News Articles

Go Ahead, Kill Your Business

3/22/2010 05:42:00 AM Eastern

If you are connected to a sports property
and you are even considering
streaming any of your games in a
market where there is live television
coverage of it, enjoy murdering
your business.

Sports streaming is in the ether right
now because the Olympics just finished
up, the NCAA hoops tourney has tipped
off, and baseballs are already popping into
crisp mitts in Florida and Arizona. It’s so
ever-present a topic that we made it this
week’s cover story (See Cover Story: Sports Streaming's Big Play).

But if, as our cover
feature suggests, sports
properties are looking
for that extra buck in
ancillary revenue, they
may also be hacking
away at the one thing
keeping them rolling in
cash: money from their primary TV deals.
And that’s a death wish.

Simply put, if the game can be found
on television in that market, you have to
protect that primary source of revenue at
all costs. Go ahead and tell me I’m burying
my head in the sand below the changing
media world. When a standard metric
and currency come together to get content
owners paid for viewing anywhere,
you let me know.

Is it really worth the risk? Rule one,
as always: Follow the money. One of
the biggest success stories in the space
is CBS Sports’ March Madness On Demand,
which offers free online streaming
of the tournament. It has become a nice
little business—and will bring in more
than $30 million this year.

But put up against the revenues of the
CBS Corp., that is nothing for almost a
month of games. Nothing. And MMOD is
rightfully considered a runaway success.

Conversely, the MMOD strategy is an
aberration—it makes sense for daytime
weekday games because it doesn’t take
people away from a TV; they are mostly
at work or in a bar anyway.

But any games in prime viewing times
that could be seen on TV in the market
should be kept off the Internet. For example,
for all of the complaining that
TV critics did—and I promise you, it
was more critics than actual viewers—I
thought NBC handled the Olympics absolutely
perfectly. Given that what they
paid for the Games was comically out of
whack with the economy, the network
had to make the best of it.

And the best way to do that—the only
sure method for driving revenue—is to
bunker down and protect the primetime
TV product. I would’ve done the exact
same thing, and let the 37 hard-core
skiing fans out there complain all they
want.

I’m not alone. Fox Sports chief Ed
Goren echoed these sentiments last week
when he said NBC’s Dick Ebersol “didn’t
hurt the Olympics, he helped the Olympics.
He just paid too much.”

Another streaming success story is
Major League Baseball’s out-of-market
Internet package, which protects
anything on television
in-market and charges
for the rest. And MLB
Advanced Media CEO
Bob Bowman says that
while models are still
being tested, he knows
which one doesn’t work.
“I think that as long as
content is not free, all the models should
be examined,” he says.

“Free” is not an option right now. If
you are considering it in sports, learn
from what happened to print publications
and Hulu: Giving the milk away for free
is a wonderful way to put great people
out of jobs.

Or as Goren says: “If we keep giving stuff
away, we’ll all be out of business.”

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