Go Ahead, Kill Your Business

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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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