Mumbai: India is on the cusp of a sports revolution. A recently released report compiled by Anand Rathi Advisors (ARAL) confirms what sports pundits have long claimed – that India’s time as a sports superpower has come.
According to ARAL, the sports industry is expected to reach $100 billion by 2027; multiplied by 4 compared to 27 billion dollars in 2020.
The report speculates that the industry will be driven by India’s gigantic youthful population (400 million people, larger than the population of the United States) and rapidly improving economic conditions. Historically, what has been observed is that when basic needs are met, people lean towards consumption that supports a healthier lifestyle and entertainment.
“We believe the overall sports media market will grow at an unprecedented rate over the next few years,” CA Atul Thakkar said.
Thakkar joined ARAL in 2013. He joined the financial services company in 2007 and honed his leadership skills within the organization for over 15 years. Before that, he started his career at Kagrana & Associates Chartered Accountants.
In conversation with Indiantelevision.com, Anand Rathi Advisors Director – Investment Banking CA Atul Thakkar shared his views on the sports media market.
On the factors that will propel the sports media market in India
Viewership and engagement will drive the sports media market. The unique ability of sports to capture the attention of large captive audiences over a long period of time is what compels brands/advertisers to spend money on sports. With multiple sporting events gaining traction with young people (cricket, kabaddi, F1, UFC, etc.), the unveiling of new sports leagues, and access to sports on multiple platforms, the overall sports viewership will increase. We believe that the entire sports media market will grow at an unprecedented rate over the next few years.
On the sharing of IPL rights between two broadcasters
Given the unique position that digital currently occupies, from the perspective of the BCCI (Board of Control for Cricket in India), it makes commercial sense to split rights between TV and digital. It is a function of the evolution of consumption patterns that motivated this decision. Media consumption is shifting towards digital, with consumers spending over 50% of time on digital compared to TV, which will increase significantly over time. We wouldn’t be surprised if the next media rights auction sees base prices for digital rights rise above those for TV.
On whether Disney Star and Viacom18 will make money
There is a solid commercial viability basis for the money spent on the rights. India is a big market, we have 400 million people in the age bracket of 15 to 45, which is larger than the population of the United States, which presents an opportunity to grow exponentially the sporting audience provided that it is presented as a mixture of entertainment and sporting prowess. – what is IPL. Viewership still has potential for growth as IPL expands into new geographies globally. We anticipate that the first two years will remain the investment period dedicated to growing the viewer base, while the returns will start to come in after that.
On IPL ratings falling on TV
Covid-19 was a setback for IPL, in which matches were postponed, venues changed. This created a pause in the excitement of the game. However, the last IPL season with two new teams was a success. The reason for the drop in TV viewership is that people are turning to OTT platforms and prefer to watch the game online. IPL is a valuable property and the only major sporting event in the country, we expect viewership to continue to grow with a shift in the OTT and TV mix.
On the potential for rights value growth for other cricket properties like ICC
Cricket’s base in India and the South Asian region in general, combined with BCCI’s monetary clout, has made IPL a huge success. IPL’s T20 format is short, action-packed and easy to consume. We don’t see any other cricket property having the means or the market to create a league of similar scale and fan following like the IPL.
On whether other sports are gaining traction in terms of viewership and rights value
Cricket has clearly dominated India in terms of viewership i.e. nine million, however, other sports leagues like PKL are growing, PKL’s viewership share has increased from 31% to 39 % in five years. Again, the ISL gained worldwide recognition and became the fifth largest football league in terms of viewership. Non-IPL properties, although currently smaller, have the potential to grow with the right investments.
Also Read: Indian Sports Media Market to Hit $13.4 Billion by 2027: Report
On the role digital plays in disrupting and growing the value of rights
India will have 900 million internet users in the next five years, highlighting the potential of digital rights. While television used to be the primary source of entertainment in middle-class Indian homes, recent years have seen a rapid shift towards online streaming thanks to affordable internet and smart devices.
The pandemic has accelerated the growth of digital media in India. For example, the premium paid for media rights in the IPL, 1.7x for digital and 1.3x for TV, shows the potential companies see in digital rights and their willingness to pay for it.
On the progress local leagues like ISL, PKL are making
ISL and PKL have been the underdogs to the IPL as they lack the financial power that the IPL has. Sport is entertainment, which PKL has successfully delivered with its format while ISL has yet to improve viewer engagement. ISL for One has always been popular with consistent viewership from a grassroots base. Investments in making games more engaging – better camera angles capturing the action, for example, will boost ISL considerably.
Both leagues started small and saw viewership grow to numbers that would be considered a success in most developed countries. The increase in viewership will see sponsorship increase for these two leagues. They have a very long way to go compared to IPL, but they have undoubtedly succeeded.
On the potential impact of inflation on the sports media rights market over the next five years
Inflation is a transient economic phenomenon. We don’t think it will have a significant impact over the next five years.
Advertising and subscription being important
Advertising accounts for the bulk of revenue, but the rates themselves are determined by audience and subscriber base. Subscription revenue provides a base to build on during times when there are no major events, shows, or movies.
Whether the slowdown in startup funding will impact the sports advertising market
Start-ups represent a minor part of advertising in the sports sector. Big-spending startups — like Dream11, Byju’s, and Unacademy — are the leaders in their field and are well-funded. A brand aims to reach the greatest number of viewers, sport invariably provides that opportunity – with millions tuning in for 90 uninterrupted minutes.
In the current environment, we expect brands to rationalize their spending and direct it towards eye-catching mega events, such as sports. There will continue to be multiple sponsorship deals and we don’t believe the funding slowdown will have a significant impact on the sports advertising market.
On the trends seen in gaming, esports in terms of investment and fan following.
The gaming and esports industry is highly differentiated. Each platform has a different strategy that does not lend itself to direct analysis. You’ll see behemoths in each segment, but each platform’s differentiated experience will allow them to coexist and thrive.
On the road ahead for India to follow more other sports
Our thinking on how to expand the sport is to create several business leagues – in the United States for example, a country with a population one-third that of India – there are over 100 functional leagues. Competitive leagues will make sports a viable career option, ensuring wider participation.
For example, the IPL has given a platform to talented sportspeople who, despite not making it into the national team, have found a way to make a meaningful career in sports. The presence of leagues will have a ripple effect, with children wanting and parents wanting to enable their wards to play sports competitively, creating a demand for related infrastructure, products and services, which enterprising individuals will fill.
The ultimate goal as a society should be for every individual to play a sport competitively. There are a host of character traits and health benefits that sport brings that can have a significant societal impact that will help the nation in the long run.