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Facebook Becomes A Player In Indian Sports Rights

Photo of Tim Mulligan
by Tim Mulligan

Despite the shock to Facebook’s growth narrative in the first half of 2018, the social media giant is not standing still in rolling out its global content strategy.

First came the Cambridge Analytica data leaking scandal in April and then the unprecedented 20% plunge ($120 billion – equivalent to the loss of nearly four Spotifys) in its market cap in July, instigated by a decline in daily active users (DAUs) in Q2 2018. Facebook has forged ahead, with La Liga this week confirming that Facebook had secured the broadcast rights for all 380 games between 2019–2022, for India, Afghanistan, Bangladesh, Bhutan, Nepal, The Maldives, Sri Lanka and Pakistan.

When the next billion dovetails with next generation TV

As  MIDiA Research has repeatedly stated, Facebook has multiple strategic challenges that it can successfully address by becoming a next-generation free-to-air TV platform. Firstly, as far as its reputation is concerned, Facebook is at a low point, highlighted by its use of billboard campaigns around its user data—the life-blood of the company and driver behind the $13 billion it generated in advertising revenue in Q2 2018. Secondly, as MIDiA Research called out in November 2017, Facebook has an Instagram problem.

Recognising that digital consumer activity was shifting towards messaging apps, Facebook decided to buy its disruptors and acquired messaging apps Instagram, in 2012, and WhatsApp, in 2014.  At the time this was seen as hubristic and anti-competitive, but with hindsight it was a strategic masterstroke, resulting in Facebook now controlling the largest global messaging app ecosystem of 2.5 billion monthly active users (MAUs) at a heavily discounted price. Facebook paid $1 billion for Instagram and $19 billion for WhatsApp. Facebook’s biggest global messaging app competitor is Tencent, which has a smaller combined user base of 1.86 billion MAUs and a market cap of $395 billion.

However, Facebook’s shift to messaging apps created a problem: users were now on apps which were and are still not currently easily monetisable. Introducing premium sports content is one way to restate the value exchange to messaging users: re-engaging with the main platform in exchange for viewing premium content. With users back on the platform, Facebook’s targeted advertising is able to perform optimally again.

In India this is of particular importance to Facebook, as the country represents the elusive prospect of the next billion users coming online, due to a combination of increasing disposable incomes (India is the fastest growing global economy in 2018 with 6% GDP growth) and rising technological adoption, predominantly led by increased smartphone usage.

Facebook needs to secure Indian user engagement if it is to maintain its growth momentum as a public tech company and to compete against fellow FAANG, Google, which is also trying to win the battle for the consumption preferences of the next billion.

Previous false starts such as Facebook’s Basics offering, which offered zero-rated data access to Facebook for Indian mobile users, was blocked by the Indian regulators amid concerns over the net neutrality implications of the trialled service. Premium sports is another attempt to hook the Indian consumer back into the Facebook ecosystem.

If Facebook makes its La Liga coverage work in South Asia, alongside its English Premier League coverage in South East Asia,which was announced last month, then it has a blueprint for the push into developed markets with a premium sports offering, which is where 73% of its ad revenue is currently generated.

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