Researched by: Sara Varghese 

The big fat auction: The deets

First, a history of bids: of the escalating value of IPL rights: 

• In 2008, Sony bought the broadcasting rights for Rs 82 billion (8,200 crore or around $1.6 billion) for a period of 10 years. 
• In 2018, Star bought both TV and streaming rights for Rs 163.47 billion (16,347.5 crore or $2.55 billion) for five years—from 2018 to 2022. 
• It set a global record for cricket rights—and beat out Facebook which bid a paltry $600 million just for streaming rights. The closest bid: Sony ($ 1.47 billion). 
• Disney bought Star from 21st Century Fox soon after. The contract expires this year—after the 2022 season ends.

The expected 2022 bid: Predictions for the going price hover around Rs 500 billion or (Rs 50,000 crore or $6.7 billion) for the next five years (2023-2027).

The length of an IPL season: is a paltry two months. OTOH, IPL matches reached 350 million viewers during the first half of the 2021 season alone. And Star India claims 400 million people tuned in for at least one match over the last few seasons—despite the Covid cancellations.

Lucrative point to note: With the addition of two new teams—Gujarat Titans and Lucknow Super Giants—the number of matches is expected to jump to 74 in 2023— increase to 84 for 2024/2025, and peak at 94 matches each in 2026 and 2027. On the other hand, increasing the number of matches can also lead to viewer fatigue. Scheduling double-headers—matches that occur at the same time—could also erode numbers, as will too many afternoon matches.

The bidding process: The last time, companies were allowed to submit separate bids for TV and streaming rights—and offer a bundled bid for both, as well. The process is likely to stay the same—and for good reason: “Industry sources expect flexibility from the BCCI given the prospects for record payments by bidders including a deep-pocketed digital-only player like Amazon.” 

Point to note: Some experts believe it is a must to split TV and digital—to avoid a streaming-only player like Amazon from walking away with all the rights. That carries the risk of IPL being yanked off air: “If IPL is not on TV for five years then that will be tantamount to killing it.” Also this: Given the eye-watering prices, it may now be very difficult for a single company to buy both TV and streaming—and make a profit in the end. 

Not in the running? No one expects Facebook to make a serious bid this time around. One big reason: short-form videos like Reels are its most lucrative format. Paying stupid money to become a streaming platform for cricket doesn’t make sense.

Timing: The auction is scheduled for April-May.

Bidder #1: Disney+Hotstar

The current math: The company has held both TV and digital rights for the past five years. According to The Ken, Hotstar expects to make nearly Rs 7.5 billion (750 crore or ~$100 million) in ad sales from the 2021 season—about the same as 2020. Combined with TV ad revenue, the 2020 total was Rs 30 billion (3,000 crore or $404 million). That said, according to The Morning Context, Disney is only “expected to break even on its investment, and possibly eke out a small profit.”

Key points to note: One, the IPL accounts for 50% of Disney+Hotstar’s ad revenue. Two: During the 2020 season, Hotstar added nearly 10 million subscribers in that fiscal quarter. As one industry expert notes, the benefits of IPL rights go beyond just ad sales—especially for a streaming platform:

“It’s debatable whether Star & Disney India recovered or made money on their bid, but on the back of the property, they also built Hotstar. For any potential bidder, the value will be the new or incremental subscribers that the rights will get.”

Also, the IPL is one of the biggest reasons why Hotstar is way ahead of its streaming rivals like Netflix and Amazon. 

What will Disney do? Disney CEO has sent mixed signals about just how far the Mouse will go to secure IPL rights. He recently said that if Disney didn’t win the auction, it will still achieve its global subscription target of 230-260 million users by 2024. The India head has been fairly coy, as well: “We will look at the business plan, we will consult. Beyond that, if it exceeds my business plan, my projections, we will see."

A key reason: Until now, Hotstar has monetised IPL primarily via ads. And it has also made money by sublicensing its content to Jio subscribers—who account for a large number of Hotstar users. But Disney wants to focus on building a subscriber-based business—that lasts beyond the short IPL window, as one executive told The Ken:

“Typically, what we had observed at Hotstar is that the viewership and the user base would swell in those two cricket months. And then within three or four weeks of IPL ending, that will start tapering.”

And the success of Hotstar’s other content during the pandemic—think ‘Special Ops’—reinforces that pivot. 

The big risk: is that Hotstar may lose its single big advantage over Netflix—and even fall behind Amazon if it secures the streaming rights. Mint notes:

“The IPL is the only property watched by the entire country. Content is fragmented into language segments in entertainment, but not in cricket. Cricket viewership cuts across language barriers.”

