Mumbai: According to a recent study ‘Can OTT sports platforms shake up the broadcast landscape’ by data and analytics firm Ampere, the growing number of pure-play and generalist OTT services in the sports rights market is putting the traditional rights model under stress.
In Europe, the likes of DAZN and Amazon Prime Video are beginning to eat into the market share of traditional rights holders, accounting for nearly 10 per cent of sports spends annually. Globally, though, the figure stands at slightly below six per. In cases where OTT services increased the number of bidders for rights, the value of rights has increased. For instance, DAZN’s entrance to German UCL market grew the total value by 62 per cent for 2018-21 cycle. For 2021-24, OTT services have secured all rights to the UCL in Germany, with the new deals increasing the total value by 58 per cent. However this trend did not hold in cases where the overall number of bidders came down, where the impact was negative.
What this suggests is that pure OTT players have the potential to impact an upward growth in sports rights value together with traditional buyers, especially in cases where the value of rights has stagnated over the years. In the short term, until OTT platforms reach a comparable or higher level of subscription than pay-TV, they will keep adding value to the game.
The study outlined four broad ways in which OTT services are impacting the sports media landscape – targeting digital-first audiences, making premium sports more affordable, super-serving specific categories of sports fans, and creating a range of D2C opportunities like out-of-market selection, co-exclusivity, and exclusive D2C for rights holders.
Case in point: IPL stagnation in rights value is a far-cry for a cricket crazy nation as India. Take for instance, the next (2023-27) cycle of IPL rights that has an aggressive set of bidders in the fray, including the content behemoth Amazon Prime Video.
Reliance’s bid, which is likely aimed at more data revenue through Jio, than subscription and ad revenue through the media business under Viacom18, will make the ‘Amazon vs RIL vs Disney vs Sony pitch’ more interesting. The winner will be announced around end-March or early April.
While Star’s September 2017’s bid of Rs 16,347.50 crore or ~$2.3 billion (amounting to a 158 per cent increase over the previous deal worth $1.03 billion) for just half the number of years was jaw-dropping, equally noteworthy was Facebook’s individual bid of R. 3,900 crore for the digital rights alone. From less than five per cent in the overall pie of 2008 deal, digital had grown by 25 per cent (4.5 times) in 2017, being seen as a standalone package.
According to market buzz, IPL’s digital rights value will see similar growth of around 25-30 per cent for this cycle and understandably so. From 2017 to now, IPL has seen considerable value addition in terms of both OTT viewership as well as digital technology. The overall value is expected to soar up to of $ five billion. A senior BCCI official recently told news agency PTI, “With two new teams about to fetch anything between Rs 7000 to Rs 10,000 crore, IPL broadcast rights could more than double to reach $ five billion (~Rs 36,000 crore).”
The OTT value ad
Hotstar got on to a flying start with the first match of IPL 2015 registering 7.2 million views on the app; six times the viewership of the first match of IPL 2014 on starsports.com. In the seven years since it began streaming the IPL live, the league’s viewership has grown from around 40 million in 2015 to 300 million in 2019, increasing every year. While the viewership for the 2020 edition on Hotstar could not cross the previous year’s benchmark, it ranged between 5.7 million and 6.7 million throughout the next (2021) season.
What’s more significant about these numbers is that they were reached despite the matches being played behind a paywall. Going back to the Ampere study, sports OTT audiences currently make up 25 per cent of total sports audience, and there nearly 800 mn to convert. This is a significantly younger audience with 75 per cent aged between 18 and 44 years. Not only are they willing to pay more, but are also spending more time and are more engaged with both live and non-live programming on the OTT services. In addition to accessibility of content and flexibility of billing options, OTT services are more affordable and unbundled, offering higher control to viewers. They target fans of sports which struggle to find sufficient space on traditional broadcasting platforms.
Echoing a similar viewpoint, Grapes national business head - Rajeesh Rajagopalan says, “by virtue of being both precise and personal, OTT services have consolidated the scattered viewership for niche sports, or sports other than cricket in India. The badminton and kabbadi leagues that have come into existence today, is because OTT players started buying these rights.” Pointing out another positive contribution of sports streaming, he states, “OTT being way more innovative with advertising than TV, offers scope even for the smaller brands with medium or modest budgets, provided they have a clearly-defined objective.”
“The decline in TV viewership of niche sports due to NTO will add to the popularity of sports streaming, which has been on the rise since the onset of the pandemic. The growth is expected to come from tier 2 and 3 cities. It will be spearheaded by DTH platforms providing OTT as a part of their services,” adds Zenith VP Linu John.
Commenting on the OTT opportunity for brands in India Havas Media Group India head–digital services Rohan Chincholi remarks that from the consumers’ standpoint, India is a market with the lowest cost per GB (~Rs seven per GB) & from the advertisers’ standpoint, there is a massive 350 million+ OTT viewership in India. Of these, paid subscribers are to the tune of ~80 million+ and they subscribe to over two OTT platforms each.
“Hotstar is projecting to reach close to 100 per cent of OTT users in India this IPL which speaks volumes about viewers’ interest in streaming sports. However, these audiences are not loyal to one OTT service. Cricket has the potential to garner mass reach in a short span, which is where the platforms win via subscriptions and repeat usage,” observes Chincholi.
On the kind of advertising being explored this season he adds, “from an advertising perspective, bundled sponsorships, associations and standalone buys will be a function of clients’ budget. Ad rates will command a premium on all marquee streaming events. Cost per reach will be higher than any other video sharing/social platform but it’s also a function of audience targeting and data layering – transacting audience cut, connected TV audience.”
Building on the point WATConsult AVP media planning and strategy Shanu Jain shares that about 70 per cent deals are bundled under different sponsorships including presence on different IPL collaterals, Live prediction, pre & post shows brand integrations, special packages, while around 30 per cent of them are standalone on mid-roll video ads. They command 35-40 per cent premium than normal rates on GEC and other video streaming platforms like YouTube. "Majority of IPL viewership comes from the age bracket of 15-30 years, and Hotstar leads the way in innovative ad formats and inventories. A lot of new ad formats have been introduced to facilitate better recall and user engagement, beginning with pre-rolls every time you start the match to drive higher relevance, and integrating the brand communication at different intervals, to additional options like group chats, contests and regular CTW ads have helped brands look at efficiencies in-terms of audiences who’re watching and clicking on the ads,” notes Jain.
OTT services globally have only just started to move the dial in the sports rights market which continues to be dominated by legacy players. They have an increasingly significant part to play alongside TV buyers by helping sports appeal to young hard-to-reach demographic. The Ampere study indicates that while the OTT audiences’ higher willingness to pay may make them look more attractive, their size compared to traditional TV broadcasters must be taken into account to ascertain whether this actually equates to higher revenues or not.
