A Different Ball Game
Q] Sony Sports’ focus on growing non-cricket sports like football, wrestling, volleyball, and the Olympics, seems to have paid off during the pandemic. In your opinion, how has that impacted viewership and revenue? Q] As per the recent GroupM ESP report, the biggest chunk of sports sponsorship is taken up by Cricket. Because your investment has been quite different, I want to understand from you whether you see football overtaking cricket with regard to the craze, sponsorship, and investment on sports in the near future? Q] Which sport brings maximum returns for SPNI? Q] So your returns have been higher than the investment for every sport that you put your money on? Q] What led to the decision of extending partnership with UEFA? Q] How much did the second screen-- the interactive experience, contribute to the overall growth of viewership and revenues, and has Digital grown at the expense of Television? Q] Speaking of growth, how has the response to Sony Sports Ten been so far in regional language broadcasting, and does it give you the confidence to explore other languages as well? Q] How have you taken advantage of NTO 3.0 restoring the old price cap for à la carte channels, for them to be part of the bouquet? Q] Cable operators have shown defiance as far as implementation of the NTO 3.0 is concerned, claiming it will impact them negatively. With top channels also going off cable platforms sometime back, what was the impact on distribution? Q] Also, on the subscription revenue front, I remember you had mentioned a few years ago that sports was the biggest driver, can we have some numbers on what it has achieved for the network in the past year? Q] Has the importance of HD channels increased with the implementation of the new NTO. How has it fuelled growth for you?
Around four or five years back, we realised that investing only in Cricket is not the right thing, especially in a country like India. What we have seen is that audiences are evolving, and there is a growing interest in many non-cricket sports. Today we have athletes performing outstandingly at the Asian Games or the Commonwealth Games, and even in the Olympics. So, it was a conscious effort to ensure that we are a multi-sports network rather than just focussing on Cricket. It portrays Sony Sports Network as a complete sports network. This has worked very well for us. The audience response is good and this directly translates into good advertising revenue, and subscription revenue from both linear TV and Digital.
We are all set for the Asian Games, the biggest multi-sporting event in Asia. Apart from this, we have a robust sports portfolio that includes WWE, UFC, UEFA Champions League and more. And we have also added to it with the acquisition of marquee properties. Over the last year, we have acquired the broadcast rights of Roland Garros and the US Open, and have extended our partnership with Australian Open, becoming home to three out of the four Grand Slams in India. We have also invested in some home-grown leagues like Prime Volleyball League, Ultimate Kho Kho League, and more.
Today, a majority of sponsorships is taken up by cricket, but do remember that it is also because investment on cricket is way too high. For us, making a successful and profitable business is always at the core of our strategy. We were never into gaining market share at the cost of losing money. So, on one hand we have high investment on Cricket, on the other, we collect events such as the EURO, the Grand Slams of Tennis, the Champions League, and so on. This balances our P&L sheet, and in the process, we have become a very successful sports network in the country.
It’s difficult to answer that. The investment on every sport is different, some are driven by advertising revenue, while others are driven by subscription revenue. For example, WWE and Football are both subscription-driven products, mainly because you don’t have overs, so no breaks after every over. You just have a halftime, and a pre and post show. So, those are distribution-led and subscription-led, for both linear and digital. Whereas Cricket is mainly advertising-led. So, the investments are different. We are very happy as long as we are investing X and getting X plus 10 returns or so.
Our attempt is just that. But this does not mean that every time we invest, we make money because other factors also come into play. But overall, as a sports business, we are quite successful and profitable today.
Football has always been at the core of our strategy, especially premium European football, which we have invested in for the past five-seven years. Our investment has been fruitful, and they have paid huge dividends. If you look at the ratings of EURO 2020 versus the one in 2016, it just multiplied, and directly translated into better revenue for advertisers. The sponsorship has been great, and even the subscription for both linear as well as Digital has seen an uptick. In the last few years, the overall audience share for football has grown considerably, especially for premium Football. Because we have invested heavily on that product, this extension was a natural consequence of it.
There was an exponential Digital growth during COVID, and it is growing phenomenally even now. But it is not happening at the cost of Television. In the last couple of years, if I were to look at some of our marquee content, I see that while the Digital ratings are going up, so are the TV ratings. India is a large country, so while you have people watching you on Digital, you also have families, television households watching their favourite sport on TV. Let’s not forget that even now the TV base is huge in comparison to Digital.
Absolutely, we were the first to start feeds in various languages, around 10 years ago for FIFA. That was well received, so this is a natural extension of that. In our consumer research, we have clearly observed that local language commentary increases the probability of a family watching a sporting event together. Sony Sports TEN 3 and Sony Sports TEN 4 contribute to around 60% of our viewership in smaller towns. They have been instrumental in growing viewership for WWE, UFC and other international properties on our network. We are encouraged to explore other languages now beyond Tamil and Telugu, like Malayalam and Bengali.
Considering sports channels are highly under-priced in India, we always wanted to increase the rate of our channels. In NTO 3.0, we have increased the price for couple of our channels i.e., Ten 2 and Ten 5. Rest of our channels are mostly priced at the price cap of Rs 19. However, very few people prefer to buy channels à la carte. We have also increased the bouquet price of sports channels by 24% for SD and by 15-16% for HD. We have the option of increasing the à-la-carte rates next year again.
No, I personally don’t see a major impact because of the new NTO. I would like to appreciate the efforts put in by the TRAI. They have come up with a very sensible and responsible NTO, and it’s not a very big disruption for the industry, which is very good. We actually wanted a slightly higher pricing for us, perhaps 19 going up to 22, because 19 has been constant for a few years now. But having said that, considering that there are so many changes in the industry because of technology and audience preferences, eyeballs shifting here and there, I think it is a very responsible modification.
In India we offer Linear TV entertainment at the cheapest rates as compared to the rest of the world, including Sri Lanka and Bangladesh. So, there is an opportunity for us to increase the rates. Indian consumers can afford far more than what they’re paying right now.
While I can’t give you an exact number, I can say live sports in particular continues to be the biggest driver for subscription, and it’s a global phenomenon, not only in India. So, for us at SonyLIV, or even for the linear business, sports continues to be very important. It has helped us create a very strong base in terms of both our reach as well as the revenue base for our entire network.
The HD Universe continues to grow, with roughly around 20-22 million households installing HD. The good part is that earlier it was concentrated only with the DTH operators. But now even the organised DPOs are investing money on HD, so the overall universe is growing.
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