How does Star sports generate revenue from broadcasting IPL?

Firstly, we need to understand as to how does any TV channels earn money. Ad revenues make most of the chunk. Depending on the prime slot each is sold at a dynamic pricing. The higher the TRP of the serial, the higher the price of the ad slot. A ten second slot is booked from ranging 500 rupees to 10 lakh rupees. In India TRAI has a law that a same ad can be run at max for 12 minutes per hour.

Now let’s talk about more about Star sports and IPL. Star sports generated a revenue of 3,000 crore last year. It has both the broadcasting right TV and digital one. The viewership over TV was more than 100 billion minutes and over digital it was 15 billion minutes. The growth over digital media didn’t affect the TV’s viewership. The average cost of a 10 second ad slot is 12.5 lakh rupees only. The price will rise more as we go forward. Of the 3000 crores, 800 crores were generated from Disney Hotstar.

Cricket is such an amazing sport. Between every over there is an ad of 90 seconds. After a wicket fall, there is again an ad. In other sports, there are not so much of ad breaks, which give the opportunity to the TV channels to make a huge revenue. Even we rarely change the channel, making it a

Let’s jump to the calculation.

(90/10) * 12.5 = 112.5 lakhs

Now there are 40 overs in a T20 game,

40 * 112.5 = 4500 lakhs

There is 10 minutes i.e. 600 seconds of strategic timeout break in an IPL match

(600/10) * 12.5 lakh = 750 lakhs

In total, 4500 + 750 = 5250 lakhs i.e. 52.5 crores

Leaving apart the ad revenue from digital media and the ad revenue when the wickets fall and when there is innings break.

We only talked about the revenue not the expense side for star sports so we can’t talk about the profitability of Star sports. Tomorrow we will explore why company spends such a huge chunk over an ad slot.