MLBAM Postseason Deal Solidifies Key Premise in Digital

MLBAM announced a deal with Turner and Fox to offer a postseason version of its popular live streaming video package. I’ve read a few comments describing confusion over adding another product to the myriad of permutations that MLBAM already offers, but this should be a case study on monetizing digital content.

MLBAM is taking its valuable core content – mainly live baseball games, to which its held onto the digital rights to – and pushing it out through every viable distribution channel. Then it’s repackaging the content to develop a new offering of the same core content, charging users a fair, reasonable price for each unique offering

MLBAM is executing the Internet business model many write about, but few perfect. Taking advantage of the low distribution costs to put their content out in multiple places, understanding the profit margin increases with scale, so finding ways to deliver the same content to more people directly boosts the bottom line, and understanding the value of its content to strategic partners (i.e. Turner and Fox) and to customers in the marketplace. The $10 computer version or $4.99 mobile version may not sound like significant revenue generators, but in all likelihood the marginal cost to develop these products is next to nothing since it leverages the same technology MLBAM already uses all season and the same content and camera angles going to broadcast. Net result is a significant profit margin for the partners to share.

Of course, the other key factor is that MLBAM offers the best products. Aside from executing on the business model, MLBAM delivers a great user experience, and is more willing to try new technologies, new distribution, and new features in digital than any sports entity. The HD feed is ridiculously close to what you get through TV. The Twitter feed and social networking integration with TBS Hot Corner are fun value-adds to occupy fans during what can be tediously long games. Camera angles, Tivo/DVR-like replays and highlights, box scores and game summaries, multi-screen layout, it has almost everything fans want. They should consider integrating a live, real-time fantasy game involving the players playing in that game, but that’s an entirely different topic for another post.

Overall, MLBAM is a model for not just sports, but any digital business with valuable content trying to figure out how to monetize it. Focus on your core product, find as many unique ways as possible to package it, leverage every possible digital distribution channel, find partners to extend the distribution even further, and monetize it every step along the way.


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.

Fox Ruins All-Star Introductions

Interleague play and free agency has robbed the All-Star game of many special qualities. It may mean something with home field on the line, but the game still feels different. Opening introductions are one of the few special moments that remain. What will the crowd reaction be? For the player, his one moment to bask in the spotlight and receive his deserved credit. Last night, with 40 Hall of Famers on hand at the baseball cathedral it had a chance to be special, then Fox jumped in.

At least Joe Buck acknowledged Bob Shepherd, the legendary Yankee PA announcer for over 58 years, who remains home sick. I was curious if he would do the introductions, only fitting. With Shepherd on the sidelines, long time fill-in Jim Hall, a ringer for Shepherd over the mic, should have stepped in. Everyone equates that voice with Yankee Stadium. Yet, we had the soothing tones of Fox’s own Joe Buck. Don’t we hear enough of him already. Something seemed amiss.

Crowd reactions help create the special atmosphere in pre-game introductions. Match-up a good story with a hometown hero, the crowd can send shivers up your spine and goose bumps down your arm. However, right from the start, Fox drowned out the crowd noise for viewers at home with its intrusive background music and overbearing PA microphone. Marionao Rivera’s thunderous applause, the only time he’ll ever be an All-Star at Yankee Stadium lost that edge that Yankee fans always bring.

One other possibility is the decidedly corporate crowd that took over Yankee Stadium for a night. Outside of a few “Derek-Jeter” chants, we had no sign of the Bleacher Creatures. Thanks to MLB for taking the event away from the greatest fans in the world. Baseball has to take care of its sponsors, but find another way. Make sure at least half the stadium is filled with regular fans, not suits from Pepsi.

When was the last commercial break during player introductions? Welcome to Fox, 2008, commercials at every opportunity. First they drag the game to 4+ hours with the longest comemrcial breaks in sports history, now they host a 45-minute to one-hour pre-game introduction. Get serious. Fans at the stadium must have loved that. Terrible job. Why break up the momentum right at the pinnacle? Forget the rules of TV for a second, and treat the viewer with respect.

Numerous options exist for how Fox and MLB could have introduced the All-Star’s and Hall of Famers. They handled it fine. But I really wanted to hear the thunderous reaction for Derek Jeter, drowned out by the poor audio job and the lack of “real” fans in the stands.

I’ll never forget the 2008 All-Star game introductions, and how I couldn’t enjoy it the way I wanted to.

