Indian economy is currently going through one of its worst phases but the return of IPL could cheer up the broadcaster, bring back the advertisers and rekindle the online fantasy sports industry.
The COVID-19 pandemic may have dampened the economy but it hasn't had any such impact on the spirits of the broadcaster, advertisers and online fantasy sports operators as far as the Indian Premier League (IPL) is concerned.
The 13th edition of the T20 league was originally scheduled to start on 29 March this year, however, the situation since then has been anything but normal. The unprecedented effect of the global pandemic saw everything coming to an abrupt pause in the ensuing months. While economic activities came to a grinding halt, sporting events across the globe were suspended or cancelled, including the IPL which was postponed indefinitely without a ball being bowled.
The good news is that the cricket carnival is now all set to return. The Board of Control for Cricket in India (BCCI) has decided to host the tournament in the UAE from 19th of this month considering the growing cases at home.
One of the biggest sporting brands in the world, IPL has long been established as a money-spinning wheel for the BCCI. In 2017, Star India won IPL's media rights for all the markets (digital and television) for the next five years with a massive bid of Rs 16,347.5 crore, which translates to Rs 3,269.5 crore a year deal. Vivo bought the title sponsorship rights for the same period with a whopping Rs 439.8 crore per year deal.
Owing to the economic downturn which has seen India's GDP contract by 23.9 percent in April-June quarter, Vivo in August this year suspended its deal for the 2020 edition. The title sponsorship right is currently held by Dream11 but BCCI would only make Rs 222 crore from the deal. The decrease in demand for goods and services and in income of companies can also make advertisers stay away this year. In light of all this, will the sluggish market environment also hit the bottom line of the broadcaster Star Sports or will the power of brand IPL shine through this temporary gloom?
IPL in 2019 clocked a record viewership of 462 million, according to BARC India's data. The reach of the tournament jumped by 12 percent and the match impressions increased by 15 percent. Banking on the popularity of the T20 tournament, festive period scheduling and Star Sports' investment in regional channels, the broadcaster is confident of having the "biggest IPL ever".
“IPL will be the biggest platform available for marketeers during this festive season. IPL has always been the most awaited sporting event and the anticipation is even higher this year as most viewers are homebound. This combined with the early start of matches and Star Sports’ continued investment in regional channels gives us the confidence that this will by far be the biggest IPL ever," said Gautam Thakar, CEO, Star Sports. "Brands are in active conversation with us for IPL as it is the perfect time for them to take advantage of increased consumer spends during this festive season.”
Will Star Sports' bullish sentiment be backed by the advertisers this year? Vinit Karnik, business head for entertainment, sports and live events, Group M, one of India’s largest media buying agencies, is fairly confident. He says Star Sports would gain from people being homebound due to the pandemic while IPL franchises have most of their team sponsorship slots sold.
"This is the first time IPL is happening in the festive season. It’s a known fact that the advertising spends during the festive season are at the peak as compared to any other months, including summer. That said, in unprecedented times like these, IPL is expected to bring some cheer, positivity and be the catalyst to a mood change for the fans. This is also reflecting in the way the marketeers are responding to the on air and on ground inventory. While the broadcaster is garnering a very positive response and conversations from the advertisers and have already closed a significant volume of inventory, IPL teams have almost sold all the team sponsorship slots on players kit," Karnik said.
"All the teams are in Dubai preparing for this extravaganza as fans and marketeers are looking forward to the biggest ever IPL in terms of viewership. Reasons for this are obvious as we all are still taking precautions and are spending significant time at home and IPL is expected to be the biggest beneficiary of this situation."
Fantasy sports industry looking forward to IPL 2020
Another Indian industry that has come to closely align with cricket recently is that of the online fantasy sports. The fantasy sports operators have been a constant sponsor for ICC, bilateral and domestic tournaments.
The Industry which only had 10 operators in 2016 has seen the number rise to 140 in 2019, according to a study conducted by Federation of Indian Fantasy Sports (FIFS), the regulatory body of the industry, and KPMG. The total user base for the operators stood at 90 million in 2019 and the industry is estimated to have generated revenue of close to Rs 2,500 crore in financial year 2019-20. The sport of cricket has been the biggest breadwinner for the industry and while the operators have diversified their portfolio by foraying into different sports, KPMG's report states that 85 percent of contest entry amount for the industry came from cricket.
The sudden suspension of IPL and other sporting activities in March and lack of live sporting events emerged as a massive challenge for the industry, forcing operators to add new sports to their platforms.
"The pandemic affected major live sporting events across the globe. The Online Fantasy Sports (OFS) industry was also impacted due to these cancellations as it is completely dependent on live-sporting events. However, the OFS industry tried to bring sporting action to Indian sports fans during this period by introducing new sports and tournaments from places which were free of COVID-19. OFS operators in India introduced new sports on their platform like baseball, handball and rugby. They were able to host 1,000+ matches from around the globe and saw participation from over 5 million users in the period between April and June 2020," said Amrit Mathur, strategic advisor, FIFS.
According to FIFS, IPL constitutes for 35-40 percent of revenue for the fantasy sports industry and there could not have been better news than the return of the T20 league.
Vinit Godara, CEO and co-Founder of MyTeam11, feels that while the industry was able to "maintain its stature" during the phase when no sports was taking place, IPL would bring in a "new lease of life" for them.
"Now with the IPL happening, it is certainly going to be a major boost. It is also the first major Indian sport to begin post the pandemic-induced lockdown. Even though it is behind closed doors and being held in UAE, the organisation of the tournament itself brings in a new lease of life to the fantasy sports market. This situation also generates an even greater opportunity for fantasy sports firms to ensure that the user experience is as immersive and exciting as experiencing a match in a stadium," said Godara.
MyTeam11 are one of the major players of the online fantasy sports industry along with market leader Dream11. The fantasy platform claims to have a user base of more than 15 million. They expect this user base to rise further as the IPL begins.
"To be honest every year during IPL we see an 8x – 10x spike in the users. We are expecting similar interest this year as well. While there is a huge possibility that it might be more considering the audiences will be glued to their screens to watch the IPL," revealed Godara.
The industry at an overall level is expected to witness a sharp rise in its user base as fans who are confined to their homes due to the pandemic would seek deeper engagement
"This IPL, fans would seek deeper engagement beyond just viewing the matches, and will turn to digital sports entertainment platforms like OFS to showcase their knowledge/skills by creating their own fantasy cricket team and competing with fellow fans, friends and family. OFS platforms provide high sports entertainment and engagement value for fans," added Mathur.
Challenges for fantasy sports operators
The prevailing economic downturn would have a direct impact on the spending power of individuals but would that be a challenge for the industry? MyTeam11's Godara is of the opinion that dip in income level would not impact the industry and the only challenge is to provide the best user experience.
"While the fact is undeniable, we don’t see it as a major impediment. As MyTeam11 we offer a diaspora of options that the fans can avail. Hence, the power is in the hands of the users rather than the platform. Now it’s up to the fantasy sports fans as to how they wish to play. Hence, we have a clear approach that the 'customer is the king' which has helped us grow and maintain a loyal user base of 15 million+ with just over four years of operation.
"I think the challenge will only be to ensure that we provide the best user experience, it is a highly competitive market and the one with the most innovative edge shall reap the benefits."
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