Streaming live sports turns into an expensive bet

June 20, 2022

Multi generation black family watching sport on TV celebrate
Jonathan Bennett, Chief Commercial Officer

Jonathan Bennett

Chief Commercial Officer

Viacom18, a joint venture between Paramount Global and Ambani’s Reliance Industries, has paid $3 billion to win an online auction for two packages of digital rights to Indian Premier League (IPL) cricket. The bid secures Indian digital rights to 410 matches played over five years across the 2023-2027 tournaments.

The digital streaming rights for the IPL have thus far been with Disney+Hotstar, the Indian streaming property of Disney+. About 50 million of Disney+’s 138 million subscribers are on Disney+Hotsar, and IPL was one of the primary reasons for the growth of the streaming service in South Asia and beyond, according to Variety[i]. While Disney lost the streaming rights, it retained rights for broadcast on traditional TV for approximately US$3 billion. Interestingly, Disney+Hotstar subscribers pay less than US$1 on average every month compared with US$8 paid by subscribers in the US. Disney’s revenue from South Asia may have been a modest US$500 million, but IPL served as a strong content hook for new user growth and retention.

Disney inherited the Indian TV, digital and international rights as part of its 2019 purchase of 21st Century Fox. That acquisition also brought Disney the Star TV group and the then-nascent Hotstar streaming operation. Since then, Disney+Hotstar has grown to be the largest OTT streaming service ahead of Netflix and Amazon Prime, besides the regional brands like Zee. According to Media Partners Asia, Disney+Hotestar could lose 20 million subscribers with the loss of IPL digital rights. On average, Disney+ Hotstar enjoyed 60 million monthly average users. But this typically rose during the IPL tournament and was well over 100 million in the second quarter. So, the loss of IPL content may also adversely impact the viewership of Disney+’s ad-supported video service beyond cricket.

According to Variety, some analysts have calculated that with the total value of the Indian rights packages being $6.2 billion, the mean value of each IPL match is $15 million. That is second only to the implied per game value of the U.S.’s National Football League ($35 million per game) and ahead of English Premier League soccer ($11 million per fixture).

Apple had recently paid at least US$2.5 billion to secure the rights to Major League Soccer (MLS)[ii]. The ten-year agreement makes MLS the most significant American sports league to move all of its games to a streaming service. From early 2023 through 2032, fans will access matches by subscribing to a new MLS streaming service available only through the Apple TV app. The league will also pursue linear-TV deals to simulcast a limited number of games. The soccer deal adds another feature to the Apple ecosystem, potentially making it more enticing to new iPhone buyers while retaining existing ones.

Amazon, on the other hand, had acquired exclusive rights to NFL’s Thursday Night Football for US$1 billion in May 2021[iii]. Different regions of the world also get access to live broadcasts of tennis matches (ATP Tour Events, the US Open, WTA), UEFA Champions League football and Autumn Nations Cup rugby games, and matches featuring the Seattle Sounders football club. Additional streaming services such as Eurosport and MLB.TV, NBA League Pass, and PGA TOUR LIVE are also available through Amazon’s Prime Video Channels, though usually for an additional monthly fee. Amazon has been steadily building a live sports content repertoire to differentiate itself in a world of programmed content led by Netflix.

Disney has thus far ring-fenced its prime linear tv sports asset ESPN from the streaming juggernaut given the lucrative cable tv agreements. However, that strategy may change with the loss of IPL rights. Netflix is following a different path around sporting experiences with the recent announcement of a reality TV show based on its top-grossing series, Squid Games[iv]. It holds the record as Netflix’s most popular series of all time, and it was streamed by 111 million users in the first 28 days of its launch. Now 456 participants will compete for the US$4.56 million prize money. Netflix will look to replicate the success of the series to set itself apart amidst increasing competition and subscription fatigue in the streaming world.

Formerly exclusive rights to screen live sports were the last remaining advantage traditional cable and satellite TV companies held in their ongoing war with OTT content providers. Statista suggests that global pay-tv revenue from subscription-based cable and satellite TV services declined 5% from US$186bn to US$177bn between 2019 and 2020. What happens next may depend on the price of sports broadcasting rights and which companies have big enough pockets to afford them. 

With smartphones increasingly central to the live sports experience, streaming companies have an opportunity to partner with mobile network operators (MNOs) to deliver their content to a broader audience. Bundling digital sports subscriptions with data allowances and mobile phone accounts offers a discounted triple play package that many potential customers will find hard to ignore. And the opportunity to pay to watch games – either by monthly subscription charges or one-off pay-per-game fees – through carrier billing offers more flexibility to younger viewers and those in countries of the world less likely to own debit or credit cards.           





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