Sports Streaming’s Big Play
Baseball and college hoops have found real revenue by airing live sports online. Now, networks and other top sports leagues are getting into the game.
By Alex Weprin -- Broadcasting & Cable, 3/22/2010 12:00:00 AM
Few folks are happier about this than executives at CBS Sports. While the network airs the NCAA men’s basketball tournament games, CBS Sports has, in recent years, found increasing success in an adsupported, free streaming of the games live on its March Madness On Demand.
Originally a subscription product generating “hundreds of thousands” of dollars, according to Jason Kint, senior VP and general manager of CBS SportsLine, MMOD went free in 2006 and immediately brought in $4 million in ad revenue. In 2009, that fi gure was up to $32 million. And if CBS Corp. CEO Leslie Moonves’ recent projection of 20% growth in 2010 is correct, CBSSports.com will make at least $38.4 million.
Online revenue for sports still pales compared to analog television— this year’s Super Bowl brought CBS around $200 million, as Moonves pointed out in the company’s fourth-quarter earnings call—but the steep growth curve for live streaming has drawn other major sports into the game. Ten years ago, sports was regarded as untouchable live, DVR-proof television; the idea of TV rights-holders or major leagues streaming their events seemed preposterous. But with fans demanding to watch whenever and wherever they wish—and technology making it easier—rightsholders are listening, and profi ting as a result.
Among worldwide sporting events, only the Olympics rival the scope of soccer’s FIFA World Cup, with the 2010 tournament set to kick off June 11 in South Africa. Univision, which has the U.S. Spanish-language rights to the event, will be streaming all of the matches live on its Website, according to executives familiar with the decision. And ESPN is making plans to stream games via its ESPN3.com broadband service.
And with Major League Baseball long being the gold standard for sports streaming— MLB.tv charges viewers for premium content— the other big sports leagues are getting more competitive. For the 2009- 2010 seasons, the NBA and NFL increased the number of streaming packages they offered, both of the free and paid variety. The NBA went from one paid streaming option, and granting streaming privileges to NBA League Pass cable subscribers, to selling a number of standalone packages.
“The three leagues other than Major League Baseball have moved somewhat tentatively; we are really just seeing them dip their toes in the water,” says Paul Verna, a senior analyst at eMarketer, who last month completed a report about major sports’ increased presence in live streaming. “But the success stories we are seeing are indicators of future potential.”
LOOKING FOR THE RIGHT MODEL
When it comes to searching for the right Web streaming business model, Major League Baseball makes a pretty good case for its own. MLB Advanced Media’s signature product, MLB.tv, began with a pay model when it launched in 2003. With 30 teams playing 162-game seasons, the service lets users watch all live out-ofmarket baseball games and choose the home or away feed, among other features. The eMarketer report estimated that subscription revenues for MLB.tv brought in around $88 million, based on sales figures provided to PaidContent.org.
“I think that as long as content is not free, all of the models should be examined,” says MLBAM CEO Bob Bowman.
MLB.tv’s success has inspired similar products from the other major sports leagues—NBA League Pass, NFL SuperFan, NHL GameCenter Live—with each offering a different number of available games at different price points. The NFL and NBC began streaming Sunday Night Football in HD online for free last season, and the NFL has revamped its Supercast product for DirecTV subscribers, offering a free mobile app to watch games on the go.
But Bowman and other executives also to point to the success of the so-called “homes pass” model as a way to adapt to a changing media environment. In homes pass, a product is sold to affiliates, with the cost then rolled into a user’s monthly bill—in this case, from the user’s Internet provider.
ESPN made the first significant move in this area with its ESPN360.com broadband channel. Now available in nearly 50 million homes, its big break came in May 2009, when Comcast agreed to carry the service for its 15.3 million broadband subscribers. Comcast pays slightly less than 10 cents per subscriber to carry the channel, according to someone familiar with the deal. ESPN360. com, which will become ESPN3.com on April 4, streams many of the network’s broadcasts, including its baseball coverage.
The ad-supported free model continues to work for MMOD. Coca-Cola, Capital One and AT&T are on board as presenting sponsors for the 2010 product.
Even Bowman, who has been critical of free live sports streaming, says that March Madness is one of the few free streamed events that can attract top-shelf advertisers. “The model does work,” he says. “It is roughly a three-week bonanza that attracts a different kind of advertising.”
Traditional media companies such as NBC, ESPN and CBS, while happy to experiment with putting valuable content online, are also keeping an eye on research that suggests the biggest games are still the top TV screen pulls.
An internal presentation from CBS Sports comparing online viewers and TV viewers during the 2009 NCAA basketball tournament is typical of the research trotted out by executives. As the tournament went on and more of the important games aired in primetime, the number of online viewers dipped and the number of television viewers rose. “We actually see almost the inverse in the viewership pattern,” said CBS SportsLine’s Kint.
With content owners and rights-holders pushing to maximize new-media revenue, the goal is to bring in what Tony Lapolito, VP of marketing and product management for technology company Signiant, calls “the holy grail”: parity, regardless of which platform carries the ad.
That search may get a little easier given the increase in the number of platforms available. MLBAM has one of the most popular paid mobile apps on the iPhone with its MLB At Bat, which costs $14.99 and allows consumers to watch their MLB.tv games on the go. According to Bowman, the company will have an iPad app ready when the much-anticipated Apple device launches on April 3. MLBAM also worked with CBS to develop the $9.99 MMOD app. During the 2009 season, MLBAM sold more than 400,000 copies of MLB At Bat, which at the time was priced at $9.99.
A perfect world for rights-holders would include a ratings form combining TV and online viewing into one metric. Such a metric would make selling ads across platforms easier, with views being counted wherever they might be.
While Nielsen is working on such a measurement, there is yet to be an announced time line. “It sounds good, but Nielsen can’t measure an online audience,” Bowman says. “The fundamental problem is that you can’t truly measure [that audience] without looking at log files.”
But that won’t stop sports leagues and content owners from going still deeper into the streaming arena in a bigger way, hoping for the kind of steep revenue growth CBS Sports has gotten each March, and MLB gets each summer.
“Two or three years ago, everyone was focused on, how do I keep the digital media genie in the bottle, how do I protect my broadcast revenue streams,” Lapolito says. “Now they understand that the model is changing, and they need to adapt and embrace it.”
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