenue on OTT. The real growth will be unleashed once tier-2 and tier-3 audiences start consuming cricket on OTT. Digital has massive headroom to grow considering internet penetration is still lower than TV,” he added.
Battle royale
Nitin Menon, managing partner at NV Capital, predicted that JioCinema and Disney+ Hotstar would engage in a fierce battle for OTT supremacy. “JioCinema is in a land grab phase, and their strongest weapon will be cricket. If JioCinema keeps it free, Disney+ Hotstar will have to compete to maintain its market share,” he added.
ZEEL’s chief growth officer, ad sales, Ashish Sehgal, said that Disney Star’s top priority right now would be to grow revenues. “Since the World Cup and Asia Cup both fall during the festive season, they are hoping this will attract top dollar from advertisers.”
Sehgal also noted that the free cricket strategy will undoubtedly give advertising video on demand (AVOD) a big boost. “Cricket going AVOD will even impact YouTube and Facebook. The price of ad inventory on both platforms is very high, and brand safety is also a concern. Cricket is totally brand-safe, while simultaneously providing high reach,” he added.
The media head of a leading FMCG company cited the example of how Reliance Jio established itself in telecom through the free route, and once it was strongly entrenched, it started charging for services. JioCinema, he said, has adopted a similar strategy. “Whatever delta they are going to get from subscriptions, they are going to charge the advertisers,” the executive said.
Rights acquisition
Over the years, when it comes to big-ticket properties like the IPL, ICC events or bilateral India matches, TV rights have typically been the key consideration for media companies compared to digital rights. The first sign of change came during the 2017 IPL media rights auction, when Facebook shocked everyone by making a bid of Rs 3,900 crore for the IPL’s digital rights, while Bharti Airtel and Reliance Jio also made strong offers.
By 2022, the argument had been settled: Viacom18’s Rs 23,758 crore for digital rights was more than the Rs 23,575 crore Disney Star forked out for TV.
The 2022 IPL also marked a turning point for the Indian media and entertainment sector, as it was the first time that digital took centrestage. The value of TV and streaming rights was nearly comparable, even for ICC media rights, which were sold right after the IPL media rights, with Disney Star and ZEEL expected to pay $1.5 billion each between 2024 and 2027.
Asian Paints – the market leader in the category has launched a film featuring Deepika Padukone and Karan Johar to promote its luxury offering
Walt Disney chief executive Iger, who returned to the company in November for a second stint, triggered the vigorous industry chatter in mid-July when he suggested during a CNBC interview that the company’s television businesses, including its stations and cable channels, “may not be core to Disney.”
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