Business Headlines : How Mukesh Ambani benefits by streaming IPL for free?

[00:00:00] If you are a fan of IPL, then it's fair to assume that you'd have thanked Mukesh Ambani

[00:00:10] for broadcasting it free of charge on the Geo Cinema app.

[00:00:14] I mean, sure Disney Star has won the TV rights for IPL again, but a lot of us are switching

[00:00:19] over to streaming these days.

[00:00:22] YCOM 18 won the digital rights for IPL for the next 5 years and YCOM 18 as we all know

[00:00:28] is owned by Mukesh Ambani's Reliance Industries.

[00:00:31] They paid a massive 23,000 575 crores for the streaming rights and by some miracle decided

[00:00:37] to allow us all to watch it for free.

[00:00:40] Mr Mukesh Ambani and his family are known to be big fans of cricket and even own the Mumbai

[00:00:44] Indians franchise.

[00:00:46] But if you ever thought they're doing it for the love of the game then you need to stay

[00:00:50] tuned for this video till the very end because I'm going to explain just how a shoot businessman

[00:00:56] like Mr Ambani plans to recover every rupee and then sum by allowing us to watch his favorite

[00:01:03] game for free.

[00:01:04] And guys if you enjoy such videos please be sure to hit that like and subscribe button

[00:01:09] for more such financial content.

[00:01:11] Prior to this year, if you wanted to watch IPL you had to buy a subscription from Disney

[00:01:16] Hotstar for $299 Rupees a month or $1499 Rupees for the whole year.

[00:01:22] On this price you could happily watch IPL as well as other sports movies, web series

[00:01:27] documentaries and more on Disney Hotstar which like Netflix, Amazon Prime, Hulu and the

[00:01:33] likes are OTT platforms.

[00:01:37] Disney Hotstar is by the way the most popular one in India and since 2014 it was trying

[00:01:41] to create a sports broadcast monopoly in India.

[00:01:45] OTT platforms are the new buzzword in town and because of improving internet connectivity

[00:01:50] and smart TVs have become very convenient to use.

[00:01:54] First cable TV became unpopular and now even satellite TVs such as Tata Sky, Dish TV and

[00:02:01] Aital DTH are slowly going out of fashion.

[00:02:04] It's all OTT these days especially with a young audience and reliance doesn't want to

[00:02:09] be left behind in this game.

[00:02:11] So what do they do?

[00:02:12] Simple.

[00:02:13] They took the biggest sporting event in the world, the football world cup and streamed it

[00:02:16] for free a few months ago and now they're taking the biggest sporting event in India

[00:02:22] and doing the same.

[00:02:24] It's just that there's a price tag of 23,500 or close attached to it.

[00:02:29] So how exactly do they intend to recover this hefty sum?

[00:02:32] A lot of you must be thinking that reliance will let everyone watch this year's IPL for

[00:02:38] free and get everyone addicted to its viewing experience with some fancy features like

[00:02:43] O.K etc and then begin charging and earning from subscription revenue in later seasons.

[00:02:51] After all that was their business model when they first released Geo.

[00:02:56] First internet was free and you only had to purchase the hardware such as the Wi-Fi router

[00:03:01] etc.

[00:03:02] Slowly but surely after they got a large enough user base they began charging for internet

[00:03:07] as well.

[00:03:09] But it's different this time around because subscription revenue will be too low considering

[00:03:15] the scale of reliance Geo would like to operate at.

[00:03:19] Advertising revenue too won't be enough to cover the entire amount paid for streaming

[00:03:23] rights and I'll get to that in a bit.

[00:03:27] So if the numbers of direct monetization don't add up and by direct monetization I mean

[00:03:34] either earning through money paid for subscriptions or advertisements.

[00:03:39] Then it's only logical that team reliance is planning an indirect approach.

[00:03:44] Because after all Mukesh Ambani has been a master at introducing a thing that is of relevance

[00:03:49] to the masses and later caching in on it.

[00:03:53] Reliance basically comes, elevates your standards for free then sells you the survival pill

[00:03:58] for it.

[00:03:59] Like by giving you the sim and internet for free they made everyone understand how beautiful

[00:04:04] the internet is and how important it is for your future.

[00:04:08] If they hadn't made it free a large part of India wouldn't have thought about paying

[00:04:13] for 4G.

[00:04:15] So you could say that all they do is show you the use case, make your life empty without

[00:04:22] it then charge for it.

[00:04:25] So now that we know the bait, free streaming of IPL matches on Geos cinema app.

[00:04:30] Let's try to understand the trap.

[00:04:32] Data.

[00:04:33] Yes we're going to be consuming a whole lot of data towards the matches and reliance is

[00:04:38] hoping that we buy more data from them.

[00:04:42] Let's discuss.

[00:04:44] Data they say is a new oil and no way is this phrase more relevant than reliance industries

[00:04:51] because reliance is literally shifting its focus from legacy petrochemicals and oil

[00:04:57] business to new age one such as digital.

[00:05:01] And data plays a huge role in it.

[00:05:04] Let's do some back of the envelope calculations here.

[00:05:07] But let me put out a couple of disclaimers before that.

[00:05:11] First one is that these figures I'm about to discuss are approximate ones and I've taken

[00:05:16] a liberty to make assumptions.

[00:05:18] But I'll explain my logic behind them as well.

[00:05:21] And secondly reliance has a media empire and famous business outlets such as CNBC TV 18

[00:05:28] and Money Control are owned by it.

[00:05:30] So please don't cross check these numbers with money control articles as I found them

[00:05:34] to be very biased and outright misleading when it comes to this particular topic.

