Field & Stream

Will Leitch is a transplanted St. Louis Cardinals fan living in New York City who needs his fix of Albert Pujols’ monster home runs. He also makes his living writing a sports blog, so he’d seem the perfect customer for Time Warner Cable’s video-on-demand MLB Extra Innings package, which offers up to 60 out-of-market games each week. But in 2003 Leitch opted to forego the $179 VOD package. Instead he chose to stream his favorite team’s games on MLB.tv, the site MLB.com offers for $79 per season, or $14.95 a month. What about the drawback of Pujols’ towering shots becoming smallball as he watches baseball on a diminutive computer screen? "I do everything else on my computer. Why wouldn’t I watch [baseball on it]?" Leitch says. Does Leitch represent lost cash flow for Time Warner? Nope. His need to stream makes him a "sticky" broadband customer laying out $45 per month to Road Runner, the company’s high-speed Internet service, and providing the MSO with reliable cash flow year-round. Still, Leitch and other fans like him are becoming a large target for MSOs and programmers, who are betting that sports streaming can pay huge dividends and eventually spawn profits. Live sports are a particularly fertile ground for MSOs to expand their cache of proprietary content, says one operator. Indeed, providing live sports events on their broadband services is becoming an increasingly effective way for MSOs to convince dial-up users to upgrade and then keep them around. Eventually, by aggregating enough content—proprietary if possible—at their home page portals, operators hope to sell advertising and premium content to customers. In addition, with media companies of all stripes desperate to find avenues to reach viewers other than via TV, sports streaming is a natural. STREAMING’S PROBLEMS But streaming sports isn’t a gimme. FiOS TV programming chief Terry Denson is coming. In March, Denson said Verizon would aggressively pursue sports rights for all its platforms. "You’re going to distinguish yourself by your content and your technology," Denson said at Sports Business Journal‘s World Congress of Sports Forum. He emphasized the word "content." For many who’d been sitting on the fence when it comes to sports streaming, a seminal event was CBS’ recent success in streaming every game of the three-week Men’s NCAA Basketball Tournament on an ad-supported, rather than premium, basis. CBS drew 1.4 million unique users for the 65 games. The trial reinforced Verizon’s strategy of pushing as much content on its portal to subscribers, even at a cost. Even better, it did not erode the television audience for CBS. Yet plenty believe CBS’ success had more to do with the unique nature of March Madness than with streaming. People watch March Madness mainly from work, making it a perfect fit for online streaming, an NFL Network official says. The NFL offers copious highlights and other features online, but has no plans to stream any of the games NFL Network will carry next season live. AN ELUSIVE BUSINESS MODEL That take on March Madness provides fuel for those who argue that, for the most part, streaming live sports is a nice technology, but is still not a business. The issues and landscape are new to operators, perhaps mirroring the dawn of subscription VOD, when cable stumbled to find the most optimal pricing models. "I’m not sure if you go from one operator to the next they don’t have a lot of different views," said Synacor’s CEO Ron Frankel. "We’re still in the early stages of how content deals evolve." The challenge in these frontier days of broadband video is finding the best economic model. Ad-supported or subscription? Pay as you go or invest for the long term in the name of brand building, even it means absorbing some red ink for a while? Figuring out which sports are best suited for live streaming is yet another question MSOs must answer if they want to use video to get customers to think of their sites as home pages. TOUCHDOWN Eventually, opera-tors will use their Web portals as critical touch points, playing much the same role that interactive program guides have played. But for now Comcast is the sole MSO offering a significant amount of live sports online. It offered 300 National Hockey League contests this season. The MSO controlled rights to the games through its OLN network. The offering was free, but hockey fans had to register at Comcast.net and watch the games through the MSO’s portal. "We got a lot of displaced hockey fans—Flyers fans living in California and the like," Comcast’s Jeanne Russo says. Comcast declined to provide hard data on usage. For Comcast, however, speed, not content, remains the main selling point for high-speed service. Atlantic Broadband offers sports video content—highlights and MLB.com’s live audio package of out-of-market games—through Synacor, a content aggregator and Web hosting company that also serves Charter and Adelphia. To get the sports, customers must sign up for Atlantic Broadband’s VIP Pass for $8.95 a month. "It’s a small number [of VIP Pass subs] so far—it’s a few thousand. We’re just learning how to sell the product as well," CEO David Keefe says. "We’re trampling on new snow here," adds Lee Berke, president of LHB Sports, which advises teams and leagues on TV issues. "We’ll all try things and experiment. Some will work and some won’t. We’ll make adjustments. From my perspective it must have been very much like when TV itself started." OPERATOR-PROGRAMMER SPLITS Moreover, there are competing agendas. MSOs seem focused primarily on selling the speed, not the content, of Internet service. Yet programmers are putting live sports online as fast as they can, profits be damned. "We need to extend the brand. We’re just aggregating content," says David Levy, president, Turner Entertainment sales and marketing, and Turner Sports. For now profit is a secondary goal, he says. Bringing more people to the new medium is the top