How IPL could change the game in the OTT space: Elara Capital’s Karan Taurani explains

The media rights auction for the next five years (2023-2027) for the Indian Premier League is set to take place on June 12.

Television rights for the India subcontinent and digital rights are two of the four bundles up for grabs.

The Invitation to Tender (ITT) provisions for the winners of the TV rights to challenge the digital rights holders, in a final round of e-bidding providing an opportunity for one party to acquire both TV and OTT rights. The digital rights holder, however, cannot challenge the broadcast rights holder.

So the TV and digital rights could rest with the same entity, or go different ways.

Around 10 companies have collected the bid documents from the Board of Control for Cricket in India (BCCI), say reports. In the bid race are incumbent Disney-Star, Amazon, Sony, ZEE Group, Viacom 18, Apple, Google India, Sky Sports UK and Dream 11.

According to Karan Taurani, Senior Vice President, Elara Capital, which published a report recently on the subject, the key players on the broadcasting side are Sony, ZEE, Star-Disney, and Viacom18. “Among these, the serious contenders could be Disney-Star and Viacom18,” he adds.

He explains, “ZEE-Sony merger has still not happened, and apparently ZEE will definitely bid for IPL media rights on a solo basis. In my opinion, there is no high probability of them bagging the bid. If the bidding gets aggressive beyond a point, the players like Disney-Hotstar have different kinds of strategic initiatives. They are planning to expand the OTT offerings, and when you look at the valuation at a global level, the platform has got a sizeable contribution. Viacom18 will have the objective of enhancing their offerings beyond GEC and focus on Jio, as among the Jio platforms, Jio TV is going to be the next big thing. That’s how the strategy focus will pan out.”

The Elara Capital report also stated that 70pc of Star India’s AVOD revenue is IPL-led, ‘with SVOD revenue largely following suit too’.

When asked if a new player bagging the rights will be able to replicate that kind of revenue, Taurani says, “Replication of revenue will remain a challenge. In terms of content, IPL is going to be one of the biggest revenue streams, but it all depends on the recall and connect the platform has with the viewers and advertisers. There will be some sort of transition for a year, where the revenue might not flow at the expected level as compared to Disney Hotstar because the new entity might not have the expertise in terms of selling rights and dealing with advertisers. After a year, there is a high probability that the revenues will go beyond Disney Star’s.”

As per Taurani, in the first year the revenue from OTT would be around Rs.700 crores. If the bid is bagged by Disney Star, then revenue might grow at 30 to 40 pc, but if OTT rights are bagged by another player, then the growth may be around 10 pc.

But traffic will definitely shift from Disney+ Hotstar if the rights shift, he reasons. That’s because sports events led by the IPL are a major factor for Disney+ Hotstar’s monthly active users.

On the subscription revenue of a new OTT platform bagging the rights, he says it would depend on the revenue per user of the platform and how it compares with Disney+ Hotstar. Platforms with similar revenue per user will see a mirror reflection in terms of subscription revenues, but a platform with lower revenue per user will see subscriptions or the number of paid subscribers increase at a higher rate, he explains.

One thing is certain. If the status quo on media rights changes, the disruption will certainly be felt beyond broadcasting.