India heading towards oligopoly in sports broadcasting


India heading towards oligopoly in sports broadcasting


Zeel Sports Business CEO Atul Pande

                                                                          (24 January 2013)

The events in 2012 could be an indicator at how the sports business will look going forward. An oligopoly, with two primary broadcasters driving the business. This is a similar model to what happens internationally, where one or two large broadcasters drive the business and share most of the content and the platform play. Sports viewing will become more expensive, innovation will drive broadcaster hooks to drive affiliation, and High Definition will start becoming a real player in the business. By definition, therefore, being marginal will not remain an option. And yes, some definitive steps will be made towards profitability.

This was a very LIVE heavy year. Almost 50 days of live India cricket, and more than 200 days of international cricket from other boards. Fully loaded IPL with nine teams, all the key European football leagues broadcasting most of their wares, new Indian leagues coming up with live products ensured that the sports enthusiast has enough to watch throughout the year.

Sports penetration increased to 22 million households. The genre share continues to hover around 6 per cent. Most of this is now split between two broadcasters and they are must have bouquets to have for any platform worth its value in a very scattered broadcasting market.

Internet continued to emerge as a credible platform. With more than three million tablets in India and 15 million broadband users, and growing at a substantial rate, it will become a platform of choice for some users eventually, and it continues to be a space to watch out for. Ten Golf launched an iPad and iOS application for live streaming and the response has been very encouraging. We will see much action on the Streaming side of the business in this area, and pricing scenarios will begin to evolve this year as the user base settles down.

Indian cricket changed hands once again on record payouts. Cricket viewership growth remained tepid across the board. Football continued its spectacular growth by increasing its reach to 11 million households and in the metro markets it is a credible and a driver product. While the other sports remained marginal, they continue to demonstrate growth and build affiliation. Football content prices are now starting to demonstrate the cricketsque growth rates of the 90s and will put the revenue model of the product under pressure going forward.

Much touted digitisation has commenced, and could be a game changer for the industry. As I write this, there is confusion on the ground but the landscape is quite positive. Clearly, sports will become a part of high value packs of the operators and full pricing delivery will kick in for discerning customers. To that extent, delivered penetration at the platform level will improve for all players, driving significantly enhanced revenues at the erstwhile analogue customer and the platform levels. This revenue action has been demonstrated at the DTH operators for the last couple of years, and the same should translate at the analogue level now. The key issue I see is the timing of the new industry structure, which may set back the real delivery by a few months as the packaging, MSOs and their LCO brethren settle down in the new regime.

The other issue that will become transparent and lead to debate is the whole pricing paradigm around niche, and especially sports channels. My hypothesis is that some of the current channels at their current pricing will find it difficult to sustain their operations and the regulator will have to look favorably at pricing changes for key sports channels. There is a market for highly niche, high value channels that needs to be developed. High value and pay per view solutions will have to be considered and approved to help these products retain their quality and their business models. This is an imperative, which cannot be postponed anymore, and the niche and sports operators will have to espouse these causes with the decision makers.

As we move to a new stage in the sports broadcasting arena, I also see a new dawn in the rural sporting landscape. This is one area where, because of the way sports channels have evolved and have become largely urban, up market products, there has been lack of focus, and initiative. I forecast 2013 as the year when we will see the birth of some rural leagues in India. I see Kabaddi and Kushti (Wrestling) as products, which will garner immediate traction and will be able to generate sponsor support too. The interesting thing to notice would be placement of these products - how do the sports channels with their urban mindset deliver these products to their eventual viewers and build credibility in this segment. So watch this space for some interesting action.

As the sports broadcasting has moved to the next stage in India, the last few years have been extremely trying financially for the business. The financial model which has evolved mandates that 70 - 80 per cent revenue of the business comes out of the subscription vertical, and most of the acquisition strategy is built around that. The industry has been suffering because the cable analogue side of the business has not supported it as much as it should, and I hope in 2013 all of us collectively are able to drive that part of the business for consumer and enterprise value.

We deserve it, to support our viewers, our investors and other stakeholders to achieve their ambitions. And above all, to help support local Indian sport and sportsmen, who deserve continued backing from the key stakeholder - the broadcaster - who helps monetise the industry. Make us healthy folks, and watch us give back to them to drive Indian sport to the glory it deserves!

Have a terrific 2013.

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