Why are IPL media rights so expensive?
In a cricket-crazy nation like ours, where the game is watched throughout the year, making serious money is not a big deal. It is also not really shocking that the platform that will own the broadcasting rights of the Indian Premier League (IPL) will mint some serious money.
The Board of Control for Cricket in India (BCCI) has pegged the base price for the IPL media rights at Rs 32,890 crore in 2022. This is more than double the price Star India paid five years ago ie. Rs 16,347 crore. And you know what's the most shocking bit? These rights are expected to sell at a final price of Rs 40,000-50,000 crore.
But why on earth is there such kind of craze when it comes to buying these IPL media rights? And how do these figures keep reaching new astronomical heights? Here's a look:
WHY SO COSTLY?
IPL media rights compete with rights for other global sporting events like National Football League (NFL), Major League Baseball (MLB), and the English Premier League (EPL) because IPL is unrivaled in India. Also, the cost depends on what the online streaming companies are ready to pay to increase their market share over 5 years.
IPL= EXPENSIVE DIGITAL TV REAL ESTATE
When a business wants to advertise its brand and increase its customer reach consistently over a period of time, it has to shortlist the widely watched TV channels that its target audience loves. Brands also have to find popular TV shows and popular sporting events and buy ad slots that will be broadcasted around the same time as these popular shows or events. Else, at least place an ad on the same channel on which the event is broadcasted.
Yogesh Rao, Manager ( Programming Strategy & Consumer Insights) at Star India Network exclusively told DailyO why IPL is a real hot property for advertisers. In real-life, an average 30-minute episode of a TV show might have a 2.5 TV rating, but an IPL match on a weekday brings a TV rating of 4. Since this is like a jackpot for advertisers, they are even ready to shell about 18 to 25 lakh for a tiny 10-second ad during an IPL match. Because they expect to get some business from you and me.
Also, the advertiser's cost becomes the platform owner's revenue. Every platform like Star India, Viacom, Reliance, and Amazon are eyeing to buy IPL rights because acquiring it would result in:
- Exponential growth of their platform reach (For eg: if Amazon airs IPL this year, its Amazon Prime subscription base is bound to grow 10 folds)
- The platform becomes a market leader.
- There is a significant rise in revenues and ad sales.
Though advertisers logically look at the cost per TV rating while deciding their ad spend, all logic goes out of the window when it comes to IPL. Advertisers are also backed by Venture Capital funds that are looking to build their brand and are ready to spend anything to get those premium ad slots.
HOW ARE THESE RIGHTS SOLD?
IPL broadcasting rights are sold for 5-year periods at a time (currently being 2023 to 2027). Now, companies can bid for four specific packages either separately, or in totality. There seems to be a provision to increase the number of matches to 94 in the final two years.
- Package 1 covers Indian sub-continent exclusive TV (broadcast) rights.
- Package 2 covers digital rights for the Indian sub-continent.
- Package 3 covers 18 selected games in each season for digital space.
- Package 4 covers all games for combined TV and digital rights for overseas markets.
SO WHERE MIGHT YOU SEE THE NEXT IPL IF NOT ON STAR INDIA?
Though companies like Reliance-owned Viacom 18, Amazon, Sony India, and Zee Entertainment were competing to get the TV and Digital rights for IPL, Amazon has dropped out of the race. Digital rights are also being contended by companies like Times Internet, FunAsia, Dream11, and FanCode. Sky Sports (UK) and Supersport (South Africa) are vying for overseas TV and digital rights.