 "Why STAR TV is betting big on Indian sports")
In April 2012, STAR TV won the rights for all India cricket for the period July 2012 to March 2018, paying a stunning Rs 3,851 crore.
“The bedrock of STAR’s bet (and indeed, MSM’s) is the change in the revenue pie for television in India thanks to the TRAI recommendations on digitisation. In August 2010, TRAI had submitted recommendations on the ‘Implementation of Digital Addressable Cable TV systems in India’, proposals that have been accepted and notified. As a result, all cable systems in the four metros are scheduled to go digital by 30 June 2012 and systems in the rest of the country by 31 December 2014. Even if, as experience has shown, the roll out is not as fast as envisaged by TRAI, there can be little doubt that the country will be fully digitised by not too long after December 2014 - which means STAR India will operate for close to four years in a fully digital environment,” we had written then .
This morning, we hear of STAR TV’s Rs 2000 crore investment in IMG-Reliance both in the form of equity and telecast rights.
That makes STAR’s commitment to sport, just in India based cricket and football, as much as about Rs 6000 crore.
Since the acquisition of the cricket rights, STAR has attempted many new ways to monetize their content, including the live streaming of football, with a paid subscription, the introduction of Indian language commentary (Hindi was the first, more are to follow) for the English Premier League coverage, and, of course, monetization of live updates of cricket matches by other websites .
However, STAR’s big gains will come from
a) The digitization roll-out, as cable operators’ under-declaration comes to an end and STAR is able to monetize virtually all their TV audiences, and
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It’s the figures that give one a clear sense of why STAR is taking such big punts on sport. Globally, the highest yields for (subscription) content on TV come from premium live sports and live events such as the Oscar Awards. NewsCorp has seen significant success in sports investments in Sky in the UK, and that is what they want to recreate now.
On TV, for example, a vanilla DTH package, which give subscribers access to about 100 channels costs about Rs. 200 per month, with channels receiving between Rs 5 and Rs 40 per month per subscriber.
Compare this figure with the charges for access to live streaming. To view the current India-Australia series live on the Internet, STAR Sports fee for the ’event’ is Rs 100. To watch the entire English Premier League 2013-14 season, STAR is charging Rs 500, for the F1 season and La Liga, Rs 500 each, and for all football for 2013-14, Rs 700.
Do not be surprised if STAR Sports creates a Rs 500 package to watch Sachin Tendulkar’s last two tests.
There are currently no estimates on the number of subscribers to the live streaming product, but what is certain is that the yields are significantly higher than TV yields.
That, then, is what STAR is betting on. The successful completion of digitization of TV households in India, which we are already seeing, and the successful rollout of broadband and 4G as well.
In a few years’ time, we might be looking at STAR’s Rs 6000 crore bet and wonder how they got the content so cheap.
Anant Rangaswami was, until recently, the editor of Campaign India magazine, of which Anant was also the founding editor. Campaign India is now arguably India's most respected publication in the advertising and media space. Anant has over 20 years experience in media and advertising. He began in Madras, for STAR TV, moving on as Regional Manager, South for Sony’s SET and finally as Chief Manager at BCCL’s Times Television and Times FM. He then moved to advertising, rising to the post of Associate Vice President at TBWA India. Anant then made the leap into journalism, taking over as editor of what is now Campaign India's competitive publication, Impact. Anant teaches regularly and is a prolific blogger and author of Watching from the sidelines.