Can Fans Handle More Fantasy? Teams Should Find Out

Nobody can debate the power of fantasy sports and the value of the marketplace, currently dominated by football. Following typical economics, as customers showed their appetite for more fantasy, competitors have flooded the market with countless products, each claiming a different fantasy experience, or unique prizes. In the end, most of the products are similar and ESPN and Yahoo continue to dominate because of their established brand and unmatched scale.

However, one area I’m surprised content producers have not yet fully exploited is team-based fantasy games or contests linked to in-venue or in-game viewing. Football aside, other major sports have room for growth. In fact, basketball and baseball participation remains flat or down the past few years, so each could use some innovation to invigorate it. Further, the local nature of these sports lends themselves more to team-based games involving their home team and maybe specific opponents or rivals.

The concept aligns with the current movement for teams to nurture a community. Nothing stimulates engagement more than fantasy, so if teams can steer that engagement to their own websites, broadcasts, and live games, it could lead to indirect benefits in key revenue streams, in addition to creating a new branding platform. Further, teams control the assets (players), the arena, at least have a significant say in television, and have a complementary web presence. With this combination of assets teams could activate fantasy in a compelling manner through multiple distribution channels and have real, coveted prizes (locker room visits, luxury suite, road trip) with access that other fantasy outlets can’t offer.

Thus far, most teams and leagues have taken a backseat, allowing media and retail operations to claim much of the value they create. It’s time for teams to become more progressive, be willing to step out and be innovative. We can think of any number of ways to implement the game, that’s not the hard part. Making the decision to do it, marketing it the right way, and executing well are the keys.

Conversely, if teams don’t act soon, media outlets with focus shifting toward local will jump on it. ESPN <Fill in the City> already possesses the know-how and operations to extend fantasy to city and team levels. CBS can leverage its local radio stations to do so as well. It’s only a matter of time for RSNs finally to move on this opportunity they have sat on for years, especially with the ESPN putting the competitive pressure on.

Maybe the fantasy market truly is saturated, and fans simply can’t handle more. But, if I’m running team marketing or business operations, I’d rather find that out rather than let someone else cash in on my assets once again. A few small shops have started to poke around with Facebook apps (Watercooler), and a rogue game or two has emerged here or there, but when the teams or major media entities make the move, then it becomes serious.

Pac-10, ACC Logical Media Partners

Here’s the lay of the land for college conference media deals: the ACC, Big 12, and Pac-10 will all vie for new contracts over the next two years, the two models are partnership [with established media networks for substantial rights fee] or ownership [of your own network].

The partnership model yields lower risk, however few options exist – mainly ESPN, Fox Sports, and CBS – and each competitor has already allocated significant chunks of programming time and fees to the SEC, Big 10 and Big East. This leaves the three remaining BCS conferences to fight over a limited supply of money and distribution. Conversely, launching a cable network is a difficult proposition in this market. Each conference has seen the Big 10 battle for distribution, while the NFL Network continues to lose its fight with providers, among other networks in protracted carriage disputes.

Larry Scott, newly crowned Pac-10 Commissioner, publicly acknowledges that he must market his conference to a wider audience, while ACC Commissioner John Swofford understands how the recent SEC deal changed the economic balance of power in college sports. Signing a rights deal with ESPN, likely for less than the SEC will not do justice to either conference’s bigger mission. The Pac-10 and ACC would play second fiddle to the SEC in college, and get buried under the NFL, golf and tennis majors, MLB coverage, and the NBA. ESPN and ESPN2 have limited shelf space, most of which is occupied. Additionally, these conferences need top billing to increase exposure and drive other revenue streams.

Given the difficulty to launch cable networks, a partnership between the conferences increases their leverage, disperses some of the risk, and increases the upside potential. Each conference brings an iconic team in both major sports – USC is the gold standard in football, as UNC and Duke are in basketball, while Florida State and Virginia Tech hold clout in football, as UCLA and Arizona do out West. They play in complementary timezones, opening the door for cyclical live programming and bi-coastal doubleheaders.

While gaining distribution is difficult, this combination is arguably a better sell than the Big 10. The aggregate covers no less than 12 of the top 30 TV markets to the Big 10’s 7, which is a generous count. Further, it’s presence in more overall markets would the network to charge a premium fee to more “in-market” consumers, thus increasing revenue. It follows that offering programming from two regions, with numerous displaced, yet passionate fans, creates a better selling point to cable providers not in school markets.

New business development opportunities can stem from the relationship. In place of the ESPN contrived basketball conference showdowns, a compelling pre-season ACC-Pac-10 series would draw interest, while the network could investigate bidding on college bowl games involving the two conferences, both creating a more compelling programming slate.

