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BCCI media rights: Will bidding for digital outsmart TV?

Despite a bleak revenue stream, a glimpse of investment that digital players are willing to make in Indian Cricket was seen during the auction of IPL broadcast rights when Facebook, Jio and Airtel made a bid (that amounted to) upwards of Rs 3,000 crore for digital rights of IPL for five years. Similar enthusiasm is likely to be seen again when BCCI holds the e-auction for broadcast rights of Indian cricket later this month

The first ever e-auction of the broadcast rights of BCCI international and domestic matches during the period commencing from April 1, 2018 till March 31, 2023 to be held on March 27 is set to witness a fierce competition. It won't be as much for TV broadcast where majorly two players Star India and Sony Pictures Networks India are interested, but the real battle ground would be digital rights.

From online giants such as Google and Facebook to the OTT players and telecom companies such as Reliance Jio, Airtel, Amazon Prime, Hotstar and SonyLiv will be bidding fiercely for the digital rights. For telecom companies such as Jio and Airtel, who have made very high investments in setting up the high speed data infrastructure in India, winning the cricket rights could be a game changer.

"The kind of customer acquisition and data consumption cricket would offer is unmatchable. It will also increase the stickiness of these telcos," a media industry expert said. 

The event is expected to be a money spinner for BCCI that, according to market reports, could set Rs 7 crore as base price for digital rights. In 2012, the base price for the television rights was set at Rs 31.5 crore plus one crore for Category A matches and Rs 33 crore plus one crore for Category B matches. (The price for digital rights however stood at Rs 3 crore per match that year.) BCCI could not sell the digital rights in 2012, despite reducing the base price to Rs 2 crore later.

This time, BCCI has divided the invitation to tender (ITT) process into three rights packages— global television rights plus rest of the world digital rights, digital rights for the Indian subcontinent and a global consolidated rights bid. It is the first time that digital is being bid out separately.

Experts are bullish this time as the smartphone and data penetration has increased tremendously. 

"With the launch of Jio entire digital marketing has changed. With easy and cheap availability of high speed data, the primary screen is moving from TV to digital," a media expert said. 

"The auction for digital rights would be fought hard as there's no popular content in India as cricket. It will keep users hooked all year," the expert added. 

The digital is expected to rake in moolah for BCCI as the online auction will allow companies to bid more fiercely as against the close envelope system where no one knew about the bid amount placed by other players until it was open. 

"The growth in TV is limited now. Though it still has wider reach than digital, the consumption is rising on digital through mobile," said another top expert of sports broadcasting. 

Since a lot of comparisons are being drawn for the digital part of the telecast rights between IPL and India Cricket, it must be noted that the highest bid amount for digital for IPL was put by Facebook at Rs 3900 crore. Airtel was a close second with a bid amount of 3280 crore, while Jio put the amount as 3075 crore. Also, Sony Pictures Networks India kept away from bidding for the digital rights of the IPL, despite the fact that the network had SonyLiv, its digital app. 

“The digital rights for the India cricket would not be much above of what was Facebook’s bid in the IPL. My estimate is that the digital rights for the Indian subcontinent should go up to Rs 4000 crore,” said a senior industry observer.

However, such high amount is also making the broadcasters sceptical as the recovery on digital is still lagging.

One of the prospective participants in the digital bid had to offer an analysis on this, saying, “Even if the digital rights costs are much lesser than that of TV, the cost per contact on digital is much higher than what it is for TV. TV is about 50 times more in reach. Getting revenues on digital is also a challenge. Even Star India is struggling to generate good revenues for IPL on digital. For TV, they might come very close to what they have paid on in its first year, but on digital, I have a sense that they will have to wait a couple of years before they announce a break even. IPL and domestic cricket is almost equally popular with a pattern that against whom is India playing.”

Experts believe that telecom companies such as Jio TV or Airtel or even the DTH players, popularly called as pipes, would have a two forked benefit from winning the rights. One, is the viewership and revenue that they generate, and the other is spreading out their network. Since they are platform owners, it will be a win-win situation. Even in the other global markets, one see a lot of platform owners and telecom service providers pitching for the telecast rights on digital. This gives an upper hand on the customer acquisition for these companies.

The first ever e-auction will also allow broadcasters to make more informed choices.

"In the previous editions, someone could win by a huge margin, while in this one, it is a more informed choice that one would make," another expert said.

IPL and India Cricket are different in another aspect (and that) is the format of the game. One would not know as to whether say a Facebook or an Airtel likes the test matches as much as they like the T20. “It won’t matter what is anyone’s estimate on the rights, because once the open bidding starts, everyone will have to be more reactive in their decision making. There is no way of predicting what their strategy is. The upper limit for this is also very unpredictable because someone might expect to sell the advertising at say Rs 1 lakh per 10 seconds, while someone else might estimate is to be worth a Rs 5 or 10 lakh per ten seconder,” one of the industry observers shared his view.

However, with Discovery new sports channel - DSport, TV could also see some action as the duopoly of Star and Sony could be challenged.

In 2012, Star India had won the rights for five years for about Rs 3851 crore, while Sony was a close No, 2 that had bid Rs 3700 crore then. Star India paid an average of Rs 43 crore per match.

Also, the television feeds have to be shared by Doordarshan by whoever gets the rights. On the other hand, digital has grown hugely since the last bid happened in 2012. The aggression and scale with which the digital companies have been growing is phenomenal and they are quite big in size.

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