Rewriting India’s Sporting Culture
If diversification marked the last few years of sports broadcasting in India, the road now leads to consolidation. Read about the advantages and perils that come with it as we kick off our coverage on the business of sports, to be carried forward in subsequent issues
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Passion, engagement, impact and revenue —very few sectors can deliver on all these parameters in the manner sports can. The global sports industry is estimated to be around $600–700 billion, with India grabbing a prime share. Evolving from a one-game nation to a formidable power with many new platforms, India has become a key market to watch out for. The years 2008 and 2014 were crucial turning points for Indian sports: first came the Indian Premier League (IPL) in 2008, and then several promising leagues in non-cricket sports in 2014.
According to a KPMG report, the Indian sports sponsorship market — comprising on-air, on-ground, team, franchise fee and endorsements — grew 12.5 per cent y-o-y to Rs 5,190 crore in 2015. Many corporates today are betting big on sports to build brands, primarily due to its ability to attract a large numbers of viewers. For instance, digital wallet and e-commerce player Paytm has committed Rs 500 crore over 2015–19 to the sports category, and is likely to target upcoming leagues in the country.
The Changing Dynamics
Lately, the sports broadcasting landscape in India has transformed significantly. Broadcasters are increasingly looking to diversify their portfolios with a variety of sports other than cricket to keep the viewership rising. With over 675 million people having access to a TV in India, it is the second-largest market for broadcast media after China, plus the sports genre has the potential to drive subscription revenue in addition to advertising revenue.
The two major broadcasters in the country — Star India and Sony Pictures Networks (SPN) — are competing intensely to acquire international sports properties. SPN, in fact, made a big move in August 2016 when it acquired Ten Sports from ZEE to diversify its portfolio. Before that, it joined hands with ESPN, marking the return of the global sports brand in India.
Sports broadcasting in India has taken a new turn with the advent of various sports leagues. Broadcasters are vying for fresh properties, through global biggies and homegrown leagues, to increase their portfolio of TV channels as well as digital platforms.
About the growing importance of sporting genre for broadcasters in India, SPN India CEO N. P. Singh has gone on record to say, “We have maintained that sports is one of the three pillars of our business and we have been investing significantly in acquiring properties that support this strategy.”
Over the last year, both Star India and SPN India have invested heavily in developing a comprehensive sports portfolio.
“Star and Sony are indeed the two current dominant players in the Indian sports broadcasting space, both on TV and through their OTT platforms Hotstar and Sony LIV, respectively. Even though there are smaller players like Neo Sports and new entrants like DSport (which is focusing on live, niche sports properties such as horse racing, soccer, golf, cycling and rugby), the TV broadcasting space is likely to be dominated by these two players (Star and Sony) in the near term,” says Girish Menon, partner, Media and Entertainment at KPMG India.
“Sports rights values have gone up and require deeper pockets and staying power. Bigger players will be in a position to invest more and recover the same better,” explains Ashish Pherwani, partner, Media & Entertainment, EY LLP.
Rise In Sports Viewership Across Platforms
The growing business of sports in India corresponds with the fast growing viewership ratio. According to KPMG, Indian sports viewership (TV) numbers grew 30 per cent over the two year period between 2014 and 2015, driven by the ICC Cricket World Cup and league-based events including Indian Premier League (IPL), Pro Kabaddi League (PKL) and Indian Super League (ISL). ISL not only managed to pull crowds to TV but also to the stadium. The average attendance at ISL’s first season was 24,357 — right behind three of the world’s biggest football leagues, Germany’s Bundesliga, Spain’s La Liga and the English Premier League. The first season of PKL in 2014 was watched by 435 million people. Its viewership increased 20 per cent y-o-y in second season and 35 per cent y-o-y in third season.
Apparently, major broadcasters such as Star and Sony understand viewers’ pulse and know just what they want or would want to watch. Their huge investments in non-cricketing sports have been reaping benefits for them. Talking about Star India’s investments in non-cricketing league like PKL, chairman and CEO Uday Shankar was recently quoted saying, “Five years ago, nobody was talking about Kabaddi let alone watching it on TV. Today, it has become one of the top sports in the country. Be it television, print media or even chatter on social networks, Kabaddi is everywhere. From a village pastime, it has become an urban sport that’s cool.”
Another sport that has experienced similar meteoric rise is wrestling. During its first season in 2015, PWL was watched by an average of 31 million viewers per day.
According to Rohit Gupta, President, Network Sales, SPN India, sports is definitely a high growth area in the future and Sony is making strategic decisions keeping this in mind. “In India, general entertainment channels are still very popular. But with 65 per cent population in India below 35, the popularity of sports is growing fast. We have seen phenomenal growth in sports viewership. That said, sports is a different kind business altogether, it’s a long-haul business that requires a lot of investments and the returns don’t happen immediately. So it’s not an area where everybody can get in; you need to have sustainability over a period of time.”
