Sports Marketing in India: Set for a Sea Change?

While many question the rationality of hosting the Commonwealth Games in Delhi, considering the enormous expenditure involved, sports marketing is set to benefit from the games. Up until recently, the only sport which has any selling power was cricketers, and likewise cricketers were in demand. Almost every brand worth its salt signed up cricketers. With the exception of few like Paes, Bhupati and V. Anand, cricketers have dominated the sports marketing business in India.

After India lost the cricket world cup, companies have realised that signing cricketers is a risky gamble, as their appeal is directly linked to their performance on field and the visibility they have among the others playing. This has lead to companies looking at other sports to diversify their risk. This has lead to the growth in the popularity of people like Pankaj Advani, the slew of chess players, Narain Kartikeyan and others. Along with this television channels have also started actively promoting various other spots like football, tennis and formula 1.

The future definitely look as the hold cricket has over the Indian sports fan is set to decrease as more options are available to him. Companies will look to have a diversified portfolio of sportspersons as ambassadors rather than hinging their fortunes on one sport or the film industry alone.

Growth of Cable Television?

Over two years ago chennai was the first city in India to have the conditional access system. Then came the second wave to organise the unorganised cable television business in India, the Direct to Home (DTH) format. And the most recent attempt is by BSNL, through its IPTV venture.

BSNL has decided to launch IPTV services in Karnataka from the 15th of august.

“About 150 television channels, movies, education from kindergarten, primary and high school students of higher levels, and much more will be available on internet protocol television. Digital quality is another benefit. Service charges are Rs 150 per month plus usage charges, thus giving cable operators a run for their money. A one-time investment includes a set-top box worth Rs 3,950 and installation charges of Rs 889.” (Link)

The catch with all these services is the upfront capital investment. A CAS set top box costs Rs 3000 (Chennai Prices), while DTH costs Rs 3000 + activation charges, and the IPTV has an upfront payment of roughly Rs 4500. Right now these systems are purchased by those who donot want to haggle with their monthly cable operator, and can have sufficient liquidity to pay the upfront capital cost.

For most people the biggest hurdle as of now would be the upfront payments required for these systems. For greater market penetration, all these players would have to offer the equipment on monthly rentals. This has two distinct advantages. first, more people would adopt the system. For instance, a Rs 100 monthly rental + Rs 500 deposit is affordable for a greater percentage of the population than Rs 3000 capital cost. Second, a rental scheme will generate more revenue for the company than an outright sale in the long run. An outright sale means that from each household the company gets Rs 3000, while a rental scheme will generate the same revenue over 25 months, and after that the amount is profit. This is of course assuming that households are on this system for more than two years.

Without a rental scheme, the DTH or CAS or IPTV system will not take off in India. Interesting times up ahead no doubt with BSNL launching IPTV, but the market leader will be the daring player who offers the capital equipment at nominal cost or who offers rental scheme.