Daybreak - JioCinema's big IPL bet has advertisers in a fix

Episode Date: March 24, 2023

After buying the digital rights for IPL for an eye-popping amount last year, Mukesh Ambani’s JioCinema wants to change the way Indians watch cricket. It wants to replace TV viewing with online streaming.In order to pull it off, it came up with an almost disruptive move. It decided to make IPL streaming freeWhile viewership is expected to hit half a billion and ad impressions to quadruple after this, advertisers are skeptical about a host of unknown factors.What are they?Tune in to find out.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production.

Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get alert, as soon as we release our first video. episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. Exactly a week from today, one of the most watch sporting events in the world, the Indian Premier League or IPL, is going to kick off. This time, however, as you might be aware, India's OTT giant Disney Hot Star does not have the digital streaming rights for the event anymore.

Reliance took that crown jewel from it last year for a whopping $2.9 billion. This year, the IPL will be streamed on Mukaysham-Bani's Geo Cinema, one of the two OTT platforms under YECOM 18. Not only did Reliance whisk away the digital rights of IPL this time, it also announced a move that has taken the market by storm. You could call it disruptive even. Geo Cinema announced that IPL will be streamed for free, and about half a billion people are expected to watch the event. While the traditional TV rights still belong to Disney Star, Reliance wants to change the pattern.

It wants to make the internet the primary source for watching the games. Geo Cinema's advertisement for IPL makes this quite obvious. It begins with a camera zooming into an old TV screen in which Mahindra Singh Dhani is seen batting. Yeah, so, so, now, ashman very safe,

there's not as far as far as and now Doney crease for polar countering to get rid of, yeah. This barred Aipel

Geo Cinema on any any screen on any screen that be free. Now Digital India Degital India

will be digital Tata IPL just in with the kind of viewership that it attracts IPL has always been the holy grail for advertisers to get their brands noticed. A 10 second slot sells for millions of rupees. This time, the number of ad impressions in IPL is expected to not double, not triple, but quadruple.

This is because the viewership is expected to increase substantially this time. But GEO Cinemas move to make IPL free has left advertisers feeling a bit skeptical. because the IPL is a crowded franchise and brands are worried about their return on investment. Welcome to Daybreak, a business podcast from the Kent. I'm your host, Nick Das Sharma and I Don't Chase the News Cycle. Instead, thrice a week on Mondays, Wednesdays and Fridays, I will come to you with one business story that is worth understanding and worth your time. Today is Friday the 24th of March.

So far, the IPL has turned out to be the greatest. vehicle to establish subscriber supremacy for OTT platforms. Look at Disney Hot Star, the biggest OTT giant in India. They had IPL rights before Reliance and it is what got them to the top of India's OTT game. But Geo Cinema has kind of turned the tables with its move to make IPL streaming free. This is why the number of viewers this time around is expected to cross half a billion. Now going by simple logic, you would think that this is. is a brilliant opportunity for advertisers, right?

I thought so too. Turns out that is not really the case. The Ken reporter Somajit Saha spoke to a bunch of ad executives about how they think the IPL being streamed for free on geo-cinema is going to turn out for them. And he found out that there are quite a few twists in this tale. Senior ad executives told Somajit that what is unusual about this whole thing is the number of unknowns for them.

And they went on to talk about the challenges in estimating advertising return on investment, whether Wycom 18's technology can actually guarantee a seamless telecast, and if the targeted new audience will have enough reasons to switch from TV to digital streaming. Let us look at these factors a bit more closely. According to advertisers and rival OTT executives alike, this time it will be viewers from Tier 2 and Tier 3 cities who are in, expected to push the expansion of the IPL's online streaming. This is in addition to urban users who could not afford a subscription last year. And because of this, traditional advertisers like

TIO, paint and pipe companies are suddenly considering spending on digital advertising. Meanwhile, startups that contribute to 13% to India's ad revenues in 2021 are expected to slink into the background. A bunch of them like Eddeck, Academy, e-commerce firm, Meisho and FinTech Slice are expected to go for smaller deals instead. Now, due to these factors, the total number of digital advertisers is expected to double. Even the number of ad impressions is expected to quadruple. An executive explained it to us. He said, say 100 people watch a 60 second ad interval during the IPL.