BCS Unlikely to Change

Despite rumblings earlier this season of a Plus-One, or even playoff format proposal to determine college football’s champion, all indications are the current BCS system will remain in tact for at least another season.

Multiple roadblocks continue to stall any proposed changes, notably the separate Rose Bowl contract with the Pac 10 and Big 10 and lack of consensus on the best method for choosing a champion. Fox’s $320 million BCS contract is up for renewal this year, they have a one month exclusive negotiation period in September though other networks have also expressed interest in bidding, while the Rose Bowl-ABC contract runs through 2014. The Big 10 and Pac 10 conference commissioners remain staunch opponents of any format changes, unlikely to change course at least until that contract expires, giving the rest of college football enough leverage to sway them.

Each proposed system has its flaws. The current BCS creates controversy because teams are often rewarded or punished based on their schedules and its too often left in the hands of computers to determine the two best teams. A plus-one format pushes the problem out from the argument of who deserves number two, to who deserves number four, and number gets snubbed. Opponents of an NFL style playoff system cite scheduling issues, damage to the entire bowl system, and travel problems, among other shortcomings.

From a revenue standpoint, college football stands to lose money by remaining status quo. Outside of January 2006, television ratings for the BCS as a whole continue to slide annually. Each of the past two seasons the championship game posted a solid 17.4, however only the Rose Bowl reached a 10 or higher, with none of the other three games even registering an 8 this season. Matchups and schedules are the biggest culprits.

The BCS renders all but the BCS Championship Game meaningless, and the system leads to unattractive matchups from both an appeal and competition standpoint – case in point Kansas-Virginia Tech and Georga-Hawaii, two of the three lowest rated BCS games this decade. A plus-one system adds importance back into at least two more games, possibly the entire BCS depending on how the system is structured – either using the top 4 seeds play, winners advance method, or the play all the BCS games, then determine the 1-2 based on ratings after those games. Better games, more interesting for the casual fan, more competitive, leads to better ratings.

Playing these games over the course of five days hurts college football in the end. For years, bowl games owned New Years Day, an American tradition. They still dominate the landscape on January 1st, but quickly lose fan momentum after that, especially when competing with the NFL playoffs. THe BCS games played after January 1st, before the BCS Championship Game, become a slight afterthought, then after the NFL takes over for the weekend, college football loses at least some buzz, especially with the casual fan, heading into the championship. Bowl games need to leverage the American persona, take back New Years Day, and keep up the momentum. One idea, play a BCS triple header on January 1st, bumping the other bowl games to early start times or to New Years Eve, or play a double header on January 1st and January 2nd. Condense the time between games to keep the fan engaged. Then hold the championship game one week later, creating the lead-in that the NFL does for the Super Bowl.

Pac 10 and Big 10 officials need to get over this Rose Bowl issue. The tradition went out the window in 2002 when Miami and Nebraska played in Pasadena for the championship, the first non Big 10-Pac 10 matchup. Instead of clinging to something no longer present, these conference commissioners should embrace a new system and contribute their ideas rather than posing threats. However, until college football can unify the television contract of the Rose Bowl with the rest of the BCS, creating a unified system, change remains unlikely.

Without change, ratings will continue to slide, and the conferences will lose out on potential revenue from a more valuable television contract, new marketing opportunities, and sponsorship deals. Expect the downward ratings trend to continue.

In the upcoming BCS renewal, when Fox bids again, the commissioners should find a way to get the network involved during the season. Fox has no presence all year, then suddenly pops up on New Years Day – new announcers, new graphics, new hosts than fans saw all season. Developing a presence throughout the season allows for more appropriate promotion, and creates a community with the fans. It also makes the TV package more valuable.

Fox does own the digital rights during this contract, though they have yet to leverage those rights to the fullest extent. It remains to be seen what they have planned for the final two years on the current contract. The BCS needs to force the networks to deliver a digital strategy at the bargaining table, then place a value around those digital rights. New media remains a mystery to most. However, its clear that digital will play a big role in sports coverage. The NBA recently bundled digital rights into its deal with TNT. Without precise pricing models, its hard to place an exact dollar value on the rights, other than knowing it sweetens the pot.

Lack of consensus among the conferences will likely prevent any changes heading into the next BCS contract. The longer it takes to change, the more controversy swirls, the more money the schools leave on the table. College football should use NCAA basketball and the NFL playoffs as model.