And slowing subscriber growth is a huge risk in the midst of a fierce fight for the global streaming pie:

“We have seen how Netflix's stock was hammered down due to slow subscriber growth guidance. The same thing will happen to Disney stock in the US if they are not able to show strong subscriber growth, which is why the company will be bidding aggressively.”

Big bidder #2: Reliance

Mukesh-bhai’s calculations are much more straightforward. Industry insiders say that the IPL bid is critical for its plans to build a massive streaming platform—which can take on Amazon, Netflix etc. 

Viacom18: The vessel for this vaulting ambition is Viacom18—a joint venture Ambani acquired when he took over Network 18. And Reliance is eyeing a partnership with the estranged Murdoch son, James, and former Star India chief Uday Shankar—the man who built Hotstar. The plan is to raise $1.6 billion.

A big sports play: Viacom18 has already successfully bid for broadcasting rights for Spanish LaLiga, Italian Serie A, and French Ligue 1 in India—and plans to set up a sports channel in the coming quarter. Also: It shelled out $55 million to broadcast the 2022 FIFA World Cup in India. 

An Ambani thing: The family has long wanted to dominate sports in India. It owns the Mumbai Indians and set up the ISL football league. The IPL rights are the missing feather in its cap—along with International Cricket Council’s (ICC) tournaments, which includes the World Cup.

Point to note: The fact that Reliance also owns Mumbai Indians could create a potential conflict of interest—and become an issue when the bidding starts. 

The Jio angle: Jio now has more than 427 million subscribers—and its integrated digital platform, Jio Platforms, raised $21 billion in 2021. So it has the money and the mass penetration to justify a very big spend. One broadcasting executive explains:

“If you want to get into cricket broadcasting, you need mass. You need penetration, not only in tier-1 cities but all over the country. That’s what Jio has done. They’re in the best-placed scenario right now. Their overall ecosystem is fully developed and fundamentally strong.”

Bidder #3: Amazon

Amazon has never directly expressed its interest in the IPL. But industry experts say winning the bid is vital to expanding its user base in India—and scoring a key win in its rivalry with Reliance. Amazon, however, has one big problem: It is a streaming-only platform—and will need a broadcast partner to make a bundled bid. 

A Bezos thing: Amazon has been steadily moving toward acquiring streaming rights for sports events around the world. It cut a $10 billion, 10-year deal to show NFL games on Thursday nights in the US. And it has sealed a bunch of big football deals in Europe—including a 20-game package with the Premier League. Cricket is the obvious next frontier. While Amazon’s intentions in India are unclear, it may be the real black horse:

“Amazon is like the joker in the pack…They have close to 20 million Prime users in India, less than half of Hotstar. And the IPL can give them a quick jump. They have picked up sports rights in the past and now have the idea of live streaming. Don’t discount them.”

Bidder #4: Sony+Zee

The merger of the two big entertainment companies gives them much deeper pockets. Sports was a key factor in the decision to join their fortunes: 

“Definitely sports is one area which shall be looked upon keenly. It will not only widen our target audience, but also enrich our content offerings on digital platforms. With the cash infusion as proposed in the transaction terms, it gives us the firepower to go and bid competitively for these premium sports properties.”

IPL plays nicely into their ambition to create a streaming platform to rival Netflix. As Times of India puts it, it “will be the newlyweds’ perfect honeymoon.”

Point to note: The deal—while not sealed—will create the largest media group in India—controlling 27% of India’s media market.

The key questions: First, can the two companies merge their strengths—SonyLiv in sports and Zee in entertainment—to create a serious streaming contender? Next, can the newly created company sustain a massive spend—with little promise of immediate profit—like a Disney, Reliance or Amazon? Finally, is haemorrhaging that kind of money really worth it?

“So, what did Sony do in 2017-18, after it lost the IPL and BCCI rights. It went shopping world over—bought sub-continent rights for all cricket in Australia and England. That canvas is bigger now and the International Cricket Council (ICC) rights are coming up too. IPL is big but not the end of the world.”

The bottomline: Whoever wins the IPL bid, brace yourself to pay the price in non-stop ads. With that kind of money, it will be a miracle if we get more than 60 seconds of uninterrupted viewing.

Reading list

Economic Times has a good overview of the auction. Reuters looks at the face-off between Amazon and Reliance. Times of India looks at the chances of a Sony-Zee play. Nikkei Asia looks at the economics of owning an IPL team. Most of the good analysis is behind a paywall—including The Morning Context on Facebook, the Financial Times on Sony-Zee and The Ken on the calculations of Reliance and Disney.