If we break the interval into 2 30-second ads, you have double the impressions, that is, 200. impressions available. So what is really happening this time is that the supply of available ad impressions is much higher. Now, because of this, the cost per mile or the cost an advertiser pays per thousand impressions has gone down, which means that brands can now strike smaller deals costing as little as 10 crore rupees this year, which was not the case in say 2021 when the minimum was at least 20 rupees. But as advertising in IPL becomes more affordable for brands, it could actually lead to another serious problem for them. Stay tuned to find out more. This increase in the available number

of ad impressions might actually hurt a brand's visibility in an advertising slot. Because now the slot is crowded, right? A senior ad executive we spoke to help us understand. They said, and I'm quoting, in a typical IPL match, you would require at least 20 to 25 million impressions to move the needle with respect to brand recall and impact. But in a high viewership match, say for example, India-Pakistan World Cup knockout, you may require as much as 100 million impressions to get a meaningful SOV given that the total pool of impressions goes up that much. End quote.

SOV or the share of voice is essentially the share of impressions that a brand buys in a slot. For example, if you buy 20 impressions in an ad slot with 200 available impressions, your SOV would be roughly 10%. The executive also estimates that now a brand would have to buy at least 4 to 6 times more impressions compared to last year's IPL edition to reach a bare minimum SOV, that is as many as 80 to 120 million impressions. You see, the IPL has always been a congested property. But the senior ad executive I mentioned earlier said that many brands may feel disappointed

by their returns on their investments in IPL 2023, especially the ones making small to mid-sized investments. And that is because the ocean of impressions will drown their slots. Executives say that a lot will depend on whether Geo Cinema can actually pull off what it's set out to do. to wean-off viewers of IPL from TV to online streaming. But that too has its own challenge. I will tell you about it in the next segment.

Geocinema has introduced a number of perks, like quick highlights, multi-camera views and 4K resolution streaming to win the long-drawn battle. But advertising and rival OTT executives also point to the fact that the majority of Geo-Telecom subscribers are pre-paid customers, which means that they have a limited amount of daily data to spend on the matches. So that kind of rules out the customer's chances of using features such as high-res streaming. Even with low-res streaming, they would end up using their entire daily data limit of 1.5 to 2 GBs

to watch one full match that usually lasts for about 3 hours. Now, according to executives, there are two ways in which this could play out. One, users could top up their internet plans to stream the matches on their devices, thereby helping the telecom operator. Two, they could simply watch the matches on TV if the service is bad, because viewers are more likely to get access to Star Sports Channel as a part of a cheaper bundled offering from the likes of DTHA service providers like TataPlink. And there is also a third scenario that is possible,

where viewers, especially the new ones from Tier 2 Towns and Beyond, decide to only tune into the streaming platform for short periods of time so as to not exhaust their daily data limit. But this has got some of the advertisers worry. The marketing head of a consumer brand that opted out of investing in this IPL season told the Ken and I'm quoting, if the viewership is not sticky, brands just won't be able to make a difference in terms of brand recall.

We need a bit of a captive audience to really work our magic. If it is a fickle audience, then there will not be a translation into consumer metrics. End quote. There is also one more important factor that has advertisers worried. Stay tuned to find out. As IPL viewership goes up this year, so does the load on internet service providers. According to two senior executives in the content delivery network or CDN ecosystem, Gio has been closely working with its CDN partners.

Gio is working with the likes of Akmai technologies as well as with telecom rivals such as Bharti Airtil and BSNL to boost its hosting capacity for the tournament. But still, this kind of scale is unheard of in the Indian OTT world. A senior executive at a core CDN firm told us, and I'm quoting, I hope that ISPs or internet service providers like Vodafone Idea and BSNL other than GEO are aware of what kind of pressures their system. are going to go through. I expect as much as half of the country's consumer internet bandwidth is going to be assigned into streaming the IPL during the popular matches. End quote.

While we don't know how things will pan out, there is one thing that we know for sure. The success or failure of this is directly going to impact advertisers' confidence in Geocinema. Daybreak is produced from the Newsroom of the Ken India's first subscriber-focused business news plan. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters, subscriber-only apps and podcast extras.

Head to the ken.com and click on the red subscribe button on the top of the website. I am Snigda Sharma, your host, and today's episode was edited by my colleague Rajiv Sien.