The total advertising revenue of IPL 2023 will be US$550 million, with digital grabbing a 60% share, according to the Media Partners Asia’s report, ‘The IPL 2023 Test‘.
The report suggests that JioCinema is expected to earn US$330-US$350 million in ad sales revenue, which is more than the ad sales revenue of IPL incumbent rights holder Star India, whose earnings are projected to be between US$200-220 million.
The US$550 million revenue across digital and pay-TV is marginally flat year-over-year and represents a steep loss against annualised 2023-27 IPL rights fees of US$1.2 billion, stated the report.
FMCG budgets are expected to be largely split between TV and digital, though budgets from RIL-owned companies (i.e. retail, FMCG) will clearly move towards JioCinema, which is the platform that will stream the IPL. Sectors such as auto have moved over a large chunk of ad dollars to JioCinema, while new economy categories (i.e. gaming) have moved over entire budgets.
Subscription fees are expected to be very modest this year because of challenges with pay-TV distribution and the lack of a subscription fee on digital. The fees are expected to be significantly impacted in 2023 due to the NTO regulations’ impact, noisy disputes with Reliance-owned cable MSOs over an increase in Star Sports channel fees, and additional complications arising from Star India’s decision to broadcast 12 important IPL matches over its FTA channel Star Utsav.
JioCinema has promised advertisers that this year’s IPL will have a reach of 400 million and a concurrent user base of 100 million. In total, JioCinema has roped in 500 advertisers for the 2023 IPL. The report stated that conquering CTV will be a challenge, given distributor fragmentation and the significant level of customisation required. MPA estimates the total CTV Total Addressable market in India is at 70 million, and it forecasts that JioCinema’s IPL 2023 penetration of this base will reach 20-30 million, driving CPMs and enhancing the consumer bond with multi-camera angles, 12 languages, 4K resolution, live statistics, and more.
Given the growing challenges associated with the revenue and cost economics of linear TV for sports, it is likely that Star India will scale down its investments. Disney+ Hotstar is also losing ground. The absence of IPL, the termination of its partnership with Jio, constrained entertainment budgets, and its recent discontinuation of marquee HBO content will all significantly diminish value for its subscribers.
Despite some promising content lined up for the second half of 2023, including the Asia Cup and the ICC fifty-over World Cup, Disney+ Hotstar is facing rising headwinds with the potential loss of close to 15 million paying subscribers by the end of 2023.
Meanwhile, India’s AVOD market reached US$2 billion in 2022 and is projected to grow at an 18% CAGR over 2023-27 to reach US$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 JioCinema, featuring IPL and other marquee sports, as well as SVOD powerhouses such as Prime Video introducing AVOD tiers to go deeper.
JioCinema will likely charge subscription fees for IPL 2024 using annual passes and dynamic pricing. In the interim, the company is expected to launch SVOD in 2H 2023, leveraging partnerships with Paramount+, Viacom18’s premium local content (including new originals) and new content and services from potential partners such as Warner Bros. Discovery (WBD), including HBO, and NBCU. The merger and platform integration between JioCinema and Voot, which had 6 million subscribers at the end of 2022, is also expected to take place after June this year.