Viacom18: Creating a Sustainable Video Streaming (OTT) Business in India Available to Purchase

Viacom18, a Reliance Industries Ltd. company, acquired the streaming rights for the popular Indian Premier League (IPL) cricket tournament for 2023-2027 for a whopping $2.89 billion. Unlike the previous rights holder, Disney+Hotstar, which put the streaming behind a paywall, Viacom18 decided to offer free streaming, betting on increased advertisement revenue from a massive increase in viewership. However, the free streaming for the 2023 IPL season only brought in advertisement revenues of $276 million against a projection of $450 million. The Viacom18 team needed to rethink its mix of advertising and subscription revenue. It had three options: a pure advertising-supported model (AVoD); a subscription model with packages for the IPL, possibly including a cheaper package with ad-supported content; and a blended business model that would combine the AVoD model with a small subscription fee (sachet pricing) specifically for the IPL. If the advertising-based model had created a large enough user base, it would have attracted advertisers and generated a profit. In the 2023 season, however, it produced only 60% of projected revenues, which was insufficient to pay the IPL licensing fee. On the other hand, a subscription-based model, although likely to create more revenue per user, would dramatically reduce the customer base because of Indian consumers' price sensitivity. Such a model also might not meet revenue expectations.