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.

Sports Properties Miss Low-Hanging Fruit in Online Business

Globalization and ethnic diversity are the next frontiers in sports fan development, especially for the three major US sports, each of which has reached some level of saturation in the primary target markets. The NFL, NBA, and MLB have all taken to hosting games overseas, opened player development facilities outside the country (be it minor league or youth), and have seen an increase in foreign born players. It’s probably safe to say internationalization and diversity are in the top three business initiatives for each sport.

Yet, explore the websites of teams and leagues, and see how many clearly indicate they are available in multiple languages. The majority of properties have overlooked what would seem a logical first step – putting content in the native language of the people you want to target. How do you expect to run a diversity program, play games overseas, or wax poetic about growth strategies built around penetrating new ethnic boundaries when you make basic content is not readily available in the native language. The Colts recently announced games will be broadcast in Spanish language on local radio – a deal that should not be the norm, not the exception if the NFL wants to increase its Hispanic fan base, as they say. Colts website is available in Spanish – top right corner of toolbar. The Giants and Jets, who play in the melting pot of NY, no sign of translation – lost in translation, if you will.

Forget globalization for a minute, think local. Hispanics and Asians are the two fastest growing population groups in the US, at approximately 3.2% and 2.5% respectively in 2008. Further, Hispanics are now the largest minority group in the country at 15% of the population, surpassing African-Americans at 12.2% of the population. Advertisers are hot for cultural demographics. Businesses are using new products to better target ethnic groups. If you want to be a major business player in the 21st century, you have to not only say you want to be ethnic, but embrace it and live by it.

The NBA is the model of sports globalization and has various language translations available on their site, though they bury the translation buttons in the lower right side of the home page after scrolling down. Maybe different home page designs are geo-targeted and I get the US version, but still should be prominent. Baseball does a good job of putting translation links to Spanish and Japanese at the top of MLB.com and in the same spot for every team website – and we’ve come to expect nothing less from MLBAM. Basketball should impart the same model for Chinese and Spanish, at a minimum on all its web properties. The NFL is furthest behind, with no evidence on the league site or most team sites. Check out UFC.com, home of the fast growing MMA flagship league. In the top toolbar, it has 5 flags to denote its language availability. No explanation needed, prominently displayed on the home page, a good example for others to follow, though I’m sure no major sports property wants to hear that they should model anything after UFC.

Why does this matter? One word – traffic. Page views and uniques remain the currency of online monetization. Even subscription based models, which for the most part these sites are not, require some level of sustained traffic for success. If traffic is the name of the game, media managers should strive to make it available and accommodating to all potential fan bases. If Dwight Howard’s jersey sells well in China, his team’s webpage should have Chinese translation so his new found fans can follow the team. Plus, the team can win some long-term fans in a profitable market, considering Dwight will not play forever. Making the site accessible to entire body of potential fans will increase traffic simply through availability, and enhance current or future marketing efforts to reach new demographics. Plus, remember the comment about advertisers desire to reach these rapidly growing demos – incremental sponsorship and ad dollars are there for the taking.

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.

Baseball’s Growth Opportunity…Maybe

Tuesday night marked baseball’s first significant foray into live TV coverage of its amateur draft. Listening to Commissioner Selig, he thinks it can eventually grow into big business. Given the MLB network is in place as a distribution hub to hype the event and players, the increasing awareness of the high school and college game, and the controversy surrounding the negotiating process – it’s certainly not out of the realm of possibility.

Baseball’s draft can go down two paths – a less mature version of the NFL draft or the way of the non-descript NHL draft that loses any appeal after the first few picks. Baseball faces a unique set of problems.

  • First off, it’s a lot longer and has more players involved than all the other major league drafts combined.
  • Teams cannot trade draft picks, sapping a lot of the drama and rumors that generate buzz for the NBA and NFL.
  • Many drafted players are still playing, thus they can’t attend the event, taking away the energy needed to make live television compelling. And the sport itself is in season, so why watch the draft when your team is actually playing at the same time.
  • Almost none of the players will make the majors for at least 1-2 years, some as long as 4-5 years, and many never, so fan interest is inherently low because its unlikely to impact the team – for better or worse – in the near future.
  • While awareness is growing, college and high school baseball popularity dwarf that of football and basketball.

That list, and I shortened it since we get the point, is a tough obstacle to overcome. Baseball will likely not become the NFL draft, perhaps never the NBA, but it can improve on this year, build a franchise, and use it as a solid marketing tool. The NFL has used it to help create a 12-month calendar of events, drive merchandise sales, and create another point of engagement with fans.

Baseball needs to define its goals. Similar to the NFL, it’s a brand marketing play, another interaction point for engaged fans. Its also an opportunity to generate interest for fans of less successful teams – something the baseball draft is less successful at that than the other sports. MLB can use it to create more awareness and excitement around minor-league baseball and off-season programs, such as Arizona Fall League. Along with increased interest come revenue opportunities. This year’s event lacked a title sponsor, which is a great way to add value for a current league or network sponsor. TV and online ad revenue get a boost. The online numbers were staggering this year with over 330 million page views. With that type of traction digital media opportunities exist across the board – mobile apps, games (fantasy, prediction, etc.), social media applications, premium content, and additional video access to team offices, or player interviews. If anyone can monetize the digital opportunities, its MLBAM.

If MLB wants to play with the big boys on TV it needs to have players on sight, and it needs to have team management (scouts, GMs, owners) on site. Without that dynamic its hard to maintain interest. Next, MLB needs to make two format changes – allow draft pick trades and put international players into the draft – like the NBA does. That will immediately raise the level of interest and create more storylines. Imagine Dice-K or Matsui in the draft, or the next big 17-year-old Dominican star. Not only does it make the draft better, it levels the playing field for the small market clubs who get a shot to sign. Trades add another element of drama.