Another key is content ownership. Both conferences have the opportunity to learn from the SEC’s Digital Network initiative, and roll out an enhanced revenue generating machine in a few years. Doubling the content library opens new, creative bundling opportunities to sell to the sponsorship market and to license out. Without diving into financial projects at this stage, with the right management in place, its feasible to make the sum value of their content libraries greater than the individual parts.

And they count the greatest golfer and greatest basketball player ever among their combined alumni – hmm, shoulder programming?

Antiquated NFL Blackout Rule Looms Over 2009 Season

Dating back to a time when team owners felt TV viewership cannibalized ticket sales, the NFL blackout rule is now a legacy, antiquated rule that the league should revisit. The rule essentially states that if a team does not sell out (or reach a certain number of tickets sold) a home game, the networks black out the game in the local market, defined as a 75-mile area around the stadium.

Darren Rovell penned a good piece that highlights the significant decrease in blackouts the past few years, relative to previous decades. Given the severity of the economic recession and the pressure on teams to increase prices to cover increased player salary expenses that trend may see a detrimental reverse, as many teams struggle to move ticket inventory. Since so few games have been blacked out in recent years, an influx of blackouts could surprise the fans and create negative reaction.

The NFL owes national much of its ascent to the top of the US sports ladder to national television. Sunday afternoon is appointment viewing for many fans. The broad reach and compelling action attract big audiences week after week. Fans develop loyalty to the home teams and they become more entrenched in the sport. Taking away that television exposure at a local level takes away the teams and the leagues best marketing tool. Not having the local team in front of fans week in and week out risks losing the casual fan to other sports or entertainment venues, and risks turning away some of the die hard fans in anger. Especially given the availability of a wide range of alternatives that did not exist when this rule was created, the NFL would be mistaken to risk any portion of its fan base.

First, its proven over years that showing games locally does not directly cannibalize ticket sales. In fact, arguably it helps boost sales by marketing the teams to potential customers. Ask the Chicago Blackhawks. Second, and more important, its less fans choosing not to buy tickets, and more fans forced to cutback on discretionary expenditures due to the severe economic conditions. As the NFL, do you want to be in the business of saying, we know its expensive to attend one of your games and that you may be unemployed, but if you don’t buy a ticket you can’t watch your favorite team. If anything the league should be finding more affordable ways to accommodate fans priced out of the stadium that are die hard fans and want more than a TV in the living room type experience.

If the league were to blackout games in any big football market, New York for example, its TV partners that pay billions in rights fees, would suffer from significant ad sales losses. NFL football is one of the top rated programs on TV. Ratings in local markets are magnitudes higher than over ratings, making ad time more valuable in those markets, black outs would strip TV sales teams of this audience. Further, if it’s a big market, it can significantly damage the national value of the ad inventory.

At a time when the NFL faces a potential work stoppage and numerous negative off-field publicity it to maintain focus on retaining its current core fan base. Blacking out local games could slow down the gravy train the NFL has rode the past few years, especially at a time when teams are pricing fans out of the stadium, not fans choosing to stay home. Widespread black outs would be a slap in the face to fans, and certainly hurt the NFL as a brand.

Essence of SEC New Media Policy What Content Owners Need

The SEC partnered with XOS Technologies last month to form the SEC Digital Network, and the conference didn’t execute the deal for charity purposes – they intend to generate revenue, potentially lots of it. Put aside the mega 15-year television rights packages with ESPN and CBS Sports, the SEC, as many major college conferences do, have many hours of valuable content that never make it to air on major networks, plus they retain digital rights to almost all of the content that involves any of the schools.

At a high-level, the conference cracked down on the amount of digital content media outlets have access to and what they can do with it. The goal appears to limit non-exclusive independent media coverage (i.e. bloggers) and to control the legal use of its content, akin to how MLBAM manages MLB content. Did we mention that MLBAM is by far the most successful digital outlet in sports? No coincidence. Media outlets can complain all they want, instead they should takes notes on how to control content, make it valuable, and earn revenue from it.

Instead of complaining, media organizations should look to partner with the SEC Digital Network. The SEC has essentially created a market for its content by limiting the supply, wiping the slate clean for competition, and understanding the demand. Next, the conference can carve the content up in numerous different ways – by sport, by type of content (highlights, press conferences, player interviews, coaches shows, etc.) and auction access to it, for lack of a better word. Make the media outlets pay to gain access to it, perhaps different access for local (to each school) and national media, but the key is to issue fewer licenses than exist media outlets. Basic economics, limit the supply to make it more valuable. This would monetize the content up front, providing what amounts to a monopoly rent to the conference since fans of each school demand the content and no alternatives exist. Can you replace Florida Gator highlights with anything else in Gainesville, or replace Alabama highlights with another team or conference? Not unless you want riots.

