Two Major Digital Deals Accelerate Live Sports Streaming Issue Into Forefront

This week ESPN struck a deal with MLBAM  for additional mobile and online video highlights, the ability to sell content through iTunes, and most importantly, rights to stream its national telecasts via ESPN360. Only days earlier the NBA authorized teams to stream games online in their local market, a first for any major sport. Both followed the NFL announcement that Sunday night football will be available live on NFL.com and NBCSports.com this season. Buckle up, its no longer coming – live streaming is here, and its about to explode.

These three recent deals involve diverse issues – the NBA allowing teams to compete directly with local RSNs, MLBAM distributing digital streaming rights rather than broadcasting in-house and expanding ESPN’s repertoire of rights both content wise (mobile, highlights, games) and scope-wise (international rights), while the NFL tiptoes around big money national television contracts and the implications on those contracts if they expand the offering.

In all scenarios, the sport wins because online streaming expands viewership and engages fans more deeply by enabling interactive features, such as integrated statistics, multiple camera views and message boards. Selling digital rights generates additional revenue, either through selling services, or distributing more than just TV rights.

Networks range from cautiously optimistic to downright angry. RSN’s with local basketball TV rights may challenge the NBA’s decision to allow local market streaming. It’s a mistake because fans want streaming. If we’ve said it once, we’ve said it a thoushand times, streaming television online does NOT cannibalize the viewing audience, it complements it. Viewers with access to an HDTV will always opt for that over the computer. However, fans who can’t watch for some reason, be it they are at work, or share a TV with others that are watching another program, now have access. Even viewers already watching the broadcast may opt for complementing it with an online experience to take advantage of the interactive features and additional camera views, plus other social engagement tools offered.

Rather than squawk about it, RSN’s should capitalize on the opportunity by buying the digital rights from the local team. With new audience measurement tools that integrate online and VOD viewers into the toal broadcast numbers, such as NBC’s TAMI product being tested during the Olympics, RSN’s can provide tangible evidence of cross-platform usage and leverage it to sell advertising. If they play their cards right, RSN’s can increase advertising revenue by integrating online and television.

ESPN picks up where TNT started in the NBA playoffs, enhancing national telecasts through broadband, then supplementing it with additional digital rights. ESPN’s strategy is to maximize its digital rights in every programming contract. Though the worldwide leader’s implementation leaves a lot to be desired, they hold the rights for the coming years to many valuable properties and have the opportunity to set the standard live streaming in major sports. First, they need to address the fact that ESPN360 is not widely available. The network streamed last Sunday night’s telecast, and will continue to do so, however most people will hardly realize it because ESPN360 is more mysterious than Versus.

Possibly more intriguing and opportunistic for ESPN are the expanded video highlights and international rights, two topics that require separate discussions.

Meanwhile, the NFL is late to the game because they can be. It’s unique apppointment viewing schedule and immense popularity allow it to tiptoe into the process, learning from the others mistakes, while the NBA and MLB need to leverage the opportunity to grab more fans. Those leagues also have more to work with because of the local television deals and additional games that the NFL does not have.

Leagues and teams will benefit the most by packaging digital rights as part of national and local distribution deals, though its still difficult to put a valuation on them. ESPN and MLBAM did not disclose terms of their contract. Leagues (or MLBAM in the case of baseball) can still generate incremental revenue by selling subscription based out of market packages, which serve a niche audience. While RSN’s and national providers will increase advertising revenue with additional inventory and higher CPM’s if they generate deeper fan engagement, the goal of the digital rights. Networks that implement successfully will see increased traffic in other parts of its site, leading to increased revenue. Subscription based revenue remains a possibility down the line. Possibilities exist for sports ad networks, amongst other synergies.

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