With Amazon pulling out of IPL media rights race, stage is set for a Reliance-Disney-Sony 'match'

They say you can't win OTT in India until you start streaming cricket. Live cricket has turned out to be - what market watchers call - the "golden goose" in India's video-streaming industry. 

Hence, Amazon's reported retreat from the bidding war involving the sale of IPL's media rights for 2023-27 barely two days before the auction (on June 12), comes as a surprise. It also leaves the metaphorical 'field' open for a three-way battle involving Mukesh Ambani's Reliance Industries, Disney+ Hotstar, and Sony Pictures Network. 

But more on that later. Let's set some context first. 

Back in 2017, STAR's astronomical bet (of Rs 16,347 crore) for the five-year TV and digital rights of the Indian Premier League left media watchers frothing at their mouths. STAR also outbid the likes of Facebook, which had put in the highest digital-only bid at Rs 3,900 Cr, Sony, Airtel, and Amazon Prime Video - whose bids weren't disclosed. 

With IPL's valuation ballooning to Rs 47,500 Cr at the end of 2020, and viewership soaring to an estimated 600 Mn, a fourth of which came from Disney+ Hotstar (STAR's OTT platform), the massive bet in 2017 wasn't a bad deal after all. In fact, ace advertisers like Maruti Suzuki, which spends hundreds of crores on TV campaigns during IPL, skipped its association with STAR Sports in 2020 to cut an OTT deal with Hotstar. 

Cut to 2022, and as things stand today, IPL rights are up for grabs again. The bid size for the next five years (2023-2027) is estimated to grow multi-fold to Rs 50,000 Cr or above, according to a report by Elara Capital. 

Why is IPL such a hot race?

This growth is not only because of more franchises and more matches now, but also due to the meteoric rise in OTT consumption in India in the last few years. "Expect digital to see premiums of 100 per cent over the current base [price], while TV premiums of 40% per cent. Based on these premiums, the share of digital might rise to 50 per cent in IPL media rights," Elara Capital stated. 

When compared to esteemed sporting leagues around the world, including the EPL, NBA, and NFL, IPL's media rights have soared in valuation the fastest.  

More growth has naturally brought in more bidders.

Disney+ Hotstar now has to contend with gigantic challengers, including Reliance Industries, which is expected to make combined broadcasting (for its newly launched TV channel Sports18) and streaming bet (for JioTV) for IPL.  

While Facebook no longer streams sports on its 'Watch' tab, other serious bidders for IPL are Sony for its streaming app SonyLIV, which has the second-largest sports library among Indian OTT platforms. Reports suggest that the June 12 auction could even see big bids from ZEE (which runs ZEE5 and streams no sport yet), Times Internet (for MX Player), and others. 

Their quest for the "golden goose" is perhaps justified by the fact that cricket rights account for a whopping 94% of sports rights in India, according to analyst estimates. Additionally, digital viewership of IPL is projected to grow faster than its TV viewership - a trend that has already played out this year, with IPL 2022's TRPs declining by a substantial 33% in the opening week. 

This also mirrors a global trend, which is compelling advertisers to ramp up their digital spends on sporting leagues. OTT platforms are expected to account for 20% of all sports rights expenditures in 2022, according to a report from Ampere Analysis (media-focused data analytics firm). 

With interest in cricket unlikely to abate anytime soon, this battle for IPL rights might "go down to the wire". 

Also read: IPL 2022: RCB, CSK, Virat Kohli, MSD rule #CricketTwitter trends this season 

Also read: IPL rights: Amazon to pull out of high-stakes bidding battle