Amazon's withdrawal from the IPL bid queers the pitch

The media rights auction for the marquee Indian Premier League (IPL) has now reached a decisive stage, with the four large broadcasters (Disney Star, Sony, Zee and Viacom18), as expected, scheduled to put in their bids on Sunday, 12 June. The potential twist in the tale was the much-hyped entry of Amazon but the e-commerce giant did not submit the technical bid, though it did pick up the tender document.

Sources familiar with the development point out that Amazon had two options. One was to bid for the digital rights (the base price set being Rs 12,210 crore or $1.56 billion), with its Prime Video, a well-established OTT service in India. Late last year, it won the live streaming rights to telecast men's and women's cricket in New Zealand. 
 
That said, the bigger revenue piece, especially for the IPL, will always be television broadcasting, a medium that brings in mass viewership. For incumbent, Disney Star, the revenue from television is 3.5-4x more than what it makes from digital - for around Rs 800 crore of revenue from digital, television brings in over Rs 3,000 crore in a good season.

The rules for the television broadcasting rights (the base price set being Rs 18,130 crore or $2.32 billion) makes it mandatory to either to own a network or be a part of a consortium, which has participation from the television side.

Going by how the story has played out, Amazon would have had to work with one of the three - Disney Star, Zee and Sony or, for that matter, anyone else in the business, who was interested. "Disney Star, Zee and Sony have their own digital streaming business and would never have been open to sharing revenues with Amazon, says one person close to the development.

In the case of Viacom18, owned by the Reliance Group, an intense battle with Amazon is in play to acquire the Kishore Biyani-owned Future Retail. "In that scenario, joining hands for a bid is simply not workable. There is already a lot of friction between them," says the same person. "All the scenarios were considered by Amazon at the time of picking up the tender document and with nothing working out, it just lapsed. That made them ineligible to put in the technical bid." Zee and Sony are in the midst of a proposed merger and will, therefore, put in separate bids. Even the most conservative estimates suggest that the winner - for television and digital - will fork out nothing less than Rs 45,000 crore.

In April, Amazon had announced that it was doubling down on its investment in content in India and announced over 40 new titles or the next two years. In all, it is estimated Amazon has invested over $6 billion in India and industry observers say the company sees a greater return on investment on that as compared to the IPL, where it will be up against the established players.

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