IPL 2020: Disney-Star could gain at expense of BCCI, franchises

Disney-Star is known to have made it clear to advertisers that it will not reduce its ad rates for the Indian Premier League (IPL) despite the tough market conditions. The broadcast fraternity, including Disney-Star, had offered advertisers discounts upwards of 60 per cent during the peak of the coronavirus lockdown in April and May. Even when the market began to bounce back in June, the advertisers refused to revert to the old rate cards.

Last year, the average price of a 10-second ad spot in IPL was in the range of Rs 10 lakh and Star is likely to go ahead with the same rate card in the 2020 edition of IPL too. After all, Star needs to achieve its revenue target of Rs 3,600 crore per year in order to be in the green. The big question, however, is will advertisers want to invest a fortune on IPL during these tough times? At a time when demand has completely dried up for several categories of brands, investing on IPL does seem unviable. However, despite all these odds Disney-Star may still be better off. The bigger loss could well be for the Board of Control for Cricket in India (BCCI) and the franchises.

With the 2020 edition of IPL being staged in the UAE and that too without spectators, the BCCI and the franchises would be deprived of on-ground and gate collection revenue. Gate revenue for the franchises can be anywhere between Rs 15-40 crore. Similarly, on-ground and team sponsorship rakes in Rs 100-110 crore and both the BCCI and the franchises are struggling to get takers for it.

"A bulk of the on-ground sponsors are B2B heavy brands such as Asian Paints, Ambuja Cements or Pidilite, which sign on-ground deals and invest in hospitality boxes so that they can gratify their trade partners. This time they can't do any of that as IPL will not just be hosted outside of India, it will also be played in empty stadiums," points out former Senior Vice-President at Star Sports, Anirudh Kalia. The woes of BCCI and the franchises have got heightened with title sponsor Vivo pulling out of the tournament this year. Though brands such as Byju's, Jio and Amazon are known to be in the race for title sponsorship, they are expected to pay significantly lower than what Vivo does (Rs 440 crore per year). With Vivo's exit the franchises are staring at a Rs 20-25 crore loss.

How would Disney-Star benefit out of this? "While BCCI and the franchises would struggle to get on-ground and team sponsorship, many advertisers would see value in buying on-air inventory," explains Kalia. Hitesh Gossain, founder of online sponsorship platform, Onspon, also expects Disney-Star to be the biggest gainer in IPL 2020. "Most of the brands in the race for title sponsorship are online brands and an association with Disney-Star, especially with Hotstar, would help them generate not just brand salience, but also click-through. These brands can do engagement advertisements on Hotstar, which they can't do on television," explains Gossain.

Both Kalia and Gossain believe that it is Hotstar that will get more prominence this IPL. In fact, Kalia expects the broadcaster to go aggressive with the subscription strategy for Hotstar. Hotstar's ad revenue is reportedly $100 million ( Rs 700 crore), while its subscription revenue is in the region of  $75 million (Rs 540 crore). "Indian consumers today are willing to pay for OTT content, so I expect Disney-Star to increase their subscription prices. If they manage a Rs 1,000 crore subscription revenue on Hotstar, they can make up for the advertising revenue loss," explains Kalia.

The broadcaster typically makes around Rs 2,000 crore out of on-air ad inventory and the remaining comes from distribution, OTT and overseas syndication. Though IPL is expected to see a huge surge in viewership this year, industry experts don't expect a proportionate growth in value. "Even if Star gets incremental advertisers, I don't expect the value to go up. I don't think Star will be anywhere close to its target of Rs 3,600 crore," points out a senior media planner. In fact, the broadcaster in the previous two editions of IPL has also missed its target. It is known to have earned in the region of Rs 3,200 crore last year. "Selling IPL inventory will not be a problem, but getting the desired value will be a challenge. Most advertisers are willing to pay only half of what they did last year," adds Kalia.

Gossain of Onspon also agrees that it won't be an easy task for Star to sell inventory at last year's rates. "The annual investment plans of most businesses are intact as none of them have spent their A&P money during the lockdown months. Star has to smartly manage the advertiser's sentiments and they have to work hard for it," he says.

Revenue generation for Disney-Star may not be easy, but they definitely seem to be on a better wicket than the BCCI or the franchises.

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