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23 January 2010

Is group on sticky wicket with IPL deal?
By Joe Leahy in Mumbai

Google could hardly have asked for a better marketing coup to juxtapose against its announcement this month that it was considering pulling out of China.

The company's announcement this week of a deal to stream free coverage of YouTube the Indian Premier League cricket tournament, the country's most lucrative sporting event, live on YouTubefirmly establishes its name as the market leader in the world's other large emerging economy.

"We're bullish not only about the appeal of this to Indians in India, but the appeal of this to the Indian diaspora and, more broadly, cricket enthusiasts around the world," Shailesh Rao, managing director of Google India, told the Financial Times.

Neither Google nor the IPL has disclosed the value of the deal or how they plan to share advertising revenue from the YouTube broadcasts.

But for Google, the marketing benefits of aligning itself with the IPL - whose mixture of Indian and international cricket players and teams owned by Bollywood stars makes it India's most glamorous media property - were clear.

Now readying itself for a third season, the IPL is the star performer of the Indian sports industry.

Before it had even staged the first match of its first season in 2008, it had developed into a $2bn industry through the sale of television broadcast rights, team franchises and other sponsorships.

The tournament's organisers, led by cable TV industry veteran Lalit Modi, are planning to auction two more team franchises for at least $225m each before the next 45-day, 60-match season gets under way in mid-March.

Now, with the YouTube deal, Mr Modi is attempting to wring yet more money out of the tournament.

"This is a good move; it will extend the IPL's audiences," says Ambika Srivastava, India head of media services group, Zenith Optimedia.

But the deal also comes with plenty of question marks, the biggest being how Google will overcome India's low internet speeds and penetration rates.

Industry estimates put the total number of internet users at between 30m and 70m - fixed line and mobile.

However, government figures are as low as 14m, with only 6m classified as broadband users. This compares with China's 384m internet users.

Mr Rao dismisses such concerns. "I think that story's done, I think that story's actually old," says Mr Rao. "I don't deny the fact that we have a long way to go, but . . . let's just take a look at what's happened in the past three years."

Advertisers do not seem to buy this. Instead they believe that the initial real target market for the YouTube streams will be users in other cricketing countries, such as the UK - who will still be in the office when the games are being played in India. The introduction of third generation mobile networks in India some time this year could change things, but that also is a big unknown.

Vivek Couto, of research firm Media Partners Asia, says that with so many question marks the success of the venture will depend on what Google paid for the streaming rights. "If they paid $1bn for it, they're crazy. If they paid less than $100m, it might make sense over a 10-year timeframe," he said.