Surge In Sponsorship
Cricket continues to dominate sports sponsorships in India with 51 per cent share in on-ground sponsorship, 61 per cent in team sponsorship and 64 per cent in endorsements.
“The impact and reach that cricket delivers cannot be compared to any other sport in this country, at least not in the near future. However, interest in other sports such as kabaddi, tennis and football is growing at both viewers’ and marketers’ level and there is decent amount of investment being done by marketers,” states Harish Shriyan, chief operating officer of Omnicom Media Group India.
Sponsorship money raised by other sports is also on the rise. India has witnessed the entry of multiple startups in sports over the past few years; these include companies involved in sports infrastructure, data/content aggregation, education and training, online retail, technology and online ticket booking.
“It’s not only TV, print, radio and OTT advertising revenue that is growing but dynamic advertising, teams and franchise, and merchandise are all on a growth path. As each league gets stronger and the teams are more known, there will be more sponsorships,” believes Nandini Dias, CEO India, Lodestar UM.
According to a report by GroupM, the Indian sports sponsorship market grew 19.33 per cent in 2016 to Rs 6,400 crore, while spending via sports sponsorship accounted for 11.5 per cent of the Indian AdEx. Both cricket and non-cricket sports contributed to this growth. Among the growth contributors was ‘on-ground sponsorship’ which grew from Rs 1030.5 crore to Rs 1165.2 crore. Team sponsorship went up from Rs 558.2 crore to Rs 699.6 crore; franchise fees from Rs 541.3 crore to Rs 548 crore, and; endorsements from Rs 416.4 crore to Rs 476.4 crore. The biggest growth driver for sports sponsorship in 2016 was media spends. It grew 24.63 per cent from Rs 2,816.9 crore to Rs 3,510.8 crore.
Says Rajat Mehta, senior president and country head of Brand & Retail Marketing at Yes Bank, “Sports marketing has gone a long way in achieving our marketing objectives of gaining consumers’ ‘mindshare’. Being a young, vibrant brand, associating with a high energy and popular sport has aligned with our target audience. In India, sports, especially cricket and a property like IPL, provide an unprecedented and sustained reach year on year.”
Further commenting on the trend of rising sponsorship in non-cricket sports, he says, “Non-cricket sports are a small but fast-growing segment and although it might take a while to reach the popularity that cricket enjoys in India, the presence of a niche audience for these sports allow brands to engage with the customers better. Another advantage of developing non-cricket sports is that it gives advertisers multiple avenues to engage with their consumers on a year-long basis, across different sports. Besides, as India’s increasingly younger population builds affinity for global sports, it will be important for advertisers to start investing in these sports at an early stage for a long-term association.”
The Big Picture
For Indian sports, IPL has been a real game changer. It helped in establishing a successful model for packaging and marketing newer leagues in India. But since IPL was a cricket league it had an inherent advantage in a country where the sport is widely regarded as a religion. The journey for some others has not been as smooth. For instance, the first professional league in India Premier Hockey League (PHL) — launched in 2005 by the Indian Hockey Federation (IHF), Leisure Sports (a sports management company) and ESPN Star Sports — failed to garner support from sponsors and viewers, and as a consequence was terminated in 2008. Similar was the fate of a few others as well.
Speaking about the formidable success of IPL and how other leagues can use the same formula to succeed, Gupta of SPN adds, “IPL is going from strength to strength. We have had it for ten years and it has been a very successful event. In a short period, it is already competing with global leagues that have been there for 30-40 years. So, we have played a critical role in creating a more successful IPL. Sony was never a sports channel and our entire thinking was from the entertainment space, which is how we were able to create the whole fun and glitz around IPL. While some broadcasters are very niche in their approach, our thinking is very massy. IPL has grown beyond proportion and Sony’s contribution to the growth of IPL is immense.”
Undoubtedly, there is immense scope for expansion of sports in India, especially since it is a high-growth economy with an ever-growing middle class with more disposable income and leisure time. This situation has resulted in a rapid rise in advertising; most local and international companies are aggressively targeting this lucrative but underdeveloped market through sports. However, to ensure a strong foundation for development of sports in India, the country needs to focus on three major aspects — governance and infrastructure, culture, and focused-approach to winning medals. With these in place, Indian sports will unleash its full potential sooner than expected.
AR/ VR In Sports
AR/VR technologies have the potential to transform sports viewing by making it a more immersive experience on ground, as well as providing a near-stadium like experience to a viewer who is physically miles away. In October last year, Hotstar partnered with VOKE to broadcast Kabaddi WC live.
Rise Of Rural Viewership
With BARC making rural India measurable, the potential of the rural sports viewer has come to the fore for both advertisers and broadcasters. In 2016, average 45 per cent of weekly sports viewership was accounted for by the rural areas. Rural viewership accounted for 64 per cent ratings for PWL (3rd season); and even cricket enjoyed a 39 per cent rural audience. The same is likely to continue in 2017. (Source: FICCI KPMG report)