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 Sport and Technology's editor Rachael Church spoke to representatives from some of the companies in the US that are having an impact on the digital sports marketplace and asked them their opinions on monetising sports content in the online and wired up world.
Nearly 40% of US web users now use broadband rather than dial-up connections, a vehicle that provides them with access to a wealth of rich media content. Unsurprisingly, the major sports leagues have capitalised on this growth in high speed access and many have launched subscription-based products that offer video coverage of games and tournaments. "All the big leagues are doing a good job," says Jeffrey Pollack, managing director of NASCAR Digital Entertainment. "But then they have a tremendous amount at stake and constantly need to deal with new ways to express their sports. The growth in digital media has been extremely important to NASCAR as it has helped create new points of access for fans and given us new exposure and value."
NASCAR is often heralded as a pioneer in the digital space, as is Major League Baseball. "MLB has done a terrific job harnessing new technology," says Chris Bevilacqua, co-founder and EVP of cable network College Sports Television. "The upside is that they have created new revenue streams out of pre-existing programming and content." Sab Singh, partner and co-founder of strategy and marketing consulting firm Avila Partners, agrees: "What MLB have done is the best from an US league's standpoint. They took the biggest risk in terms of making as much content available to fans as possible and created a package that was reasonably cheap. In return, they are supposedly making a fair amount of money out of their subscription services." And rightly so he believes. "League's should definitely set the ball in motion when it comes to digital services. It's their content after all."
At the time of writing, MLB was making headlines following the demise of its $6.3m a year agreement with RealNetworks to market and distribute its digital content - a contract that RealNetworks claims cost it more money than it made from the deal. MLB is now thought to be seeking even larger up-front payments from distributors (such as Microsoft) in return for access to its live and archived baseball games. In reply, RealNetworks has filed a lawsuit against the MLB compelling it to continue using its technology under the terms of its contract. RealNetworks has also announced it will no longer be continuing its previous strategy of front-ending deals with rights holders such as MLB and will instead be concentrating on white-label deals where it provides the back-end infrastructure.
RealNetworks has a two-fold approach with its partners - "to enrich and support their content," says Steve Grimes, general manager of sport for RealNetworks. The company has utilised a variety of models in terms of supplying technology to its partners. "Primarily we use our own platform. With the NFL we are hosting and serving and are a one-stop-shop for them including providing an e-commerce solution. In other instances such as with TWI Interactive for the Rugby World Cup 2003, we used their platform. NASCAR's interactive partner is Turner and they have an affiliation with AOL - so we do the transactions and we host it out of AOL. Every way you turn there's a different way to slice and dice it." Grimes says that the company realised quickly that it wouldn't be successful if it limited everybody to doing things "the way we were doing it". He explains: "While we can offer a 'soup to nuts' approach to people, we also have flexibility to say it makes sense for some rights owners to host themselves and use our platform for the rest." Simultaneous consumption and going wireless A recurring theme in the industry is that platform flexibility is important for distributors and content producers alike. In the US, 50% of people are thought to simultaneously watch television and surf the web, a trend that is being monetised by Disney's ABC Enhanced TV. "We have created a PC/TV concept based on the idea that people watch television at the same time as they are on their computers," says Rick Mandler, VP and GM of the company. Users of ABC's Enhanced TV service can go online and interact with a broadcast such as Monday Night Football through play-along games, polls, comments and other opportunities. The company has also introduced a wireless service allowing fans to vote and enter polls.
"Wireless is certainly creating a buzz in the marketplace here," says Singh from Avila Partners. "The success of ringtones - which is now a multibillion dollar industry - has surprised people and they are keen to explore other opportunities."
Manish Jha, SVP and GM of emerging media and data services at ESPN agrees with Singh: "Right now we are seeing wireless technologies coming into their own. We are seeing 1m page views on the WAP site we offer which is impressive."
Whilst NASCAR's Pollack believes that: "TV is king and will continue to be king", he is certain that "after that, wireless will see the greatest growth." It is no coincidence that wireless communications company Nextel is NASCAR's new sponsor and that it will be using its partnership to showcase some of its own technology. "Nextel will be able to advertise and promote our sport in ways the previous [tobacco] sponsor could not," says Pollack. "They will apply their technical expertise at the track and to wireless devices which will help bring our sport to new fans."
It's good news all around according to ABC's Mandler. "Wireless services offer extra value for sponsors who can sponsor the broadcast, PC content and cellphone application channels at the same time. "We can help advertisers establish one to one relationships with their audiences."
Rather than funding its wireless services through the sponsorship route, ESPN in particular is trying to monetise digital sports content through subscription services. "Most of our activity at the moment is around licensing content," explains Jha. "We have created a variety of downloadable one-offs which we license to network operators. One time fees aren't attractive to us for these services so we are pushing towards subscription-based models and creating bundles of content. These could be bundles of ESPN content or ESPN content bundled in with content from other sources. We are very keen to encourage the creation of packages that help grow data consumption and usage."
But what should be in such packages or services so that they will appeal to fans? "Content that gives them more choice, control and convenience and is meaningful," believes NASCAR's Pollack. "Content that puts them into the stands no matter where they are located and helps to tell the story of the event. Fans have an increasing appetite and willingness to consume more and more data."
Jha agrees echoes Pollack's latter sentiment: "Sports fans are insatiable and have a hunger for live drama and data. If we don't stay on top of servicing these fans then they will go elsewhere."
RealNetworks' Grimes says that his company will continue to explore new markets such as ex-pats from the US abroad, or ex-pats from other countries living in the US. "We like to aim our services at those core groups of passionate fans," he explains.
Billing issues "Creating content for a broadband platform is a win-win situation," says Jha. "But what is tricky is how to monetise it. People are used to getting content free on the web and so it is a tough proposition getting people to pay a premium to their ISP for content services. With wireless though there's no paradigm. Consumers have a certain expectation that they are going to have to pay for something if they want to receive something of value to them."
Singh believes that the concept of micropayments and more piecemeal billing are gathering steam online in the US. "On the wireless side, customers are more comfortable paying in one bill which is good news for a league if fans are willing to pay upfront," he continues. Mandler from ABC Enhanced TV adds: "In the US the cellphone billing model is an all that you can eat buffet for a monthly fee. Meanwhile pay-per-view is not a concept that has tended to fly over here." The market for paying-per-clip, whether audio or video, may therefore not be a lucrative proposition in a country that has thus far being a laggard in the wireless side of developments.
Crystal ball gazingLooking ahead, ESPN's Jha believes that creating partnerships with strong brands will be key to wireless companies looking to monetise sport.
Meanwhile, ABC's Mandler expects to see more convergence or tighter joint ventures between cable companies and phone companies. "Another player that might enter the mix is the electricity provider which has a ton of unused frequency and lots of big, thick wires," he adds. "If the issue of how to get data to jump over the transformers could be resolved, that's a lot of potential bandwidth out there."
The final word goes to Bevilacqua from College Sports Television: "It's still too early to know what's going to make money. There will however be lots more experimenting with content propositions and business models but what is clear is that everyone has a role to play - the broadcasters, sports themselves as well as sponsors and advertisers. It's all about creating 'anywhere programming'."
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