In today’s Tuesday post am going to talk about how STAR after spending 16,347.5 Crores to buy the TV rights for IPL is going to make profit.
How are they going to earn that money back?
We Indians are Cricket Crazy and the Craziness has gone to another Level in last 10 years courtesy IPL. IPL has brought so many changes to the game, introduced new players, made careers, had its own share of controversies and much more. Not just the careers to aspiring cricketers but also many other jobs in branding, promotions, sales, advertising event management etc. There is so much money in the game, so much that the latest broadcasting rights cost of 16,347.5 crores bid by Star Sports which is roughly 2.55 billon dollars is more than at least 10 countries GDP put together. Brand IPL has become part of every Indian’s lifestyle. People are mad about this sport and wait eagerly for Summer. So much money is involved!
Money Money Money!
If you look into the Money part, the total IPL Broadcasting charges are 16,347.5 for 5 years and for each year it comes to 3,276 crores. With 60 matches happening every season the cost per match is coming to 54.6 crores. That means each day Star Sports has to earn above 54.6 crores to make profits. On a day when there are two matches scheduled Star has to earn more than 100 crores. Earning more than 100 crores in the weekend and 55 crores on weekdays is nothing short of a Bahubali task.
Will Star Sports earn this much or have they got themselves into trouble by over bidding?
Firstly the 16,347.5 crores are not just for Indian Sub-Continent but it’s a global contract that Star Sports had bagged. They include TV, Digital, Internet in all the countries. The major source of income though is the ad revenue that the broadcaster generates. Ad revenues are calculated on the basis of pulse rates.
Pulse is a 10 sec time slot for an advertisement. Star Sports is charging around 8.5-9 lakhs per 10 seconds. That means a Reliance Jio ad that comes for 30 seconds costs roughly 25.5 lakh per insertion. Which means a minute ad will give Star Sports 51 lakhs and if we calculate this way we get to see minimum of 40 mins of ads Star will earn 20 crores. Last year the ad revenue was recorded as 1300 crore and this time it is expected to be 1600-1700 crore. STAR has roped in 11 sponsors for IPL apart from many other advertisers for airing the advertisements. Spinsors pay more money and are committed to advertise a certain number of times compulsorily.
11 sponsoring companies that have signed the deal for IPL
- VIVO- Title and on ground
- Elica Kitchens
- Dream 11
- Polycab Wires
- Reliance Jio
- Coca Cola
- Future Consumer
Last year IPL was shown only on 4 channels but this year it has gone up to 10 channels in India. IPL this year will be available in 6 languages that includes English, Hindi, Tamil, Telugu, Bengali and Kannada. With these 10 channels and 6 languages STAR is aiming to have a 350 billion minutes of broadcast time this year and a total reach of 70 Crore. Yes, 70 Crore people will be targeted this year through Digital and TV platforms compared to 55 Crores in 2017 and 36 Crore in 2016! This is a rapid jump in number and that is why the advertisements as well as the cost of advertisements is more this year compared to any other year.
Following are the 10 channels where IPL matches are shown live.
- Star sports 1 (English)
- Star sports 1 HD (English)
- Star Sports Select 1 (English)
- Star Sports Select 1 HD (English)
- Maa Movies (Telugu)
- Star Sports 1 Hindi (Hindi)
- Star Sports 1 Hindi HD (Hindi)
- Star Sports 1 Tamil (Tamil)
- Suvarna Plus (Kannada)
- Jalsha Movies (Bengali)
The other part of revenue generation for STAR is from the Digital Medium!
The official digital media of Star Sports is Hotstar. Hot Star last year had total viewership of to 500millon and is projected to reach 700 million this year for all the matches. This is another big source of revenue as people subscribe for the live streaming which is at 299 rupees presently. Apart from subscriptions, ad revenues are also generated on digital media which runs into crores. Even if we take minimum addition of 25 lakh subscribers the amount goes to 747 crores. Now you know how the money that is pumped in by Star Sports is huge and the break even looks tall, it is actually not. It’s a Gold mine and that is why as many as 24 companies bid for IPL rights.
Here are the other few statistics from IPL 2017 that will interest you!
- No of people who searched for IPL are 6 crores – IPL 2017
- 1cr 84 lakh 44 thousand Facebook comments
Engagement factor – Number of times people searched
- Mumbai Indians – 1 cr 84lakh
- RCB – 1 crore
- SRH – 69 lakhs
- DD – 41 Lakhs
Highest number of social media groups
- RCB 5 lakh 10 thousand
- SRH 4 lakh 32 thousand
- MI 2 lakh 98 thousand
Most valued players
- Virat Kohli
- Rohit Sharma
With so much riding on IPL, let’s see if STAR will be able to collected 54.6 Crore per match and break even or fall short of the target. All the matches are generating lot of excitement and let’s hope that this season breaks all the records and sets stage for a bigger and better IPL season next year!
For now, sit back and enjoy the matches and don’t forget to watch the advertisements in between because they are the ones which are running this IPL!!!