[00:05:40] Okay.

[00:05:42] So after considering all possible scenarios where you have the option of watching matches

[00:05:48] in medium standard high quality and 4K.

[00:05:52] If you take an average, you consume approximately 3GB worth of data to watch a 3.5Rip

[00:05:59] PL game.

[00:06:00] But let's assume not everyone watches the full game and so we'll round this figure down

[00:06:06] to 2GB.

[00:06:07] There are 74 games in total including the knockout stages and finals.

[00:06:12] So, throughout the IPL you could say 148GB worth of data will be consumed per viewer.

[00:06:19] And I'm not even considering pre and post-match shows with some viewers like watching.

[00:06:23] Okay so moving on, let's come to a second variable cost per GB of data.

[00:06:29] I've given reliance the complete benefit of doubt here.

[00:06:33] My industry experts say that the average cost of data in India is 14 rupees per GB.

[00:06:41] As a result, I've given all viewers the new data as per these new ultra-low rates

[00:06:51] and have taken the weighted average of all 3 plans combined.

[00:06:55] Then as per my calculation, consuming data from reliance geo would cost you just 4 rupees

[00:07:02] per GB as opposed to 14 rupees industry standard which should entail a total cost of fine

[00:07:08] 92 rupees of data per viewer throughout the duration of the IPL which is 52 days.

[00:07:15] Now let's come to the third variable which is how many people in India are expected

[00:07:20] to use Geo's internet to watch the IPL.

[00:07:23] Akash Ambani, the chairman of reliance geo recently announced that the telecom giant has

[00:07:28] a user base of 430 million.

[00:07:30] That's 43 crore users.

[00:07:33] I would assume that a good portion of the people using Geo's internet service would likely

[00:07:37] watch IPL on Geo cinema app.

[00:07:40] Let's split this into 4 scenarios.

[00:07:42] Scenario 1 would involve all 430 million geo users watch IPL on Geo cinema.

[00:07:48] If this were true, reliance would earn a total of 25456 crores from charging for data alone.

[00:07:57] Considering fine 92 rupees of data per viewer for the IPL as we had discussed before.

[00:08:03] And this is just for one year.

[00:08:05] Remember they paid 23,000 575 crores for purchasing streaming rights for 5 years.

[00:08:11] If you assume 75% of their user base watches IPL on Geo cinema app, that data consumption

[00:08:17] build comes up to 19,100 crores approximately.

[00:08:21] Again for one year.

[00:08:23] If we assume 50%, it comes up to 12,728 crores.

[00:08:28] And even if we assume just 25%, the figure is 6,364 crores per year.

[00:08:36] And remember I've taken just the base case scenario in terms of rates per GP which have

[00:08:42] assumed less than one third standard industry rates.

[00:08:46] Direct advertising revenue is another bonus and reliance is expected to rake in around

[00:08:51] $350 million from advertisers in this year's IPL, which is around 2800 crores.

[00:08:58] Which like I said earlier is not much in the grand scheme of things.

[00:09:02] But could add up to a substantial amount over 5 years, especially considering an increase

[00:09:07] of 10-15% every year.

[00:09:09] Then there could be additional benefits accruing to reliance as well.

[00:09:15] In general it's very tough to make people upgrade from 4G to 5G because it's not only

[00:09:21] about paying more money for data.

[00:09:24] But you also need to upgrade to a new device that supports 5G.

[00:09:29] Just switching SIM cards is not enough.

[00:09:31] So by using IPL streaming in 4K quality, reliance is giving us a use case to make us realize

[00:09:38] the importance of low latency in 5G services in the hopes that we may upgrade to it over

[00:09:44] the next 5 years.

[00:09:46] Because once 4K becomes standard, you can't just move back to lower quality viewing experience.

[00:09:52] Many reliance does manage to do that.

[00:09:55] It opens up a whole new revenue stream to them and numbers will be eyeballing.

[00:10:00] Of course, there's also a possibility that they may even begin charging for subscription

[00:10:06] to the Geosinema app in the next couple of years.

[00:10:10] After they have a big enough user base on the app.

[00:10:13] Which now currently stands at 30 million active monthly users.

[00:10:18] Then there's one more way Mr. Amani is putting the squeeze on Disney hot stuff which is

[00:10:23] showcasing IPL on satellite TV.

[00:10:26] Basically, reliance is the majority shareholder in den and hathaway cable networks which

[00:10:33] provides satellite TV to 1.7 crore Indians out of a total of 14 crore cable connected

[00:10:40] TV screens.

[00:10:42] These companies controlled by reliance have decided to remove star sports channel from their

[00:10:47] basic packages.

[00:10:49] So if any one of these 1.7 crore viewers want to watch IPL on TV, they would have to purchase

[00:10:56] an additional costlier package or buy star sports individually or switch over to other

[00:11:03] DTH players such as Sataskaya, Dish TV or Etel which are way costlier.

[00:11:08] Meanwhile, all of those same users have the option to watch IPL on Geosinema app for free.

[00:11:14] So there you have it.

[00:11:15] A masterstroke moved by a very shoot businessman indeed.

[00:11:20] Caching in on his favorite game, all the while pretending to be a public benefactor.

[00:11:25] And these are just the possible scenarios which I could think of today.

[00:11:31] God knows what plans reliance has for the next 5 years for which they are both streaming

[00:11:36] rights.

[00:11:37] But this we can save it's surety even now.

[00:11:42] For reliance, data is indeed their new oil.

[00:11:46] Thank you.