Ancillary to the draft, baseball needs to promote minor league baseball and Arizona Fall League to a national audience – or at least, make it more prominent in local markets. Raising the profile of college baseball, beyond ESPN’s two week coverage of the CWS, would also help. For the draft to become more relevant, fans need to care about the players, they need to know the players, and they need to follow the players after the draft. The NBA and NFL have it easy – baseball has a challenge. It can leverage MLB Network as a distribution point, it can work with local RSNs to push promotion, and MLBAM can find ways to generate fan interest in these ancillary baseball worlds. Baseball needs to address the entire life cycle that players travel to make the draft relevant for fans.

Over the next few years baseball will make a push to improve the draft, and I wouldn’t preclude a time and date change as a possibility. How they approach it will determine if it remains a successful web event or becomes a national sports phenomenon.

Digital Industry Moving Slow on Wireless

Of all the breakthrough technologies driving digital media, wireless should be at the forefront. Consider that almost every family in the US has a cell phone (84% of households, over 250 million people). You can’t go anywhere, stadiums, subways, schools, sidewalks, movie theaters, cars, without seeing people, young and old, using cell phones. Text messaging, phones, Internet, cameras, you name it, someone’s doing it. So why is wireless revenue for digital media sports entities still a blip on the radar?

Standards remain a big problem. Almost every phone provider and wireless carrier has different development platforms. Most phones have still have varied screen sizes. And to make matters more difficult, the landscape is constantly evolving with new releases. A content providers nightmare. Faced with developing a variety of formats to roll out just one application, content providers have stayed behind the curve opting to utilize more standardized offerings, such as text messaging.

Rights issue to video also hold back innovation. In order to maximize profit, some sports rights holders opt to negotiate exclusive deals with carriers, preventing millions of people that use other carriers from receiving desired content. It’s a mistake by the content provider (i.e. the NFL). No users will switch mobil providers simply to watch NFL highlights, you need to make it as accessible as possible to everyone. Exclusivity rarely works in the digital world, especially when you are trying to push out a product to mass appeal for the first time.

Even with these issues, it’s on the cusp of exploding. Phones continue to get better and better. Each round of smartphones has better display attributes (size and clarity) and better battery life.  Users are quickly moving over to smartphones, much more conducive to mobile content. Carrier networks are evolving with faster speeds, and at some point the day will come where standard will rule, making life easy of mobile application developers.

Thus far, text-based applications are the most successful. Local networks post questions during the broadcasts to text in a vote for the player or play of the game, or they will post a trivia question and have fans text the answer. Teams and sports media proviers also have text message based score and news alerts. Some providers charge a small fee, but primarily carriers collect a portion of the text fee, and providers garner the sponsorship money.

It’s a first step in fan engagement, yet it completely leaves out the fans at the game, and the fans not watching at the time. It requires appointment viewing. Content providers should expand the program to have question of the day contests, where users can text a question in and have the broadcasters answer it, or have it answered on the post-game show. Teams and networks should also integrate with sponsors, particularly QSR. Run an advertisement that offers a deal to users who text in an order (for example, pizza) within a certain time. Easily measureable and highly integrated. Teams can run ticket promotions at the stadium. Post a question on the scoreboard answered via text message, winner gets a pair of tickets or a dinner.

Mobile video is going to take off as smart phones improve. Costs, battery life, and rights issues are holding it back. As they are resolved, mobile video will can become a big money maker. The makers of Slingbox have a similar application for mobile phones,  allowing users to watch games and highlights from anywhere using their phone. In today’s world of constant information expect that technology to take off. How many people will be watching those afternoon baseball games at work, without worrying about streaming MLB.tv through the corporate firewall? Fans at games can benefit tremendously from mobile video. One word, instant replay. A great dunk, a great catch, a controversial call, fans at the game are not privvied to the thousand replays shown on TV. Eneter mobile video, allow the broadcasters or stadiums to stream replays out to the fans. I believe fans will pay a per game fee for that service, and it has great sponsorship potential.

Another form of text messaging is to connect the fans at the games with the fans at home on the Internet. Allow mobile access to message boards, connect the fans at home watching with fans on the road or at the game. Given a forum and a topic, users will engage. It leads to further engagement on the web site by home users, and another use of wireless. More engagement and more texts makes the product more attractive to sponsors.

MLBAM offers mobile video alerts, essentially the next generation of text alerts for news and scores. The alerts are accompanied with a video link. All highlight plays that you want get sent to your phone, when news breaks users not only get the alert but imagine also receiving the press conference or video of the news coverage.

WIthout delving further into more ideas, the fans will use mobile, now the teams and media need to find the revenue. The obvious part is to have a sponsor for the content or contest. However, it’s important to integrate the sponsor. Ad’s should accompany the content to the phones in a non-intrusive manner and give fans the opportunity to engage with the sponsor if they choose. Content providers should work together with mobile carriers to find a way to make the pie bigger to the point where each can take home revenue. Right now only the carrier nets revenue.

Wireless ticketing, concessions, and e-commerce will also have a major impact on the sports industry, but require separate discussions. It’s an all encompassing technology. Almost every fan has a cell phone attached to their hip morning, noon, and night, and uses the phone constantly all day. Phones are the perfect revenue-generating device for sports media because the eyeballs are already there, it’s just a matter of pushing the right content out and providing the right incentive.