Selling IPL ad inventory won't be easy for Star India this year. Here's why

This Indian Premier League (IPL) season is set to be a challenging one for broadcaster Star India as it faces not one but three obstacles in selling ad inventory for this year’s edition of the T20 extravaganza.

Industry estimates peg a slowdown in the growth of IPL ad revenues for the broadcaster as it grapples with multiple challenges. While ad revenue from the tournament will see some appreciation, it may well be below what Star India would have expected.

Sources among the media planning and buying community reveal Star India has managed to sell around 50 per cent of the advertising inventory for this year’s IPL, and most of it has been sold at 5-10 per cent higher over last year. Ideally, broadcasters expect ad rates to rise 15-20 per cent over the previous year’s ad rates, given the scale and scope of the IPL.

In 2018, the average rate for a 10-second TV ad slot on the IPL (live matches) grew by 15 per cent year-on-year to Rs 7.5 lakh. If it was a normal year, Star India could have asked for a 15 per cent increase in ad rates for a 10-second spot. However, this year, sources say the broadcaster has managed to get between Rs 7.8 and Rs 8.2 lakh for the same, suggesting a 4 per cent and 10 per cent growth at the lower and upper end of the range.

“It is early in the game to be fair, but it seems like TV ad sales is going to be tough in terms of the premium over last year. Brands also have more choices this year, so they will not bow down easily,” says a planner in the know.

Star India pays the Board for Control of Cricket in India (BCCI) Rs 16,437.5 crore (Rs 3,287.5 per year) for the global media rights to the IPL for five years (2018-2022), which makes it very important for the broadcaster to make significant ad revenues on the property.

The BCCI announced the first phase of the tournament schedule on Tuesday. Some of the fixtures are subject to change if they clash with election venues.

While the obvious challenges come in the form of the general elections and the 2019 ICC Cricket World Cup, sources reveal the new tariff order mandated by the Telecom Regulatory Authority of India (Trai) will also play a significant role. The tariff order has a direct impact on the distribution of channels, which, in turn, has an impact on the reach (the number of people seeing the tournament) of the IPL.

“Two genres will be fighting for viewers’ eyeballs this time – news and sports. A lot of the news channels are free-to-air, and the election (coverage) will get a lot of attention. The data shows that reach is very high for news channels during elections. IPL is anyway a large property. So advertisers will have options this summer,” explains Vineet Sodhani, chief executive officer (CEO), Spatial Access, a media audit agency.  

Under the new Trai tariff order, every channel (barring the 25 Doordarshan channels) on a subscriber’s set-top box has to be chosen by the customer. In other words, broadcasters and distribution platforms cannot bundle and force channels upon consumers. In this light, many people may opt for news channels over sports channels, while the election is on. Sports channels are also among the costlier ones on a-la-carte basis. News channels range between 50 paise to Rs 3 per month exclusive of taxes, while channels from the Star Sports bouquet cost Rs 19 per month exclusive of taxes.

Moreover, majority of India is a single TV household. This means one TV set is shared between four members of a family on an average. So if there is a clash between election coverage and an IPL match, the choice usually lands in the billpayer’s favour, which is usually the earning male in the family. Majority of this audience (male adult) will opt for the news coverage, meaning IPL viewership could take a hit.

“The only thing in IPL’s favour is that some of the major brands may not want to be in a brand landscape that news channels provide. So for the more premium brands, the IPL may be a better option,” adds a planner.

However, TV’s loss is digital’s gain in this case. Experts expect Star India’s over-the-top platform Hotstar to see a jump in revenue this year. “With digital, it’s a more targeted medium. Advertisers will opt for digital over TV in some cases because it provides better addressability of communication,” says Indranil Das Blah, co-CEO, KWAN, a media and entertainment agency.

“Star seems to have realised that there is greater scope for monetisation of (content on) Hotstar this year as it is not selling ad spots on Hotstar bundled with TV this year. Last year, the rate packages sent out to advertisers and agencies were for bundled ad sales. This year, they are separate. Star is ready to make a composite package on request,” adds another planner.

While elections and the new tariff order are domestic issues, the ICC Cricket World Cup also poses a challenge. It not only provides advertisers choice of cricket property as an advertising avenue, but also means that some key players may not be present at crucial stages of the IPL. Blah, however, feels the World Cup may not have that big an impact on the ad revenues of the IPL.

“The IPL is a more stable property, so advertisers may consider it a safer bet. Also, let’s not forget there is no dearth of brands that want to advertise on the IPL. The queue for advertising the property is not getting shorter,” he says.

FAST FAQs

Rs 2,000 crore: Star India’s ad revenue from IPL in 2018

Rs 6.5 lakh for 10 seconds: Average ad rate for 2017 IPL (2017 IPL was on Sony Pictures Network India)

Rs 7.5 lakh for 10 seconds: Average ad rate for 2018 IPL

Rs 7.8-8.2 lakh for 10 seconds: Average ad rate this year (against the expected Rs 9 lakh per 10 seconds)

50%: Amount of ad-inventory sold so far

Source: Industry estimates