Sunday, June 29, 2008

ICL vs IPL. Why the first mover came second

IPL vs ICL. Why the first mover came last.


Vinod Natesan

Mayan Consultants International

The ‘first mover’ advantage is something that management students are taught as part of marketing strategy. The IPL vs ICL battle has proved that tenet wrong, it would seem.

The Indian Cricket League was the first off the blocks in November 2007 when the country, flush with the victory in the T20 World Cup, was on a cricketing high. There was a call to encourage young blood and if someone mentioned “no country for old men” one would have been in doubt whether the reference was to the Oscar winning movie and the poem from WB Yeats which had that as the opening line, or to the selection policy for the future national cricket team!!

The timing seemed ripe for Subhash Chandra put the weight of the Zee media network behind the venture to start an alternate cricket set up that would bring in fresh blood which was in the fringes and give that talent its rightful place in the sun through the Zee media platform. Along wiith IL&FS, Zee put in Rs 100 crore behind the venture.

However, within three months of the ICL, the IPL was rolled out by the BCCI, and the situation has changed dramatically for ICL . The attempt in this article is understand the revised business situation from the point of ICL and to analyse and hazard a few top of mind options in terms of a way forward.

Those familiar with Michael Porter and his ‘five forces framework’ would understand the dynamics of this situation perfectly. At the risk of stating the obvious, the ‘five forces’ refer to the dynamics that prevails in any industry structure, namely, rivalry among existing competitors (BCCI was a monopoly), threat of new entrants (IPL would have been a logical reaction to counter the ICL challenge),bargaining power of suppliers ( players in this case and the talented ones, who now have a choice ), bargaining power of buyers, ( the 117.million viewers of C&S who with their remotes decide the fortunes of both ICL and IPL), threat of substitute products ( in the vital T20 category, IPL is a substitute and the West Indies league is another competitor for players and an already scarce playing calendar). Shifts within these forces have changed the situation for ICL taking away its first mover advantage and is threatening to leave it as an also ran.

It may be advisable to analyse this situation within the five forces framework and understand the underlying reasons even while hazarding a prognosis on what lies ahead.

Suppliers in this context refer to players. They provide the ’ raison de etre’ for the product. Getting the right talent and ensuring a balance is crucial. Cricket’s appeal has been its uncertainty and sustaining it through the 4 hours of an match is essential. When the skill levels are “electrifying”, to borrow Ravi Shastri’s favourite phrase, we have a ‘cracker of a match”!

ICL tried to ensure that .Cricketers were offered significantly larger fees and nearly 10 international players of the stature of Brian Lara, Lance Klusner, Craig McMillan, Micheal Beaven were signed up for Rs 3 crores apiece for a three year period. Nearly 30crore was invested in “star” players and a similar amount was spent on local talent. For a domestic player of repute, a contract that offered him anything more than 16 lakhs a year was manna from heaven. ICL therefore had a mix of “no namers” who were the local talent and a motley crew of international “brand” players.

Reaction from BCCI, the rival, was swift. It revised the players fee to match that of ICL at almost Rs 36,000 per match for the domestic player. The IPL was also rolled out and the cream of international talent was signed on. 78 to be precise. A lot of talent players switched sides and some even left ICL after signing up.

While overseas associations refused to blacklist players of the ICL, the BCCI went ahead and alitigation for unfair practice did not stop it. To drive the advantage further it has now rolled out a Champions League and has issued a mandate that ICL players will be excluded irrespective of their national cricket association selecting them.

This has been one single factor for ICL’s poor showing in my opinion. And the next ‘force’, which is the buyer behaviour will illustrate this better.

Buyers of the product are viewers and these include ones in the stadium and those in the drawing rooms with remote in hand. It is amply clear to anyone familiar with the business of sports, that it is television coverage and viewers who are the deciding factor nowadays. The Premier League in English football was started to take advantage of the lucrative broadcasting rights. Here too, BCCI’s revenues are accounted for largely by television broadcasting rights. In fact 80%, to be accurate.

What draws viewers to cricket is the unpredictability of the result and when it closely contested, there is excitement. To dish this out you need superior talent. Even when these two are accounted for, there is the question of emotional relevance. They need a player or more with whom they identify with so that they can “support/cheer/ root’ for. Without that, the contest is cold.

ICL managed the first two, talent and excitement. However emotional relevance, or the connect, is missing. The TRP’s of 1 and thereabouts for the ICL is evidence of this. IPL had TRP’s of nearly 5 + throughout and nearly 9 for the finals.

