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IPL 2021: Is it game over for the media and advertising biz?

The suspension of the cash rich league will impact the ecosystem commercially.

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KOLKATA: The Indian Premier League (IPL) returned to Indian soil after two years amid great excitement but no one had expected that the tournament would come to a halt midway. The steep rise in Covid2019 cases in the country had already led a lot of people to question why the league was being staged, and a PIL on the same was filed before the Delhi high court. Yet, the bio bubble had acted like the shield of Aegis for the event – until it was breached.

On Tuesday, the Board of Control for Cricket in India (BCCI) decided to "postpone" the season with immediate effect. It is not certain whether the 31 remaining matches will be played in another window. The move came after multiple players across teams tested Covid positive.

A tournament which is valued at thousands of crores, a season that was expected to fetch many more crores in sponsorship and broadcasting revenue is now faced with the pivotal question: what does the suspension mean for advertisers and TV viewership? It is undoubtedly a setback for an industry which is already battling the impact of Covid2019. But experts believe it was the right call to postpone the IPL and prioritise health and safety over monetary interests.

“Given the prevailing pandemic situation, I think it is the right decision to postpone IPL for now. The health and safety of all the players and everyone involved is paramount and keeping in mind the situation and the prevailing mood of the nation, in my view it is the right decision,” Dentsu APAC CEO & India chairman Ashish Bhasin said.

The breach in the bio bubbles is just one factor for calling off the league, noted business strategist & ex- PepsiCo, Motorola & HP APAC marketing head Lloyd Mathias, who held the view that it is simply insensitive to continue with the IPL due to the magnitude of the Covid crisis in India.

“I think brands and businesses should welcome this move in the larger interests of society and their consumers. Yes, there could be some financial impact, but this is insignificant when compared to the devastation all around. There are times when businesses need to set aside their commercial objectives – in the larger interest of society, and this is one such moment,” he commented.

Pulp Strategy founder & MD Ambika Sharma claimed that everyone from sponsors, broadcasters, to the BCCI will have to bear huge losses, but the current environment is least conducive to host matches. “The high stakes of IPL should have been looked into when we see players falling to Covid infections. The infection can have multiple manifestations on the health of the players which can lead to serious lifelong illness. A mutually agreeable formula by key stakeholders can be adopted transparently to arrive at a decision when the medical experts are warning us about the Covid peak,” she added.

Significant revenue impact for the IPL ecosystem

There is no denying that the IPL will suffer a significant downturn in revenue for the current season with loss of sponsorship and broadcasting revenues for the BCCI, said Duff & Phelps managing director & valuation advisory head- APAC Varun Gupta. The league was already coping with loss of revenues from ticket sales and in-stadia F&B, besides the loss of revenue last year due to Vivo pulling out for the 2020 season, he mentioned. The teams, too, will have to face reduced revenue from the central pool and loss of team sponsorship revenues.

For advertisers, the impact will be in terms of redrawing their plans, redirecting their investments to other mediums, shared Tonic Worldwide founder & CEO Chetan Asher. Deep-pocketed brands that had lined up to cash in on the IPL could now reallocate some of their ad budgets towards relief efforts. More so for first time advertisers, they can be nimble, drive change and emerge stronger, he quipped.

“Remember, the BCCI is a very rich body, and this financial loss is an insignificant price to pay in comparison to the larger catastrophe all around. Also, insurance may help cover part of the damages, suffered by the teams, the sponsors and the broadcaster,” observed Mathias.

Brands must reformulate media strategy

Until now, brands like Cred, Dream11, PhonePe, Zomato have come out with buzzworthy IPL campaigns that captured audience interest. However, there are several creative works in the pipeline that were waiting for the league to enter its second phase, Grapes Digital COO and strategy head Shradha Agarwal pointed out. In May, many brands would have rolled out ad campaigns because the IPL advertising inventory is sold through long term contracts that are signed before the tournament begins.

“This will also impact digital agencies that are ready to launch their campaigns with influencers based on IPL. There are few possibilities, firstly, the IPL is suspended and not dropped hence, advertisers will wait for the league to resume or some clients would cease the campaign and work on Plan B because the budget was allocated for a specific period, and if the quarter changes they will back out. Small advertisers might take the route of moving to regular inventory instead of investing for the remainder of the season in one go,” she explained.

Mathias acknowledged that media planners will have to rework plans but given business sentiment is down and lockdowns are being enforced this is a good time to lay low, until the dark clouds clear. “We agree with BCCI’s decision to postpone the IPL. Focussing on tackling the current crisis in India, along with ensuring the health and safety of players, is far more important than any business impact,”  Dream11 & Dream Sports CEO and co-founder Harsh Jain said.

What does the official broadcasting partner say?

“Star India supports BCCI’s decision to postpone IPL 2021. The health and safety of players, staff and everyone involved in the IPL are of paramount importance. We thank the BCCI, IPL Governing Council, players,  franchisees and sponsors for their support. We are also indebted to our employees, on-air talent, production, and broadcast crews for trying their best to spread positivity by delivering the broadcast of IPL 2021 to millions of homes in the face of challenging circumstances,” the IPL broadcaster said in an official statement. But it remains to be seen how the broadcaster will strategise its content line up in the absence of IPL matches; reruns could be the easiest option.

Negative impact for overall TV industry

Advertising revenues had just started trickling back for the TV industry, with the IPL aiding this recovery the most. Now with the tournament suspended, there will be a significant impact on TV viewership, Elara Capital VP research analyst (media) Karan Taurani said. Fresh non-fiction programming on GECs – which have high going rates and contribute in a big way to ad revenue – has halted due to the filming ban. The movie genre may offer some succour with recent film releases on OTT platforms now landing on TV channels. On the other hand, viewers may again migrate to the streaming services to satiate their viewing needs.

Brands still game for the IPL

The IPL is the single largest property on television in India with an overwhelming appeal to a wide target audience, across geographies, said Dentsu’s Bhasin. It has unparalleled reach and has always proven to be an excellent vehicle for brands and it will continue to be so, he reaffirmed.

“One must also acknowledge that while it was ongoing over the last few weeks, the IPL provided three to four hours of much needed diversion and relief to the Indian masses who are reeling under a barrage of bad news on the Covid front. IPL’s ability to pull TV audiences continues unabated. Secondly, the value of any enterprise is based on its future cash earning capacity. To our mind, while there will be some revenue loss this year, the future revenue generation ability of the IPL is undiminished,” summed up Gupta.

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