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With live sports now a major driver for OTT, is TV now up for some stiff competition?

03-April-2017
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With live sports now a major driver for OTT, is TV now up for some stiff competition?

On the back of a dramatic growth in viewership last year, Hotstar, Star India’s digital streaming platform, roped in two sponsors- Chinese smartphone maker Vivo and automobile company Maruti Suzuki with deals worth Rs 20 crore each. In fact, the upcoming edition is slated to make more than Rs 200 crore in advertising revenue, according to media reports. Hotstar had more than double its reach for IPL’s ninth edition in the past one year from 35 million the previous year to 80 million unique viewers in 2016. Meanwhile UEFA European Championships 2016 got SonyLIV 20 million hits and 90 million interactions. So sports, especially live sports, has turned out to be another major driver for OTT players with regard to advertisement and viewership.

Uday Sodhi, Executive Vice President & Head-Digital, Sony Pictures Networks, points out that the width of his Sony LIV’s offering brings in more and more consumers which in turn fetches more advertisers. He says, “In fact most of the big brands across categories like FMCG and automobile are allocating bigger budget for live sports. Brands into car and bikes and fitness drinks, especially those who are targeting youngsters are coming to the platform for sports. So strategically it’s a huge and important space for us.”

Sony LIV has brands such as Maruti Suzuki Swift, DSP Black Rock, TVS Tyres, Godrej Aer, USL-McDowell and Jacob’s Creek who are especially interested in sports.

Vikram Tanwar, Co Founder & Director, Veqta, digital sports network, says, “I see a great marriage between OTT and sports given the flexibility of OTT (for viewers) and the fact that sports is something that’s largely served live. So consumption pattern is really growing as far as sports viewership on OTT platforms is concerned.”

Rajiv Dingra, Founder & CEO, WATConsult, agrees as he says, “Sports has much more live viewing value. Just because the percentage of viewers are lower doesn't mean live sport doesn't command a high price. The sponsorship for IPL on Hotstar made it probably the most expensive property on digital.”

We approached Hotstar for their comments but didn’t get any response at the time of filing this story.

Challenges set ahead

Currently there are only three players who are investing heavily in live sports including Star India’s Hotstar, SPN’s SonyLIV and Veqta. Coming from a network, which already has acquired huge stakes in sports properties, comes with certain advantages.

For an entry level player like Veqta that can pose as a challenge. Tanwar says, “Yes, they have an advantage because of the name and past legacy. The existing rights are sitting with them. But I don’t see that as a big challenge. We are developing a whole new market and creating a new ecosystem of content which has not been served before.”

He lists out other challenges, “There’s the availability of rights. The other is the transfer of content. Typically at this stage it happens through satellites. Not all broadcasters or sports federations pass on the rights digitally. Last but not the least data speeds. But there is progress in that respect.”

But streaming live sports on OTT players comes with its own set of challenges, besides low bandwidth. “Live sports is the toughest thing to do in mobile because it’s real time. It requires significant investment and infrastructure. We are doing everything in the book to be best in terms of consumer experience across different sports. We are putting a lot of effort on backend technology,” adds Sodhi.

Beyond football and cricket

For SonyLIV, sports contribute to about 30 per cent of the overall viewership. Sodhi points out that despite cricket and football being big drivers for them, niche sports are also bringing them loyal viewers. He explains, “In terms of passionate users, we are seeing traction from basketball, wrestling and tennis. The number is small. But the whole strategy is to keep getting loyal viewers who keep returning to the platform for tournaments across events.”

This year SonyLIV has Sri Lanka and West Indies series amongst others in cricket, El Clasico, 2017 FIFA Confederations Cup and 2017 FIFA U-17 World Cup in football, WWE in wrestling, ATP and Australian Open in tennis, among others. Sodhi says, “We have the widest range of sporting events in the country today which makes us undoubtedly one of the biggest sports players.”

Ajit Mohan of Hotstar in one of our previous interviews mentioned that less than 15 per cent comes from sports, given the scale of platform and consumption of local and international content. It holds the rights for most Indian cricket team matches, along with English Premier League, Bundesliga, ISL and Kabaddi league matches.

Veqta inked a five-year deal with Australia’s National Basketball League last year for which they got good traction from its users, according to Tanwar. He even informed us that Veqta will be starting with subscription packages from April end. “We may not be chasing cricket necessarily. We have signed some rights and are going to sign some more across motor sports. Fight sports is doing well for us. We will focus on basketball, tennis, rugby, snooker, pool and specifically on adventure sports. We will put together a global content portfolio for our viewers, some of which has never been showcased before. Going forward we will have 75 per cent of live sports. We have already signed up 6000 hours of live sports.”

Veqta will also focus on licensed content like practiced footage and behind-the-scenes and press conferences from Manchester City. He adds “We are talking to other global football clubs from EPL for similar content.”

Digital equaling TV in the case of live sports

The OTT sector might still be in its nascent stage but the kind of deals live streaming of sports like IPL and UEFA Championships are fetching on Hotstar and SonyLIV, the future definitely looks interesting. The viewership figures and the past advertisement revenues raise the question of OTT taking over television.  Dingra says, “I think already advertisers are spending Rs 15-30 crore on their IPL sponsorships on digital platforms. Some are spending even up to Rs 50-60 crore if you consolidate all their spending during the IPL period on all digital platforms. I feel comparison to TV is unfair as digital penetration is at 20-25 percent while TV still commands the lion’s share of the penetration, but I do believe in three-five years’ time digital will be equaling TV spends in many genres.”

He added that advertisers have started to see the benefit of digital but ‘changing old practices take time.’

Tanwar adds the fact that so many brands have lined up for Hotstar explains the importance and relevance of live sports on digital platforms.

He forecasts that digital is going to give stiff competition to TV in live sports, “A lot of the rights are locked with large television broadcasters for the next five years. So one cannot expect OTT to replace television but it will definitely take away a lot of viewers from television. With Hotstar clocking huge advertising revenues, live sports on OTT is fetching in the same traction from advertisers as television. It’s already happening. Compared to 120 minutes in front of TV Indians are spending 198 minutes on smartphones.”

Sodhi agrees that while the viewership on OTT player is large and significant it’s not fair to compare it with TV. “I don’t think one screen is cannibalising the other screen. We are definitely seeing more and more consumption. As a network it’s good for us as with TV (with three brands Sony SIX, ESPN and now Ten Sports) and OTT we have more screen time.”

Does this mean more OTT platforms investing in sports properties? Tanwar says, “For some of the platforms it will be a natural progression. Those who have been focusing on entertainment feel they have a large market size may venture into sports. I do know some of these platforms are already looking at it.”

Dingra adds, “I do believe live sports will have takers across OTT players as it helps them attract and signup new users.”

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