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.

YES Network Marketing Follies for Live In-Market Streaming Package

“Watch the Yankees when you’re locked out of your house?” I know that’s not the first thought when I’m locked out, it’s a distant second, with everything else behind gaining entry! Yet, that is how YES Network is pushing their product to the market place.

When the Yankees, YES, and MLBAM announced the first live in-market streaming deal in July with a price tag of $39.95 for the rest of the season or $19.95 per month, it immediately raised the question of who would pay for this and what would they gain. MLBAM and cable nets are absolutely right in that they should charge for it out of the gate, and prevent the issues every other media business that moved online with free content now faces. However, subscribers have to be Cablevision (and now Verizon) customers with both Internet and cable service. My question, and one YES should consider as they market the product, is one would someone already paying for network at home, pay a significant fee to watch games online all season?

The marketing plan does not communicate a value proposition to its audience, a reason why they should pay additional for this service. Further, it’s creative leaves much to be desired, and I don’t think I’ve seen any distribution outside YES and its website (though I’m not a Cablevision or Verizon customer). MLBAM offers a tremendous online game package with great features and high quality feeds, YES should be touting what you don’t get with a regular cable subscription at home. Talk about the live stats on the side, the fantasy player tracker, the ability to call up highlights on-demand, social media integration to discuss the game with fans, and even PIP if they are MLB.tv subscribers.

Next, consider when customers will use this service. According to YES, its at the beach or when you’re locked out. Maybe I’ve been locked in a cave, but I’m not seeing many laptops in those situations (leave mobile out for now), nor do I feel the Yankees game is top of mind in either situation. The ads do mention work, which is likely the number one place, but what about in the house when your wife/parents are watching something else, or at school, or stuck traveling – or you want to track stats and interact during the game. Build out realistic scenarios, then develop creative that presents them in a more humorous way – similar to how the NCAA tournament employs the boss button. A key missing ingredient in the marketing is that I never see someone watching the games on their laptop in any realistic situation. All YES shows are generic Yankee highlights, if you watch it without sound it’s not completely evident what the product is.

One problem could be that YES is marketing a product that does not yet exist – single PPV games. Without any added value, customers will always opt for TV over online, making a full season or even monthly package less realistic. Then the marketing campaign touts one-off scenarios when the product is useful (beach, etc.), yet you can’t buy a single game for say $2.99.

Two other points on YES product roll-out. First, I mentioned the poor distribution earlier, but placement on their website is abysmal. I actually looked at the site for a good minute or two and thought it was not on the homepage, until I finally found it at the top, with the same colors as the background and no distinguishing creative. Not going to attract fans who are not looking for it. Second, the team should offer fans a chance to sample it, say one game free for all eligible subscribers, or put a time constraint. Get people to experience it, try it, live it – and win them over that way. Make completing a survey a stipulation for the free access, and leverage that data for next year’s product.

Under the current conditions, I don’t see how this product is generating much subscription revenue at this point. Though, it does have promise if executed correctly.

PGA Shows Online’s Ability to Attract International Fans

Omniture data showed South Korea accounted for .9% of Turner’s record setting web traffic for Thursday of last weekend’s PGA Championship, ranging up to 2.3% for Sunday’s final round. In absolute numbers the 30-50k unique users may not move the needle, and Y.E. Yang may not be the player that captivates a nation (at least yet). However, take South Korea, add in the many other countries on that side of the globe with an interest in the sport, either because of Tiger or country representation in the tournament, and on the aggregate these fans add significant valuable.

I’ve wrote about this in the past – golf and tennis are two of the sports that can most benefit from live streaming and in-depth, user oriented online coverage. The individual play that creates simultaneous action in multiple locations, and international tilt of the players create an opportunity. Golf embraced live, free online streaming last year, tennis more so this year, thankfully removing the pay wall from Wimbledon – or maybe not. Live streaming does call for a “fremmium” model, free sampling of coverage provided by the network, then a fee-based service to give users the opportunity to control their own experience, follow who they want, get advanced stats, etc.

Neither sport is their yet. South Korea tunes in and they want to Yang. England tunes in to tennis and they only care about Andy Murray. Digital providers need to allow fans to really customize their experience and give them the tools to watch any player they want online. Provide access to archives of that player, let them see his/her greatest shots, past performance at the tournament, even throw a camera on the practice range. An all-encompassing experience needs to be possible.

Not everything must be HD or professionally shot, sometimes a web-cam in the sky is sufficient for a tertiary view to feed the long-tail of viewer interest. Leagues can generate engagement with the data and archived video they already own. Once they put all of that online in an accessible format, expenses to provide the customized experience should remain low, with potential revenue increasing.

As a marketing tool, which digital is though people often forget this point, it promotes the game in these various countries. Live streaming, minimal spending on aggressive viral awareness campaigns can lead to audience sampling, and if they like what they see these sports can start to build a sustainable audience into the future. This increases the value of holding international events, selling international television rights, selling separate sponsorships through the digital platform, and someday integrating more overseas sponsors into live events), if they can generate enough interest.

With TV ratings suffering, particularly on the women’s side, and TV coverage waning between majors, online is a critical component to the long-time sustainability of these sports. It can drive attendance, introduce new revenue streams, enhance ancillary revenue streams, and most importantly build a new fan base.

Will Customers Say ‘YES’ to Double-Charging for Streaming

YES Network officially launched its partnership with Cablevision to stream Yankee games in New York Wednesday, the first local market live streaming deal in the major professional sports that rely on local TV revenue. A day later, the network had the perfect bargaining chip – a mid-week afternoon game. Now fans can catch every minute of the Bronx Bombers, even at work.

A few aspects of the deal boggle my mind. Start with the combination of exclusivity and price point. Only customers of Cablevision’s cable and Internet product are eligible to sign up, thus some form of authentication is in place to manage access. I’m all for charging for online content, however if Cablevision and YES implement an authentication system, doesn’t that assure that all the users already pay for YES Network on cable? The point of charging for online content is to avoid giving it out free, not to double-charge customers that follow the rules.

Given the operational cost of live streaming and the anticipated demand networks and teams project, a small fee is justified, but nailing customers for $50 for the season while still charging them for YES on their cable bill will not help gain traction for the service.

On to the second key point, content distribution. Streaming video will most benefit users who can’t access the network on TV, so why cut exclusive deals for people who already receive the network. YES should focus on those who currently have no access to YES, thus presumably have higher demand for the live stream. This may be less pertinent in the NY market, since YES is widely distributed, but look at San Diego, the next market to roll out the service. Cox has withheld Padre broadcasts from AT&T IPTV subscribers, so a significant audience that demands baseball has no access – the perfect place for live streaming. Yet, the team is dealing exclusively with Cox, who already broadcasts the games.

I understand the politics surrounding these decisions, yet it still perverse action by the teams and leagues as they attempt to usher in a new revenue stream. Given the choice of HD on a nice TV or streaming video on a little computer screen, which by the way inhibits multi-tasking, the choice is clear. However, given the choice of nothing or live streaming, sports fans will shell out.

The current price point appears to high to gain traction among cable subscribers that already have access at home. Is it really worth $50 to sneak a peek at the handful of weekday games the next 3 months? And listening to the YES marketing pitch, someone should advice them that most people don’t go to the beach and plan to watch Yankee games on the Internet. Maybe they should rethink that campaign.

If they have an authentication mechanism in place, baseball should consider different price points for current cable subscribers and non-subscribers, plus add the option to purchase individual games, in addition to the rest of the season or 30 days to encourage incremental purchases. Right now, I envision single game options would increase revenue more than lost revenue from potential 30-day purchasers trading down.

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.