With funding dried up, real money gaming advertisers may go slow on IPL spends

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Last week, Y Combinator, a Silicon Valley legendary investor, advised its portfolio founders to “plan for the worst” as startups across navigate through uncertain financial conditions, a first since the global economic crisis in 2008.

Each month, the inbound funding into India is on a downward trend. Indian start-ups have announced layoffs, shutdowns, and rationalising operations to reduce cash burn.

Japanese conglomerate SoftBank – a prominent investor in startups in India has posted it’s biggest ever annual loss earlier this month. The Fund said it is “severely cutting” its investments.

This global economic downturn could now impact IPL which is slated to announce the telecast rights for the next 5-year cycle.

IPL viewership has also fallen by almost 30% this season according to various reports. The Board of Control for Cricket in India (BCCI) has doubled the reserve price of its media rights for the next five-year period. IPL’s current media rights holder, Disney Star, had paid Rs 16,347.50 crore for five years till the 2022 edition.

For the next cycle (2023-2027), the combined base price for the four available packages has been set at Rs 32,890 crore. BCCI will auction the media rights from June 12.

Gaming, crypto, and new-age startups have displaced traditional companies as the primary advertisers in IPL and other major cricket tournaments.

Real money gaming has emerged as the highest spender on IPL. Conventional categories like auto, aerated soft drinks, and perfumes have declined, with only one exception: pan masala according to research firm TAM Sports.

In the ongoing IPL, Unacademy, Cred, Dream11, Upstox, and Swiggy are Official Partners with Paytm as the Umpire Partner. Except for Dream11, the remaining companies are yet to turn profitable. Gaming companies WinZO, A23, and Zupee are prominent advertisers for Star India during IPL telecasts.

MPL, and Bjyus act as jersey partners for the Indian national team. My11Circle recently sponsored the women’s IPL. Recently, ASCI has found 14 gaming companies violating advertising norms during IPL telecasts.

The demand from the startups made Star, the official broadcaster of IPL to charge up to 16 lakh for a 10-second ad spot during the IPL costs, while a 30-second ad during breaks in the match for the duration of the tournament costs Rs 37 lakhs.

Consider auto brand Maruti Suzuki, which has shrunk its IPL investments to Rs 25 crore this year, as opposed to Rs 93 crore back in 2019. Now with funding dried up or uncertain, the gaming startups are also expected to cut down on their marketing commitments including for the IPL.