The emotional relevance is due to the absence of any “Team India” player in the ranks. Dinesh Mongia is hardly box office. Sachin , Dhoni, Yuvraj, Sehwag who can eyeballs on their own strength are all with the IPL.

To enhance the loyalty of buyers it is abundantly clear that the valence of the product has to be hiked. The ICL brand has to build equity. The brand architecture indicates that the building block is the “brand” players. The promotional efforts of ICL were very limited. Apparently Rs 20 crores were spent in promotions but this has somehow been washed away by the publicity blitz unleashed by the BCCI /IPL combine. Nearly Rs 190 crores has been spent in promoting the IPL , between the BCCI (Rs 40 crores ) Sony SETMax putting in Rs 45 crores as part of its commitment and franchisees putting in Rs 94 crores on various for a to build their fan base.

Zee and ICL would need to invest in building their players as brands, their teams as umbrella brands ( no , not the ones we use during monsoons, but the collective brandunder which brand players function as one) and the ICL in itself as the mother brand ( no offence to the paternal ones, but maternity is a fact and paternity…).

As Rakhee Sawant who seems to be the ‘underdog’ ( no pun intended and deliberate use of the masculine gender ) brand of the year says “jo diktha he woh bikta he” !! He, He!!

The term “buyer” could also be used for the “investors” in the game. Here too

the rival offering has also been better engineered. ICL has managed to get only low profile sponsors like the title sponsor Edelweiss Capital, the Mumbai ICL team sponsor Dabur Glucose, Bharat Student .com which the sponsor of the Hyderabad team and Pioneer Urban which sponsors the Delhi team.

IPL’s strategy of spreading the ownership and stakes has worked. The investment in the league has been Rs 303 per year by sponsors for the title and nearly 94 crores on promoting the event . With so much prestige and money running on the league, the franchisees have done their bit in terms of raising the decibel level.

The television rights were at an all time high of Rs 385 crores per year and a commitment from the broadcaster to put in promotions worth Rs 45 crores for each season. Splitting this with the franchisees was a masterstroke and brought in investor confidence. Linking the TRP ratings to future sharing of broadcasting revenue will ensure that 8 franchisees will do their bit to handle the ‘buyers”. ICL seems to be fighting this as a lone ranger. Widening the ownership was a trick that was missed.

Rivalry from the BCCI has also resulted in substitutes being used to make the task difficult for ICL. Its maiden league was cannibalized by the Indo Australian series and then the South African tour. With the Bhaji vs Symonds spat assuming international proportions thanks to a willing and eager media, the ICL was all but relegated to obscurity.

The calendar issue is likely to recur with players (suppliers) complaining of excessive cricket and the law of diminishing returns applying to the buyers. ICL would find it difficult to time its events to make a significant connect with its buyers. Summer vacations in the North have been taken by the IPL, the September slot is going for the Champions Trophy and the December season is booked in the Southern Hemisphere with the Australian, South African and New Zealand Associations scheduling summer tournaments.

The way forward for ICL would be what it is planning to do already. The UAE, UK and other markets where the Asian Diaspora exists seems to be the segment to target. Shahrukh Khan’s entry and rise in the Godfather and Family driven film industry is testament to the fact that shrewd selection of target markets and delivering carefully engineered products to these niche segments can make for great marketing successes.

In the overseas South Asian market , entertainment options are few and gate collections in terms of per spectator and per match would be significantly higher. One could keep football as a benchmark here. 35% of club revenues come from the box office. Merchandising is also a money maker and Indian fashion sells.

The time zones and calendar issues can be handled better. Erratic weather in the Middle East is not an issue though it may be, in the US, UK and Canada.

Live telecasts may not be the revenue driver and that’s a fact to live with unless there is migration of brand players who are Team India caliber and have their own fan following. ICL would then have to offer them a lot more than 3 year conrtracts.

Changes in the league ownership pattern and bringing in entertainment as a focus could shift things. Gate revenues could be the money spinner then. A much higher advertising effort and savvy PR could buttress things to some extent too.

As Amir Sohail says ad nauseum “you should play with the right ideas” … leftist’s kindly excuse… this is not the nuclear 123 agreement but the 123 of successful marketing….


1 comment:

The Scorpio said...

This diligently written article indeed enlightens the reader about the various management aspects involved in the ICL and IPL scenario. This article will indeed help a management student like me in understanding how the various management theories and concepts that we learn in our classrooms can be applied in real life situations and have a true understanding about it.