Why Facebook Is Getting Serious About Delivering Sports Video To The Next Billion Digital Users

Photo of Tim Mulligan
by Tim Mulligan

facebook_2015_logo_detailOn Monday, September 4th, the Indian Premier League (IPL) held its media rights tender process for the rights to stream Indian Cricket matches for five years from 2018 to 2022. A total of 24 companies participated in the invitation to tender (ITT), to bid for the broadcast and digital rights both in India and globally. Only 14 of the 24 ITT respondents actually made bids, with the winner being the 21st Century Fox owned pay-TV network, Star India. The network acquired the rights for $2.55 billion in a consolidated bid for the broadcast and the digital rights. Among the bidders for the digital rights were Reliance Jio, Airtel and Facebook. Facebook’s bid was worth $609 million, or 10 cents per Indian citizen, spread out over the five-year duration of the contract.

The tenth season of the IPL’s flagship T20 cricket tournament, which took place from April 2016 to May 2017, garnered 1.25 billion views for its 59 matches – 22.5% increase on the previous season, according to the Broadcast Audience Research Council (BARC) India. It is important to note that the BARC figures only refer to TV viewership and not digital streams. Either way, Facebook’s bid represents an audacious escalation in its video content acquisition strategy.

The next billion meets the next stage in Facebook’s media transition

Facebook’s IPL digital rights bid highlights two core strategic imperatives for Facebook as a global media player. Firstly, it needs to start investing heavily in premium video content if it wants to retain engagement on its platforms. In MIDiA Research’s April 6 market consumer survey, only 8% preferred watching video on Facebook to YouTube, and only 12% viewed live video on Facebook. As the TV industry knows to its cost, live premium sports is still a significant content draw; it consistently engages video audiences, and helps to explain the price inflation in the multi-year auctions. The 34.8% price inflation on the previous bidding round in 2008, which Sony Pictures Network won (outbid yesterday by Star), and the halving of the rights durations from 10 to five years is symptomatic of the overall inflation of the sports rights market and the escalating number of new bidders, such as Facebook, now moving into the space.

The second big strategic objective for Facebook is the battle for the next one billion digital users, who, overwhelmingly, will be located in India. Facebook is primarily locked in a race with Google to become the preferred digital conduit for these new market entrants and the Facebook Free Basics plan—blocked by India’s telecom regulator in 2016, which, offering zero-rated mobile plan through local carriers, demonstrated how keen Facebook is to capture these new digital users. For publicly listed technology companies focused on continual growth India is a strategic market which they cannot be seen to be ignoring. And with development markets entering into a post growth phase, emerging markets like India are crucial for future growth potential.

Yesterday the IPL, next year the NFL?

Beyond the strategic imperatives of breaking into the Indian market, Facebook might just be readying its processes for next year when Verizon’s four-year $1 billion NFL mobile rights deal comes up for renewal. If Facebook was prepared to pay $609 million for IPL digital, then Facebook paying $1 billion plus for NFL mobile rights to serve its core US user base becomes entirely plausible. And if that happens, what are the chances of Disney’s new 2018 ESPN SVOD service staying on the side lines? After all, BAMtech – 75% of which is owned by the Walt Disney Company – was named as one of the IPL bidders yesterday although no bid amount was stated in the final tally.

Yesterday saw the opening moves in the next phase of sports coverage on digital platforms.

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