Thread by @KShriniwasRao

#Thread #IPL #MediaRights

#Viacom & #Amazon

So, as I mentioned in my previous thread, these two players – from the list of ‘Big 5’ – need a separate mention.

For the uninitiated, this is a follow-up on my previous thread, you can read 👇:

https://twitter.com/KShriniwasRao/status/1534175287281610752?s=20&t=OOtNnpDLC8QQRAG5aDMsOg

(1/25)

First things first. To set the mood for this thread, I’ll recommend listening to the Jeff Bezos song on YouTube, if you haven’t already. It’s a “masterpiece” 😊 ().

Funnily, I keep thinking, Amazon executives will be warming up listening to this.

(2/25)

Just the reference of #Viacom & #Amazon in the same sentence lays down so many subtexts.

It makes us think of so many battles within battles – Reliance vs Amazon, Mukesh Ambani vs Jeff Bezos, e-retail wars, giant market footprints, Forbes rich list, etc etc etc…

No?

(3/25)

Now add cricket to it.

Both parties will arrive at the bidding table on June 12. Both are heavily invested in sport, both will be armed with a firm plan. Both have never held cricket rights in India. Both have cash to spend & expansive business models to cater to.

(4/25)

Let’s begin with Amazon first. Their investments in sports broadcast – from a content perspective – began in 2017 when they picked up rights for Tennis ATP in Europe. It’s risen steadfastly since.

This link gives a great perspective -- tifosy.com/en/insights/th…

(5/25)

Last year, their buying of broadcast rights for NFL’s Thursday Night Football was the deal-of-the-decade in US, & their biggest acquisition yet.

They whipped out close to billion $-a-year for a 11-yr-deal to bag the rights. Check this (source: tifosy.com)

(6/25)

But there was a flipside to this investment. Amazon was left with little choice but to increase the price for its Prime service (in US) by 17%. It went from US$119 pa to $139 pa.

Pricing wars are key to playing the OTT game. Netflix’s biggest headache has been that.

(7/25)

Amazon’s overall revenues, however, tell a different story.

Their net income (2019) was 15% up from 2018 while in first quarter of 2022, they reported a 7% jump in revenues.

And we all know how dependent the world was on Amazon during pandemic.

forbes.com/sites/shelleyk…

(8/25)

So, there’s clearly been a method to the madness in which they’ve gone about, particularly in the West.

So, what haven’t they managed to crack yet? The India code. Of course they’re in India, but do they “get” India?

And that’s where this thread is headed. 😊

(9/25)

There’s a very interesting interview of Mr Ambani from 2011 where he shares a brilliant insight.

“I love the leopard. It sits on top of a tree. It doesn’t take any risk. Whenever it sees it can make a kill, it rapidly makes the kill. It just happens in a flash…

(10/25)

“After getting the kill, the leopard goes back to the top of the tree and sits there…”

It says so much about what he wants to convey, only if you’re willing to listen carefully. The wait is everything in the hunt.

Here’s a link: economictimes.indiatimes.com/news/company/c…

(11/25)

Both, Viacom-led JV & Amazon, will have a completely different set of priorities when they turn up at the auction. Viacom has interests in TV & digital; Amazon only digital.

And yet, their paths will cross because apropos of priorities, there’s a bigger picture.

(12/25)

If you’re thinking e-retail is that ‘big picture’ & idea of grabbing subscribers in order to grab eyeballs in order to grab potential customers – with cricket as the ‘catalyst’ (which I mentioned in a thread yesterday) – is what they’re plotting…

You’re probably close.

(13/25)

But again, not quite.

Head further with this line of thought and you’ll find a greater battle for market footprint.

Check this Bloomberg piece from @andymukherjee70. There are layers within layers telling us a story from multiple angles: bloomberg.com/opinion/articl…

(14/25)

It’s a battle with multiple stakes. But none bigger than Reliance letting Amazon know who’s the boss. In that lies a bit of everything that everybody’s clashing for.

Anyways, lets get back to the rights.

Who has the bigger canvas to paint here? Viacom or Amazon?

(15/25)

It’s definitely Viacom. Why? For starters, Viacom will look to bid for everything that’s on offer. Amazon, on the other hand, can do a 50:50 on Pkg B while it definitely will make desperate pitch for Pkg C.

Those unaware of rights packages: 👇

https://twitter.com/KShriniwasRao/status/1513520595606306822?s=20&t=5gXiypE3Jf6euM6jZ4xm2A

(16/25)

Now, before we move further, here’s something (one that I came across after a very interesting discussion with an industry executive).

Can Amazon be as flexible with its bids as Viacom? The answer to this question tells the story.

Let me give you an example here.

(17/25)

Let’s say there’s bidding on for Pkg C & Amazon bosses in US marked Rs 10,000 cr as upper limit to grab it.
Amazon is at Rs 9,500 cr but realise they will get the pkg only if they can extend the bid to Rs 12000 cr. Are they flexible to revise their numbers last minute?

(18/25)

Or will they strictly adhere to their pre-calculated exit strategy and walk away?

Amazon is a Bezos-controlled company & word is, every single decision is run through a series of protocol-driven procedures.

So, the question to ask: How high will be their exit strategy?

(19/25)

Will there be enough fluidity in their game?

Viacom, on the other hand, is coming through a JV and all players in that JV will be in the bidding room.

And who’s the face of that JV? None other than Uday Shankar, the man who knows what it takes to win a cricket auction.

(20/25)

Fluidity and flexibility is everything.

Viacom-led JV will bid for Package A, B & C (D, I’m not sure & it doesn’t matter).

Amazon could very well bid for B but will definitely bid for C.

If you’re again wondering what these packages are, there’s a link above.

(21/25)

Bidding to win a consolidated rights package technically adds more muscle to one's strategy than bidding to win the sum of parts.

Why? Because I can ‘hedge’ my investments & have a higher bargaining power once I have all the rights. Uday Shankar did just that in 2017.

(22/25)

Whereas, if I’m just looking to pick one package, I’m either entering the game with all my plans centered around just one bit – like Amazon did in NFL – or will be entering the game to spoil it for my rival, make it costlier and sneak out.

We'll know the answer soon. 😂

(23/25)

It’s impossible to tell right now who is thinking what.

But one thing is for sure, it is the battle for Package C – the cluster of non-exclusive 18 matches – between Viacom, Amazon and Disney will take the auction to the 'next level' that pundits are talking about.

(24/25)

So, here’s what the takeaway is: Will Amazon bid to win this or disrupt others' plans?

Well, who knows who's thinking what. : )

What we do know is there's an interesting e-auction coming up. I for one will go bonkers live-tweeting it. 😅

(Ends)