IPL 2020: Vivo’s exit could see Star India take a Rs 250 crore hit
The impact of the Indo-China tension and the prevailing anti-China sentiment in India, will hurt many of the league’s stakeholders. The financial impact is well stated below - excerpts from MoneyControl article:
VIVO’s exit may see an erosion in Star India ad revenue. Vivo, the title sponsor of the event, advertised heavily on television. According to BARC data, it was last year among the top 10 advertisers on television.
In the case of a replacement, it could be 5-10 percent lower than Vivo’s payout given the market conditions, said Karan Taurani, VP, Elara Capital.
Vivo’s exit may also lead to other Chinese brands lying low or not advertising at all during IPL 2020.
“Amid the Chinese companies, Oppo, Real Me, One Plus, Redmi/Xiaomi, Huawei, ZTE, Lenovo, Meizu, Coolpad, Zopo, Tecno, spend at least Rs 600-700 crore on the IPL (across TV and digital),” said Sandeep Goyal, Chairman, Mogae Media, a Mumbai-based marketing and communication agency.
He also believes that companies such as “Paytm, Dream 11, Swiggy and Zomato, all having Chinese relationships (investments), could decide to play it low-key”.
This is why Goyal estimates a Rs 500 crore loss for Star TV and Hotstar, the IPL’s digital partner.
As much as 40-50 percent of Star’s potential revenue of Rs 3,000 crore is now in trouble because of China, estimates Goyal.
Last year, in the 12th edition of the IPL, Star India had recorded a 20 percent jump in ad revenue to Rs 2,200 crore across the television and digital platforms from Rs 1,750 crore in 2018. This year, it looks like the broadcaster will struggle to come close to that number.
Taurani added: “On TV, Chinese brands account for almost 40 percent of the telecom/e-commerce vertical spends and this vertical aggressively pushes towards the target group of IPL. Hence, the league will see a severe impact.”
He added that Chinese brands contribute almost 5 percent of the overall adex (advertising expenditure) across mediums on an annual basis based on their large presence in telecom/e-commerce. “This number could possibly become half or even lower if they decide to lie low or not advertise during the IPL this year,” he said.