IPL’s future shock for businesses

R Srinivasan | Updated on: Jun 15, 2022
The mania for cricket translates into mega audiences for match broadcasts

The mania for cricket translates into mega audiences for match broadcasts | Photo Credit: SLS

India’s passion for cricket is laying the foundations for a digital future

Electrical and electronic consumer goods maker Havells is today a true Indian multinational, with half-a-dozen global brands under its belt and operations in 60 countries. But the situation was quite different in the early 1970s, when the late Qimat Rai Gupta, then a small trader in electrical goods in Delhi’s electricals and electronics wholesale hub Bhagirath Place, decided to start branding his products and move into the consumer electricals space.

Anil Rai Gupta, Qimat Rai’s son and the current Chairman and Managing Director of Havells, told me in an interview once that when they first decided to start building their brand and hired an advertising agency, they were presented with a media plan that would have sunk the business before it started. That’s when the Guptas decided that they would only do tactical advertising, releasing their ads at times guaranteed to reach the widest audience. They chose cricket.

I am unaware whether the situation has changed now, but at the time I did the interview a few years ago, Havells only aired its advertisements during broadcasts of cricket matches. Never anywhere or anytime else. This is what Anil Rai Gupta said in that 2012 interview published in this paper: “Our buyers are largely men. Decisions about electrical equipment, or fans or switches are not taken very often — typically when people build or renovate houses — and it’s mostly men who decide,” says Gupta, adding, “and most Indian men like to watch cricket.”

That might be something of an understatement. Indians — not just men but women and children, of all ages, castes, creeds and from every economic stratum of Indian society — are hooked on cricket. And this mania for cricket translates into mega audiences for cricket broadcasts — particularly of tailor-made entertainment spectacles like the Indian Premier League, or IPL, as it is universally known.

When Alvin Toffler coined the term “Future Shock” to describe the impact that rapid change — particularly of the technological kind — had on people and societies, he was looking at change in the dystopian sense. Toffler’s argument was that people become discomfited by change (he also coined the term “information overload” half a century before it became the norm in contemporary society) and this “future shock” lies at the root of societal problems like loss of identity and the waning connections with family, faith and culture.

Wake-up call

But all shocks are not necessarily bad. Some can serve as a wake-up call, shocking us out of our familiarity-induced somnolence and forcing us to take notice of the changed reality around us, perhaps in time for us to take necessary corrective actions to deal with that change.

Well, the recently concluded broadcast rights auctions of the Indian Premier League for the 2023-27 cycle have delivered just that kind of ‘future shock’ to businesses. The IPL is now the world’s second richest sporting franchise, second only to the American National Football League’s “Superbowl”. At a combined ₹48,390 crore ($6.2 billion) for broadcast television and digital streaming rights, the IPL is now more valuable as a sports franchise than the EPL (English Premier League) or the National Basketball Association (NBA) championships. And it has managed to do this in just 15 years, about half the time EPL needed to dislodge NBA from its number two slot.

The numbers may be shocking for mere mortals like us, but hardly staggering for global businesses. After all, tech giants like Apple and Amazon were both interested in getting a slice of IPL action but eventually decided that slugging it out with the petroleum-fuelled pockets of Mukesh Ambani might prove too draining on their main business. And with an audience of 600 million, IPL may even claim to be worth the money. Hotstar, then owned by STAR (now a Disney property) became India’s largest subscriber-driven OTT platform thanks to IPL. 70 per cent of its revenues from subscriptions and ads were tied to cricket and IPL.

No, the shock comes in when one looks at how the numbers divvy up between broadcast satellite TV and digital. Disney Hotstar shelled out ₹23,575 crore to broadcast IPL matches over the next five years to the Indian sub-continent, which includes cricket-mad Pakistan, Bangladesh and Sri Lanka. Mukesh Ambani’s Viacom 18, on the other hand, has anted up a whopping ₹23,758 crore for digital streaming rights.

Yes, about ₹200 crore more than the TV broadcast rights. There has been some speculation as to whether the winning bidders — both Disney and Viacom — would be able to recover their money from advertising and subscriptions. Certainly it would be tough — the cost of a 30-second spot during an IPL match could cross ₹1 crore and with the collapse of venture funded spending sprees (remember Dream11 and Byju’s are big cricket sponsors), it might be tough finding brands willing to pay that kind of money on a sustained basis.

But for Ambani, it is a simpler proposition. What he can’t get on the swings, he will make up on the roundabouts. Apart from subscriptions and ads, since he also is the biggest player in the data business in the country, he will also earn money as users burn up their data quotas livestreaming matches.

A new connect

But the fact that digital is now bigger than TV should make all businesses which have to deal with consumers in India think about how they will connect with them. The millions of fans watching cricket on their smartphones may come for IPL but stay to do other business. Which means that every business will now by default have to think of a digital option to deal with its customers, no matter how well set its brick-and-mortar business may be. One can already see the surging digitalisation of the economy in the astonishing ₹10 trillion a month worth of transactions happening on UPI for instance, or the breakneck growth of data consumption in India.

The IPL auctions may be to India’s digital future what Y2K was for India’s IT services industry — an inflection point where old notions are no longer any good for dealing with the future.

The writer is a senior journalist

Published on June 15, 2022
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