Leagues of Their Own

23/2008 Issue: Page 44

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Since the days of the gladiators, sports fans have had an irrational bond with their favorite athletes and teams. Feats of athleticism evoke eruptions of euphoria or a tidal wave of tears as a game's final play unfolds. These strong emotions create an indelible brand loyalty that remains long after the season ends.

Marketers are learning to exploit these relationships in new ways by expanding the scintillating sights and sounds of sports beyond television highlights to broad online distribution. By enabling fans to personalize their interactions with multimedia content and by bringing the game to their favorite arena - be it a social website or a personalized Web page - sports leagues are creating new online marketing opportunities that are increasing revenue. Typically, online merchandising of memorabilia and apparel is not handled by sports leagues' online properties and is therefore not addressed in this article.

Sports leagues and their broadcast partners have historically been conservative in granting permission to use video and audio from games online. This idea was based on the belief that making highlights or live broadcasts available dilutes the value of live games and would reduce advertising revenue and attendance. For example, in the late 1990s, local radio affiliates streamed broadcasts of baseball games online for free. But within two years, Major League Baseball ended the process, allowing audio webcasts to be streamed only through the MLB.com website through paid subscription services.

Baseball continues its policy of charging to listen to games online today. Dinn Mann executive vice president of content for major league baseball, says the league listened to fans and for the 2008 season reduced the price of a season audio subscription by $5 to the former price of $14.95. "We tipped our cap to fans who complained," he says.

Requiring customers to pay for live audio provides an alternative revenue stream, according to Mann. "Having a subscriber base and not relying entirely on advertising is of strategic importance," says Mann. Subscriptions, which require submitting an email and physical address, provide an avenue for MLB to pursue online and offline direct marketing.

Major League Baseball also charges for video streaming of live games and restricts viewing to any games that are "out of market" from where the customer lives. This protects the lucrative contracts with cable companies and local TV stations that are the bread and butter of their revenue. Baseball game viewing – despite the lengthy 162 game schedule – remains largely a pay-per-view world, Mann says, because "some things are still worth paying for."

This year is the first time that baseball fans can watch archived broadcasts of full games for free, something that MLB is "experimenting with," according to Mann. The archived games do not feature advertising, but MLB is "exploring the right relationship," Mann says.

Growing the Audience

Sports leagues are now taking a page from online marketers' playbooks by encouraging consumers to personalize their experience in interacting with content. Instead of going the affiliate marketing route, the digital sports media companies are focused on partnering with social networking sites and other media companies that have established audiences of fans. The strategy is to encourage consumers to link to and save content on the sites where they visit on a daily basis, enabling fans to mash-up multimedia content to create something new from existing content. Marketers who join the roster of their online partners will gain a share of the spoils in growing their audience and reaching a new generation of fans.

At the start of the 2008 season, MLB.com announced a partnership allowing Yahoo.com to stream games and highlights. Yahoo will also sell ads against both pay and free content, although thus far the video has been distributed largely without ads. Through this agreement, MLB.com gets access to Yahoo's large audience and the two companies share revenue from any transactions facilitated through Yahoo.

Professional and collegiate sports leagues have learned that embracing younger audiences on their home turf is the quickest path to rapidly growing an audience. The NCAA, in partnership with CBSSports.com, opened the video streams of its college basketball championship tournament to a wide variety of publishing partners with great success. This enables fans to see the content where they want it delivered.

Just a few years ago, video streams of March Madness games were protected from the majority of the population as if they were enriched uranium. The subscription service generated just $250,000 in revenue annually. But over time online distribution was proven not to be hazardous to the health of television advertising revenue. Subscription fees were replaced with free streams, and then the NCAA/CBSsports.com embraced social networking (See sidebar).

Free live game webcasts have paid huge returns, according to Jason Kint, senior vice president and general manager of CBSSports. com, which manages the online video distribution of the NCAA tourney. CBSSports created an embeddable media player that contained multiple advertising locations, in-stream ads, and fixed positions sold to sponsors.

Online "consumption is additive and not cannibalistic" of the TV audience of live college basketball, Kint says. The streams were primarily delivered to people who didn't have access to TV, including office workers. The media player's "Boss Button," which instantly hides daytime viewing at the office, was clicked more than 2.5 million times, according to Kint.

People will continue to watch games on TV if they can, he says, as the final championship game was the most watched game on TV and had the smallest proportional share of online viewers. Industry watchers speculate this type of arrangement may lead to new relationships between those who promote other events, such as concerts or entertainment awards shows and affiliates who can deliver a targeted audience.

Content owners looking to maximize their audience for ad-supported content should also spread it far and wide, Kint says. "Don't expect users to come to a URL - bring the content to them."

Like its collegiate counterpart, pro basketball also recognizes that working with existing online communities enhances rather than endangers its own digital efforts. For the past two years the NBA has "embraced the idea of distributing content beyond NBA.com" and is partnering with video sharing and social networking sites, according to NBA's Vice President of Interactive Services, Steve Grimes.

Grimes says working with video sites such as YouTube, Joost and Hulu and social networking sites such as Facebook, Beebo and MySpace has increased fan engagement. The NBA makes highlight videos available to publishers such as Hulu and Joost to strengthen its brand awareness among younger audiences who are consuming a greater majority of their video online.

The NBA is encouraging fans to create their own highlight reels by mashing up content available only on NBA. com and embedding it on their social networking sites. "Fans that love the NBA will come to NBA.com, but those who like it will visit other sites," Grimes says. Widgets that enable sharing of content are delivering interactivity to sports media. NBA's widget page (www. nba.com/widgets/) contains embeddable code for showing highlights, up-to-date-scores and photos. The NBA has sponsorship deals with companies including Lenovo and TMobile for some of its widgets to gain revenue from content that sits on other sites, Grimes says. The league has also launched a fan application on Beebo to reach its audience.

"(Sports) sites are starting to realize the power of how content can be aggregated across the Web (using widgets)," says Tad Greenleaf, the media team lead, for Omniture Consulting. Continued on Page 2...

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