Winning IPL digital rights is helping Asia’s richest man in more than one way

• The IPL digital rights are also going to have a positive impact on Reliance’s telecom offering and content ecosystem.
• Reliance acquired the digital rights of IPL for ₹23,800 crore, which is ₹200 crore more than what Star Sports India paid for the exclusive TV rights.
• The sports sector in India — comprising media rights, apparel and more — could grow fivefold to $100 billion in the next five years.

Reliance Industries Limited recently paid a hefty premium to acquire the digital rights for the Indian Premier League (IPL), the biggest Twenty20 cricket tournament in India, for its subsidiary Viacom18. While many may assume that the move is linked to Mukesh Ambani’s ambition of making its OTT platform Voot a relentless competitor to other major players like Disney+ Hotstar, there is definitely more to this deal than meets the eye.

According to research firms Bank of America (BofA) and CLSA, the IPL digital rights may also have a positive impact on Asia’s richest man Mukesh Ambani-led Reliance’s telecom offering and its content ecosystem, along with the OTT offering.

“If marketed properly, we think Jio has the potential to poach users from telco competitors to watch the content. Apart from IPL, we think RIL is also looking at movie content as ‘Cricket+ Bollywood’ combo would aid better monetization,” the bofA added. However, there are arguments that while IPL rights add the potential to increase the number of active users, there's little to know of its impact on the overall revenue.

Asia’s richest man Mukesh Ambani-led Reliance acquired the digital rights of IPL for ₹23,800 crore ($3.04 billion), which is ₹200 crore more than what Disney-owned Star Sports India paid for the exclusive TV rights.

Disney-Star held the contract for both digital and television rights in 2018. However, IPL media rights are for 410 matches over 2023-27 versus 300 in the previous five years when Disney-Star held the mandate. The sports sector in India — comprising media rights, apparel and more — could grow fivefold to $100 billion in the next five years.

Viacom18’s Voot sits at the center of it all

Viacom18’s video streaming service Voot is currently among the small players in the Indian OTT ecosystem at the moment, with a mere 2% of the market share. While the IPL rights might not be enough to dethrone the industry leaders player like Disney+ Hotstar from its 26% market share, it is enough to cause a significant dent in its numbers from IPL for the next five years.

Hotstar, even before being acquired by Disney in 2019, attracted most of its audience through cricket match streaming services. Disney+Hotstar — available in India and Indonesia — reported revenue of ₹1,721 crore in the fiscal year 2021, with cricket accounting for 80% of that as per former Hotstar executives. This year, the company added four million subscribers in the January to March quarter thanks to Disney Star’s association with IPL.

“Viacom 18’s OTT VOOT has been lagging, and the IPL digital rights loss will be a significant hit to Disney Hotstar,” CLSA said.

Now with media rights coming to Viacom18, Reliance could actually make an attempt to bump up its revenue through ads or a subscription model. The potential of ads does increase as impulsive purchases of commerce and food usually go up during the IPL season and they are expected to go even higher in the near future.

"Ad rates will be about 10% upwards on TV and digital will be around 30% higher," said Karan Taurani, senior vice-president, Elara Capital. Notably, IPL advertising revenues jumped nearly three-fold in the past five years to ₹4,000 crore and form 50% of total ad spending on sports in India, as per CLSA.

Besides this, Jio Platforms could monetize their IPL digital rights by charging an annual subscription fee of ₹20-80 from its customers who want to watch the cricket league without any disruption, BofA noted. Disney+Hotstar is known to have followed a similar model in the past.

Even JioFibre, Jio telecom and other Jio Platforms are expected to gain from it

RIL’s digital venture Jio Platforms owns multiple consumer platforms including TV streaming app JioTV and video-on-demand JioCinema to name a few, which simply has the potential to diversify the content even further and therefore power the monetisation engine as well.

It’s the vast portfolio of services and apps offered by Jio Platforms that analysts expect Jio telecom’s subscriber base to pick up. Notably, the mobile arm of Jio would act as an exclusive digital distributor for the IPL rights.

Broadband services JioFiber — which also allows users to stream content — also falls under this mix and gives the company an opportunity to step into the TV screens in an instant. BofA believes that Jio’s improving fixed broadband rollout in coming years could further improve the monetization beyond mobile screens to smart TV audiences, where the average revenue per user (ARPU) is higher than mobile phone services.

CLSA believes that the Viacom18’s digital rights win could boost Reliance Jio Platforms’ content pool significantly, and digital rights exclusivity could boost Reliance Jio data subscribers. Reliance Jio has over 35% of India’s mobile users and was the biggest telecom service, as of April 2022.

“We value Jio telecom entity (₹826) at ₹5.6 lakh crore and the ad and commerce potential for Jio digital opportunity (₹160) at ₹1.08 lakh crore (at 2-year fwd avg P/S multiple for peers),” BofA concluded.

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