Now the content license holders – newspapers, local news, national magazines, whoever it may be – have the opportunity to charge subscriptions, package the content in any way they want, be innovative, and run a media business. Fans will have no grounds to complain. If they want access bad enough, they will the pay the price, if not then they will be satisfied with the national linear television coverage.

As for bloggers, of which I am one and am generally an advocate for, nothing changes. You can bid for the exclusive license and make it a real business that competes with newspapers and TV, or you can pay the subscription fees and write second hand recounts, as most currently do. Everyone can still post opinions. However, the limited supply of professional content will further differentiate what’s true journalism and what’s citizen journalism.

This scenario includes many hypothetical scenarios, however its an example of how content owners can monetize content. Implementing paid online content using major college sports, where fanatical demand exists, is an easier place to start than local news or Page 6 gossip. Another step in the process, left for another discussion, is how the SEC would crackdown on illegal use of video and photos, and where they draw the line between UGC and illegal use. The SEC is on to something, now I want to see them carry it through into revenue.

ESPN Makes Local Splash, While CBS Flies Under the Radar

Last week’s confirmation of the inevitable – that ESPN will expand its locally focused web sites into additional major markets provides a major threat to the digital component of RSNs and seriously jeopardizes the long-term sustainability of local sports coverage in newspapers.

However, lost amid the ESPN announcement was CBS Radio announcing the launch of local sports stations in DC and Boston. CBS Radio already has the leader in NY, and established stations in Philly and Baltimore, giving it a stranglehold in the sports crazy Northeast and Mid-Atlantic. Its foot print extends to Chicago, Detroit, Dallas, and Houston among top markets. So you say talk radio is dying medium. Not quite, in fact, if CBS gets it right, they will be right there competing with ESPN on multiple fronts.

First off, radio is not exactly a dying medium across the board. Sports talk carries that special level of fan engagement that the web tries to recreate, but is unable to always capture the passion and spontaneity of live radio. Further, live radio broadcasting of games is an art form, sports version of fine literature. Plus, unless you are in front of a television (given the lack of mobile streaming) it’s the still the best option, so talk radio and radio rights to team games still have value. Look at the latest NY ratings, WFAN actually increased its numbers almost across the board.

Though not strongly integrated with radio, don’t forget CBS has a Top 3 web presence. If they can integrate it tightly with the web, similar in strategy but maybe different in execution to how ESPN is setup, put some marketing power behind it, and improve the streaming interface, then you may have a formidable setup. The integration opens the door for locally focused sites to compete with ESPN’s move. The radio stations have already created personalities with local followings in each city. CBS can leverage simulcasts, podcasts, use the talent for short-form video, and easily integrate UGC given the audience focus of talk radio. Integrating radio and digital expands distribution to the point CBS can justify hiring additional journalists in local markets – possibly beat reporters or the equivalent of columnists. See where I’m going here.

Almost every media discussion comes down to newspapers. Local sports writers have loyal followings. A player specializing in another medium is going to capitalize on that following at some point. It’s already happened in a few markets, but ESPN or CBS are best positioned to go after them, though I still think the major RSNs are asleep at the wheel for not locking them up, or at least doing a distribution deal with their newspapers to get content and more importantly hold the talent on retainer. That said, a CBS can either hire away beat reporters, then use them for exclusive radio beat reporting, online coverage, and short-form video packaged for online. At the least, they can strike a deal with newspapers to syndicate articles and get exclusive use of the talent for radio coverage and multimedia content. And once CBS and ESPN get rolling online, everything can be packaged for iTunes, mobile, video syndication, social media, and the myriad of other possibilities.

Don’t sleep on CBS. They have given no indication of taking this route, but you don’t have to look too hard to see that it exists. A successful push by CBS and ESPN could be another nail in the coffin for newspapers.

[Aside: this doesn’t even mention the power CBS can leverage through its broadcast channel]

TV Everywhere, Anywhere, Somewhere…

Programmers and cable operators, other than CBS of course, tout it as the savior, putting the proverbial “genie back in the bottle”. But the $64,000 question is if the TV industry is already too late to the game and if this plan is what can save them?

One key concept from Chris Anderson’s “The Long Tail” is how technology has democratized the tools of production, reducing the barriers of entry to previously capital-intensive businesses such as television. This raises a few fundamental questions about the TV Everywhere plan. What prevents someone from recording a show on DVD (or a networked DVR for that matter) and putting it on the Internet through a pirated video site? Legal authorities can do only so much to prevent illegal sites, but like it or not they exist. One only needs to look at the frustration over NBC’s tape-delayed Wimbledon coverage. Disappointed users had no problem finding a live feed on the Internet.

