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Can sports beat Bollywood for TV networks?

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Can sports beat Bollywood for TV networks?

Sports fans have been having a field day with IPL, India-England series, Pro Kabaddi, Indian Super League (ISL) and other sporting events. Top networks such as Star India, Multi Screen Media (MSM) and ZEEL sports channels have been busy acquiring the rights of sports properties, be it Indian or international.

Some channels have also co-created properties such as the Pro Kabaddi League and ISL. Evidently, there is some bang for their buck that is drawing the channels towards sports, but is it better than general entertainment and block-buster films or sustainable?  

Traditionally, cricket has been the top revenue earner among all sporting properties. The ICC World Cup 2011 is said to have brought in Rs 800 crore for ESPN Star Sports (Star Sports) according to a media report. While this may be so, according to some media reports, MSM earned Rs 800-850 crore during IPL 6 season and had pegged their earnings at Rs 800 crore for IPL 7 season. The reason for the lower revenues was the reduction of matches and half of the tournament being held outside India. 

Dinesh Vyas, GM, India of MEC is of the opinion that sports, especially cricket, and may generate quick revenues for the TV networks. “For instance, SET MAX during IPL would make Rs 400-500 crore from the 45-day event itself, while a GEC would probably be making the same money in a year. Given the clutter on most channels today, networks are using the sports genre to create new viewership that will stay with them. Besides, people are showing interest in sports like NBA, F1, Tennis, Football, etc. It is a strategic move to provide content for a sports lover throughout the year.”

Mayank Shah, Dy. Marketing Manager, Parle Products says that sports properties offer networks an opportunity to increase their top-line revenue. “Nobody can generate as much as revenues as GECs. However, these (sporting properties) are additional or incremental sources of revenues. Everybody looks at growing their topline, and there is only a limit to which you can probably go in terms of adding GECs and Movies (properties). To generate additional viewership, you have to look at a different TG. Sports viewership is an untapped opportunity and every channel is looking at exploiting it,” he said.

According Amit Tiwari, Director, Country Head, Media, Philips India, “Whether it is Kabaddi, ISL or different opportunities within sports, they are all creating opportunities for viewers. If these opportunities are culminating into good amount of viewership, revenues will be directly proportional to it. But at what cost? What are you acquiring it for? And what are you selling it for? Every sport will not be treated as a premium property. I think it will be sometime before the TV networks are able to distinguish between the cash-cows and what is good for the entire portfolio.”

Is it worth the investments?

Sports properties present a big opportunity to earn substantial amount of revenues in a very short time. In the US for example, the National Football League (NFL) Super Bowl is worth $10 billion and expects to reach $25 billion by 2027 according to a report in USA Today. Dubbed as the Indian Super Bowl, the IPL’s total value is estimated to be worth $3.2 billion according to American Appraisal India. 
“I think it is also a long term strategy for the channels as with the economy picking up, the country is becoming a lot more sports oriented,” says Balakrishna PM, COO, Allied Media, Percept Group. He adds, “Of course sports as a business is not so easy to make profitable. If you actually see in other parts of the world, TV rights become very crucial. It’s a long-term game and Star (India) is in it for the long haul. They are investing in multiple channels and will need content. So they are buying rights left, right and center. It’s an investment phase and I’m sure the returns will come in another 5 to 10 years. They have also ensured that they have short-term leverage with enough cricket on their network. They are also investing in sports, which they feel will see a growth in infrastructure as well as popularity over the next four-five years. At one level they are monetising Kabaddi, at another, they are picking up the rights for badminton, tennis and football. These are the marquee sports which are going to be the future popular sports.”

According to Vinit Karnik, National Director, Sports and Live Events, Group M ESP, it’s mainly about distribution. He explains, “It’s about creating a robust offering to a MSO or a DTH operator. The ability to negotiate harder to get more revenues out of each connection from a MSO or DTH operator is increasing for Star (India) or any network.  Around the world, sport is always considered a premium property compared to movies or general entertainment, and is the most expensive content to watch. So in the developed markets you pay serious amount of money for sports. For example if you have to watch IPL in Europe or US, you have to shell out almost about $150 per week. We are right now in the development zone so while we are talking about distribution in terms of connectivity. Who knows, may be tomorrow we would get into a pay per view environment where you will only watch the Finals of IPL or ISL or Wimbledon. You will pay for only the content that you see. We are moving towards that slowly but steadily.”  

While cricket continues to dominate any conversation on sporting revenues for broadcasters, the emergence of other sports is a healthy sign. Besides it augurs well for the channels as well, keen to break the clutter. But it remains to be seen how much of the initial viewer enthusiasm over the various sporting properties is sustained and translated into serious revenues for the networks and advertisers investing in the great Indian sporting dream.


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