priority. "We don’t care [what devices] they go to," Levy said at the SBJ Forum. "We just want to make sure people have touch points in all the ways they consume our products." ESPN360 FREE TO FiOS The upshot: Some of the issues that have divided operators and programmers in the core video business have cropped up on the Internet side as well. For example, ESPN’s broadband video service ESPN360 offers a rich array of content—some of it live and exclusive to cable and telco providers. But Bristol has signed up few operators for the offering because of its double-digit license fees. Unfortunately for cable opera-tors, FiOS is an ESPN affiliate, meaning its customers will receive ESPN360 at no additional cost. But so far ESPN has only 8 million subs for the service because most MSOs have resisted paying a license fee whose rate card is north of 10 cents, according to operator sources. MSOs feel they are already subsidizing ESPN’s online content through its hefty video license fee. "The deal is expensive and it doesn’t make sense," says an MSO executive who also resists the network’s demand for guarantees—that is, to be paid based on a minimum number of customers even if the MSO hasn’t reached that level. The executive would prefer to adopt a model based on revenue sharing. Noting its array of live sports online and plans to simulcast this summer’s World Cup soccer matches, as well as showing NCAA basketball and football games exclusively online, ESPN VP and GM Tanya VanCourt argues, "We think this is a business model that makes sense." But in a nod to the anarchic early days of video streaming she also notes, "It’s too early to say what are going to be the lasting [economic] models." A SUCCESSFUL MODEL MLB.com is the model for a successful subscription package, with 800,000 subscribers who take either of three packages: MLB.tv, a premium video service that offers condensed replays of recent games for $99.95 and a subscription audio service for $14.95 (part of Synacor’s offering to MSOs). MLB.tv president Bob Bowman claims most of the content at its site is free, including game highlights. Others believe the free-pay hybrid model is the wave of the future. NBA Entertainment overhauled its broadband offerings this season by rebranding its broadband content as NBA TV and changing from a subscription to an ad-supported model. Like MLB.com, live games are still restricted, but are free to those who subscribe to the NBA League Pass VOD plan. "The video broadband ad market we thought was in a position to support the free model—that bore out," says Brenda Spoonmore, SVP for Interactive Services at NBA Entertainment. "Our goal was to make as much of the NBA content available to fans." Stream Weavers: Sports Video on the Web For cable operators eager to use sports content to enhance their Web presence, these are some of the major players. ESPN360
Launched: 2005 (ESPN Broadband in 2001)
Ownership: The Walt Disney Co.
Management: John Papanek, SVP/editorial director, ESPN New Media; Aaron LaBerge, VP, technology; Tanya VanCourt, VP/GM, broadband and interactive television; Tim Dolman, VP, strategy and new business, ESPN New Media.
Unique page views: 16 million
Key content: Will simulcast 52 World Cup games from ESPN and ESPN2; NCAA basketball and football games ESPN has rights to and is already producing, but not aired on TV; ESPN movies; features on NFL draft; Driving Carmelo, original series. NBA.COM
Launched: 1995
Ownership: The National Basketball Association
Management: Adam Silver, president/COO, NBA Entertainment; Gregg Winik, EVP, programming/executive producer, NBA Entertainment; Steve Grimes, senior director, NBA Entertainment; Brenda Spoonmore, SVP, interactive services, NBA Entertainment.
Unique page views: 3.5 billion during 2004-2005 season
Key content: Live streaming of NBA games for those who subscribe to NBA League Pass; NBA TVBroadband with game highlights; mobile and podcast downloads. MLB.TV
Launched: 2003
Ownership: Major League Baseball through MLB.com
Management: Bob Bowman, president/CEO, Major League Baseball Advanced Media
Unique page views: N/A; reported net revenue of $68 million from 800,000 subscribers in 2005.
Key content: Live streaming of nearly 3,000 out-of-market games a year on monthly or annual subscription basis; a la carte of "classic" MLB contests and condensed versions of recent games at MLB.com. CSTV.COM
Launched: 2003
Ownership: CBS Corp.
Management: Brian Bedol, CEO; Chris Harner, SVP/GM, CSTV Interactive.
Unique page views: 6.5 million
Key content: Live streaming of more than 10,000 events from 250 schools covering 35 men’s and women’s sports in a subscription package. OLNTV.COM
Launched: 2000
Ownership: Comcast Corp.
Management: Gavin Harvey, president; Brad Friedrich, VP, business development.
Unique page views: 350,000
Key content: Live exclusive streaming of the Giro d’Italia thoughout May on subscription basis; TV provider of NHL links to free Comcast.net live streaming of 300 games a season for Comcast high-speed customers; free weekly highlights of NHL, Professional Bull Riders, cycling coverage. SPEEDTV.COM
Launched: 1996 (as Speedvision; became Speedtv.com in 2002)
Ownership: Fox Cable Networks
Management: Kevin Annison, VP, business development and operations
Unique page views: More than 1 million
Key content: No live streaming; "two-screen" interactive TV-type coverage of Rolex Sports Car and AMX Superbike series with Speed On-Board Pass; Speedondemand.com replays of select SpeedTV races from superbike, supercross, SCCA Speed GT World Challenge; IROC Series. TURNER SPORTS INTERACTIVE
Produces NASCAR.com; PGA.com; TNT Overtime
Launched: Aquired rights to NASCAR.com in 2000, PGA.com in 2003; TNT Overtime launched in 2005.
Ownership: Time Warner
Management: David Levy, president
Unique page views: N/A
Key content: live streaming of British Open; Pit Command, ITV-type application to accompany televised NASCAR; TNT Overtime.