The off-field action in sports seems to have become far more exciting than the nail-biting finishes on ground. Sample the action in the last four months:
- News Corp announced it will buy ESPN’s 50 per cent share in the ESPN Star Sports (ESS) joint venture.
- Star bought Board of Control for Cricket in India (BCCI) rights for a whopping Rs 3,851 crore.
- Multi-Screen Media (MSM), which runs Sony Entertainment, launched a premium sports channel called Six
- Zee launched a dedicated golf channel called Ten golf
- And, after losing the BCCI rights, Neo went for a brand change.
So what’s making the sports genre so exciting in the Indian market even when some of the existing sports channels are struggling to survive? Consider this: Star paid as much as Rs 40 crore per match for bagging the BCCI deal even though Neo could not manage to pay Rs 32.5 crore per match.
But experts say it would be wrong to write off Star’s move as just over-enthusiasm. And the reason for this is digitisation. Most sports channels now have a 50:50 revenue model for advertising and subscription. “Sports drive subscription. But with digitisation, the current business model could be challenged ,” says Nimbus Chairman Harish Thawani. The company runs Neo Sports Broadcast, which has properties like UEFA Euro Cup and French Open.
“The genre itself has seen growth in India and with digitisation being a reality, sports will be a huge revenue generator for broadcasters,” says Ashish Pherwani, associate director, media and entertainment at Ernst and Young. This was perhaps the reason that encouraged MSM to launch its own sports channel Six in April. MSM owns the telecast rights of the Indian Premier League.
The other aspect is the telecom regulator’s recommendation of further cutting down ad volume on television, which means ad rates will go up. This reduction in ad volumes, experts say, will benefit big players such as Star, while crowding out the smaller channels.
There are other reasons as well why sports channels make sense. According to TAM Media Research, the sports channel market share in the overall industry has grown to 3.40 per cent in 2011 from 2.80 per cent in 2009, an increase of over 18 per cent. Till week 24 of 2012, sports had a share of 1.99 per cent, says TAM.
Adds Thawani, sports generally has 2x growth compared to the overall growth of the media and entertainment industry. “If the media industry grew by 13 per cent last year, sports grew at 25-26 per cent. And most advertisers have realised that,” he says.
The launch of the High-Definition (HD) service has also opened another vista for serious viewers and will open a completely new high-value market, which will grow rapidly. Sports viewers on HD will touch a million by the end of this fiscal and are expected to grow to 5 million in two years time.
At present there are 11 sports channels and the segment is dominated by STAR and Zee. These two networks together operate seven channels. Other channels include Neo Sports, Neo Prime, Six and DD Sports.
“Sports is a long-term game and break-even takes time,” says Ashish Sehgal, chief revenue officer, Zee Entertainment, which is now gearing up for the India-Sri Lanka Series in July. Others like football, hockey tennis and motor sports have of late gained traction in viewership.
For instance, the on-going Euro cup has similar ad revenues to Asia Cup (cricket) for Neo Sports. Thawani says both these tournaments have revenues to Rs 50-55 crore.
For a country obsessed with cricket with a viewership of 195 million, there has been a steady rise in viewership of other sports like soccer, tennis and motorsports. In 2008, Soccer had a reach of 83 million while in the first half of 2011 it had grown to 121 million. Similarly, Motorsports and Tennis had 59 million and 70 million in 2008, while in the first half of 2011 it had viewership of 88 million and 92 million respectively.
And there are examples such as Ten Golf that charge Rs 200 for subscription per month and that is their revenue model. “But still the channel driver in terms of revenue is cricket but other sports offer better return on investments ,” says an industry official.
Media experts estimate the Indian sub-continent contributed almost Rs 900 crore to ESPN Star Sport’s revenue of about Rs 1,600 crore in 2011-12.
“Cricket is the equivalent of a big-ticket property on a general entertainment channel. By itself the property may not turn out to be too profitable, but it makes the overall channel profitable. It takes care of the low visibility programmes. And with all the rights that ESS has, STAR now has not one or two but quite a few big ticket properties,” says Hiren Pandit, managing partner at Group M.
At present, ESPN Star Sports has BCCI and ICC (International Cricket Council) rights, in addition to the rights of ECB (England and Wales Cricket Board) and the ACB (Australian Cricket Board). Six and Ten are the other two that have strength in the Indian market.
Experts say the challenge moving forward for the genre is ensuring sticky content and since in sports, the content is finite and cannot be easily created, the battle ahead is in identifying and securing rights to relevant properties.