Sony raises its game as it cuts reliance on IPL

Sharper focus on digital, non-cricket sports over past 3 years brought new viewers to Sony

Last Monday, Sony Pictures Network CEO NP Singh walked into the office canteen in Mumbai for a little party. Rox, Sony’s second music channel, had gone on air that afternoon and the team wanted to celebrate. 

The estimated Rs 4,500-crore Sony, however, has a lot more to celebrate. From 12 channels in 2014, Rox takes its tally to 22 now. And it is on schedule to reach 30 soon. By April, Sony will launch a channel for kids. There are two more due with BBC later this year (subject to regulatory approvals). 

Two days after the Rox launch, the Competition Commission of India cleared its Rs 2,600-crore acquisition of Ten Sports from Zee Entertainment. It already owns the broadcast rights to the Indian Premier League, the biggest sporting property in India, and had allied with ESPN in late 2015. Going by Broadcast Audience Research Council (BARC) data, all its channels put together increased their share of the national TV viewing pie from 8 per cent to 10 per cent over the last one year. Sony Liv, its video app, just got rebranded, there is a new TV production arm and a promising film business after its 2015 hit, Piku. And after years in the wilderness, its flagship Sony Entertainment Television is up on the ratings chart. 

“It (Sony) is back in the game,” as a consultant puts it. In the Rs 54,200-crore Indian television industry, the local broadcasting arm of Sony Corporation was seen as a risk-averse, conservative player. It refused to invest in new channels or regional markets, even as rivals Star India, Zee and Viacom18 were expanding rapidly. 

The new aggression can be traced to early 2014 when Singh took over as CEO. 

“We have been aggressive about expanding our portfolio over the last two years. Earlier, we were focused on making our existing business profitable. Once that was achieved, we started working on making the business ‘future ready’,” says he. The pillars of Sony’s growth strategy are entertainment, sports and digital. 

Currently, sports fetch one-third and entertainment the rest of its revenues. Over the last three years, Sony has reduced its dependence on one or two properties/channels. That brings more stability. “Three years from now, 10-15 per cent of our revenues should come from digital, 35-40 per cent from sports and the rest from entertainment,” says Singh.

N P Singh, CEO, Sony Pictures Network

Change of stance

Singh had been with Sony for 15 years when he took over from Man Jit Singh in early 2014. At that time, Sony was written off as a largely urban network surviving on reruns of CID and Crime Patrol. “For the last 5-6 years, SET was not doing too well and, as a result, the dependence of the network on IPL was very high,” says Shailesh Kapoor, CEO, Ormax Media, a consulting firm.

“The first target was to make existing genres strong and robust,” says Singh. It started with a third general entertainment channel, Sony Pal, three more movie channels, free-to-air ones such as Sony Wah and so on. Much of the work on entertainment has been geared towards small town and rural India — critical now that BARC gives these 50 per cent weightage in its sampling. “The larger objective is to reach out to 90 per cent of the Hindi-speaking market universe,” says Neeraj Vyas, executive vice-president and business head, Sony Max movie cluster. Much of this came with its music channel, Sab TV, and by putting Sony Pal and later Sony Wah on Doordarshan’s Freedish. A slot on Freedish costs  Rs 3-6 crore and is reckoned as a good way to reach the small-town markets critical to FMCG marketers. 

Then in March 2016, it signed on Kapil Sharma. “The success of his show has driven the flagship SET ahead of competitors like Zee TV and Life OK. The show is rating higher than its previous avatar on Colors and is giving significant ratings and revenue boost,” points out Kapoor.

While the Hindi entertainment market is now well-covered, “Sony needs to fill up the void on its regional offerings to compete with the other three broadcast majors,” thinks Vivek Couto, executive director, Media Partners Asia.

Star, Zee and Viacom18 get 15-25 per cent revenues and audiences from languages other than Hindi. However, except for one Bangla offering, Sony has nothing. Sony will attempt regional sometime in the future, says Singh.

Beyond IPL

The ten-year IPL contract gets over after the 2017 season. Sony had the right of first refusal but the Board of Control for Cricket in India refused its renewal offer. Now fresh bidding will pit Sony against some tough rivals, the biggest being Star India. Star had, in 2014, committed to invest Rs 20,000 crore in sports over five years. Currently, it owns the rights to almost every major cricketing tournament except IPL. Then, there is the possibility of a well-funded digital player — say Jio or Amazon — bidding. “We will be very aggressive (in bidding for IPL), but only up to a certain stage,” says Singh.

What happens if Sony loses IPL? “Sony’s acquisition of Ten Sports is a good hedge for its sports play should it lose IPL. It complements its existing properties and may work out to be an ‘either or’ situation where it is not justified for Star and Sony to retain both IPL and BCCI rights,” says Couto. Ten Sports adds 23 per cent viewership share and Rs 631 crore to Sony’s revenues. The revenues, however, are less than half of IPL. 

“We still have cricket rights from five boards and are invested in 10 different sports of which football is the fastest growing. We have FIFA 2018, Champions League, La Liga. Outside of English Premier League and Bundesliga, we have every major football tournament,” says Singh. He lists more: WWE, UFC and the Pro Wrestling League. 

How the sports broadcasting duopoly in India turns out will depend on how data and digital are used, thinks Vinit Karnik, business head (entertainment, sports and live events) at Group M’s ESP Properties. (See Sony’s sporting chances)

The sports and regional question becomes important if Sony wants digital to deliver. Currently, one-third of Sony Liv’s 9-10 million monthly visitors come in for sports and the rest for shows and films, says Uday Sodhi, executive vice-president and head of digital business. (Star not Sony owns the digital rights to IPL.) Sodhi reckons that India will hit inflection point at 400 million digital users and by then both advertising and pay revenues should be substantial. Will Sony be ‘future ready’ by then?