Will the $6 Billion IPL Cricket Series Mean Disney is Hit for Six in India?

According to Singapore-based consultancy and analysis firm Media Partners Asia, the upcoming Indian Premier League tournament could be a watershed for the country’s jostling media empires.

Viacom18, backed by Mukesh Ambani’s Reliance Industries Limited (RIL) and Paramount (as a minority stakeholder), in partnership with financier Bodhi Tree Systems, and Disney Star India, the incumbent pay-TV player, paid close to $3.1 billion for broadcast rights to the five 2023-2027 editions of the tournament.

It paid around the same amount for each set of digital rights. With an annualized cost of $1.2 billion, or roughly $600 million per conglomerate, for the tournament rights, Media Partners Asia projects that advertising revenues generated by the two-month 2023 competition will end up around $550 million.

(According to the research group, RIL will get $300–350 million from advertising sales, whereas Star’s best-case scenario is $220 million.) That could be considered a reasonable loss leader for financially stable RIL.

But Disney may have to reevaluate its strategy because of the magnitude of those losses and other challenges. By securing the digital rights, RIL is able to compete with Star and offer a free service that Star is charging for, attracting customers to its Reliance Jio mobile broadband service and winning new viewers for its Jio Cinema platform.

The MPA believes that by 2024, RIL will implement yearly passes and dynamic pricing for IPL subscriptions. (Reliance Industries’ strategy of offering free service at first, then charging a small fee as it gained market share in India’s cellphone and mobile broadband markets, and eventually charging much more, is a model for this video strategy.)

Jio Cinema has assured sponsors that this year’s IPL will be viewed by 400 million people and viewed in real time by 100 million people. The company can show advertisers how their commercials can reach a specific audience through mobile devices and smart TVs.

This will also serve as a storefront for the business in anticipation of its planned SVOD rollout later this year. Jio Cinema plans to use its partnership with Paramount+ and the introduction of new content and services from other potential partners like Warner Bros.

Discovery (which includes HBO) and NBCU to accomplish these goals. After June of this year, Jio Cinema is planning to merge with Voot, a smaller SVOD streamer that had 6 million subscribers at the end of 2022, and integrate their platforms.

The effects of these variables on Disney in India are likely to be negative. MPA predicts that Star’s pay-TV ad sales for the 2023 edition of the IPL will be more than halved compared to the $442 million in 2022. MPA also predicts that in 2023, there will be a “significant impact” on the percentage of Star’s subscription fees that the company allocates to its IPL business.

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