Sony's TV-only strategy could have cost them the IPL media rights

Sony Pictures Network (SPN) might have missed a trick by not partnering with a digital player to jointly contest the IPL auctions

e4m by Abhinn Shreshtha
Updated: Sep 6, 2017 7:41 AM

The battle for the IPL broadcast rights was always expected to be aggressively contested between Sony Pictures Networks (SPN) and Star India. However, what took the industry observers and analysts by surprise is SPN’s overall strategy, particularly that it did not even make a bid for the digital rights. 


Historically, SPN has not been as aggressive on the digital front as its arch competitor Star India. Industry observers we spoke with opined that had SPN entered the IPL auction as part of a consortium with a recognised digital player, it would have boosted its chances. In fact, there had been rumours that this is precisely what SPN was planning in the days building up to the auction but it came to naught. As one analyst told us, “It will be interesting if we can learn why this did not materialise.”


A partnership on the digital front could have put SPN in a much stronger position. For example, if we take the combined bids of SPN and Facebook (the two highest bidders for India broadcast rights and digital respectively), the amount comes to Rs 15,034 crore, just Rs 1,312.50 crore shy of Star India’s consolidated bid.


“There were market rumours for many weeks preceding the auction that Sony was looking to partner Amazon or Google (YouTube). Obviously it didn't work out. A consolidated bid equalling or exceeding Facebook's could have well got Sony the rights,” opined Sandeep Goyal, Vice Chairman of Mogae Group.


One media planner, who preferred to remain unnamed, also commented that a joint bid in the auctions could have changed the entire scenario.


As expected, digital rights for the event were hotly contested with the likes of Star India, Facebook, Reliance Jio, Times Internet and Airtel all in the fray. In fact, Facebook’s Rs 3,900 crore bid was the highest in this category. To put the matter into context, Star India, which owned digital rights for the IPL for the last 3 years (2015-2017), paid around Rs 101 crore per annum or Rs 303 crore for the rights. This represents a nearly 672 per cent increase in valuation over 2015.


In terms of revenue, Hotstar is said to have raked in Rs 150 crore in advertising revenue last year for the IPL, which is expected to increase to Rs 200 crore next year. In this scenario, SPN not even attempting for the digital rights seems like a strange decision. 


On the TV front, SPN’s bid of Rs 11,050 crore was the highest and nearly twice the amount that Star India bid for India broadcast rights (Rs 6196.54 crore). The difference between Star India’s consolidated winning bid and the sum total of all the winning bids in each category comes to a mere Rs 527.49 crore. 


In this scenario and given SPN’s apparent reluctance to commit to the digital medium, it is interesting to think about what would have happened had SPN entered the auctions with an established digital player as its partner. 


“A Sony-led consortium would have nailed it for sure,” agreed one trade analyst we spoke with.


This is not too far-fetched. In fact, in 2008, Singapore-based World Sports Group (WSG) had won the global broadcasting rights for the IPL before licensing it to Sony India as its official broadcast partner in the country. 


“It was supposed to be a two-way race (between Star India and SPN) but Sony’s strategy surprised everyone. On the other hand, Star India had a brilliant and deliberate strategy in place. For them it was all or nothing. If Sony was not interested in digital then it would have made sense to enter the auction as a consortium,” opined an analyst specialising in sports and media who did not wish to be named.


Given that SPN has lost a property that was one of, if not the biggest revenue streams for it over the last decade, it will be interesting to see how they respond. “It is a massive win for Star India and Sony will have to now rethink its entire strategy because IPL was a big money earner for the company,” agreed Dinesh Vyas, VP (Planning) at OMD. 


Star India won all media rights associated with the Indian Premier League (IPL) with a consolidated bid of Rs 16,347 crore. SPN had held the television rights for the IPL since the league’s inception 10 years ago after paying Rs 8,200 crore.

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