Technology evolves faster than corporations can react. Even if the TV Everywhere concept comes up with a successful authentication plan and finds a way to address pirating, how long before someone figures out a way to beat the system. Shedding light on Cablevision’s recent court victory allowing it to deploy remote DVR, it may actually help the industry in the end. A DVR is yet another Internet-capable device in the possession of users that consumers can use to put unlicensed content online. Removing these boxes from cable homes can help prevent this. It may sound farfetched, but its not outside the capabilities of the increasing tech-savvy world.

Putting the genie back in the bottle is tougher than it sounds. It’s like telling kids not to smoke. They know about it, they have seen it, telling them smoking is bad only makes them want to do it more. Giving the customers free content, then taking it away from them, will only inspire them to want to find ways to get it free.

Bringing up another Chris Anderson concept, one I don’t agree with, free does not work. It killed music, its killing broadcast television, its ruining newspapers, and it will destroy everything in its path. iTunes did not save music. 99 cents is not sustainable revenue. Kindle is about to ruin the book industry with its low-cost business model. Offering services free drives user numbers, not businesses. The key is to find ways for the product to drive usage and squeeze as much revenue out of the situation as possible – something Apple has done well for the most part, in selling premium products.

TV Everywhere is necessary. Content providers will not remain sustainable in the long run if they can’t charge for content. TV Everywhere is the effort to save big programmers. If it fails, and users begin an attrition from cable to online, revenues will start to shrink, programmers will be unable to afford content development, and users will be left with a smattering of UGC and You Tube videos to watch.

Obviously, its an exaggeration, but it’s the path the industry is heading towards. Leno at 10PM is the first step, a major network unable to afford traditional programming due to shrinking revenue. It may take years to manifest itself, but successfully charging for online content and maintaining current revenue levels with reasonable growth is necessary for the industry to avoid disaster.

Favre Pushing the Limits of Overconsumption

Will he play or stay retired? Will Favre report to Green Bay or wait out a trade? He’s flying on his private jet from Mississippi. Wait, no, he’s go back home. For weeks the American public was inundated with Brett Favre news, even when there was none. ESPN staked out Packers camp just to say we’re here waiting for Favre. Then the bally-hooed trade to the Jets, which made things even bigger because, well everything in NY is bigger. Now his every move and every word leads the sports news. When is enough enough?

Actually, it might be too much already. While awareness of who Favre is jumped this summer (according to the Davey Brown Index), his trust and endorsement power took a hit. Favre put himself in the middle of a controversy. It’s disguised because they were no arrests or late night incidents, but it was a full blown controversy. Fans take sides, and many felt Favre was wrong in how he retracted his retirement and tried to force the Packers hand.

Further, Favre is testing the limits of overexposure. At some point public awareness reaches the point of diminishing returns. America had Favre shoved down their throats for weeks. It took weeks for the snail-like story to unfold, so many days he was the news because of no news. At what point do people get sick of him and tune out? Favre put himself into choppy waters. Sure, his Jets jersey set records for single day sales. Chalk that up to the NY factor, and a team with passionate fans desperate for a winner and a superstar. If any other NFL MVP was traded to the Jets, fans would buy that jersey at the same rate. The Jets have not had a superstar for years and are looking for someone to latch onto.

Living in NYC, it’s hard to take the pulse of the rest of the country, but will anyone in LA or Chicago care in October when the Jets are 3-3 playing in mid-October? CBS plans to continue the overexposure and put Favre’s Jets on at every opportunity possible. The story can go two ways from here: Favre plays great, the team makes a surprising run, plays competitively every week, and all hail Favre the savior; or Favre plays average, the team flops, and the fans turn on him quick. Think those Jet fans bought his jersey fast, watch how long it takes to boo him off the field after 4 interceptions against New England. The public will be left with the image of an aging player who didn’t respect the game and got what he deserves, not the star player who made one last run in Green Bay last season.

CNBC’s Darren Rovell reports his marketing clout took a hit because of his indecisiveness and unreliable comments. We’ll monitor his sponsorships as the season approaches and plays hit. If Favre wants to cash in, now is the time. He’s still a hero in NY without taking a snap. The TV and radio appearance deals are certainly on the table, and any Jet sponsor would love to use Favre as the front man. Meanwhile, back in Green Bay local TV should take advantage of the Favre love affair and get his face on the screen whenever possible. If Aaron Rodgers falters, the affection for Favre in Green Bay will multiply. He’s still a valuable commodity in that market, and will only get bigger if the team struggles.

Favre will serve as an interesting case study on where the line is for too much exposure. Marketing firms walk the fine line with their stars, and the news coverage, much of which Favre brought upon himself, was clearly too much. The best way to measure the impact is the fan reaction he receives on the road, the national ratings Jet games receive, and how many marketing opportunities come his way.