Thursday, August 09, 2007

Start it up – an Internet streaming explosion

When the year began it appeared two significant sports industry trends that showed strong growth potential over the last few years, continue to move forward as we head into the “dog days of summer”. The secondary ticket marketplace (examined in an Insider report last week) and the streaming of live sports events on the Internet continue their impressive gains through the first seven months of 2007 with no signs that growth won’t continue for the foreseeable future. In an industry searching for more, diverse and new revenue generating opportunities two announcements in the last 24-hours linking the streaming of sports on the Internet indicates those ahead of the curb in using the latest technologies are poised to capitalize on the tremendous potential for growth.

ESPN360.com Broadband Service the center of ESPN’s video streaming efforts Wednesday announced a series of dramatic content initiatives that will not only add profile to the service but provide an opportunity to increase revenues.

ESPN360.com will adopt a new programming strategy this fall, becoming a live sports-driven programming service. Under the new programming strategy, the ESPN Digital Media and ESPN Programming units will collaborate to present more than 2000 live events on ESPN360.com in the next 12 months, dramatically growing the service’s programming and delivering to fans the most comprehensive live, multi-sport broadband service anywhere. In 2006, ESPN360.com delivered more than 200 live online sports events, and through July 2007, had featured more than 500 live events.

A new user interface for ESPN360.com is in development and scheduled to launch in fall 2007. To implement the day-to-day operation of ESPN360.com’s new programming strategy, Jeff Cravens has been named the vice president & general manager of ESPN360.com.
With ESPN360.com’s shift to live programming, ESPN.com, the leading sports destination online, will become the home for ESPN’s extensive library of daily on-demand online video (http://sports.espn.go.com/broadband/video).

“With the new programming approach for ESPN360.com we are creating the leading online destination for live sports,” said John Kosner, senior vice president and general manager, digital media. “This is a tremendously exciting development for sports fans. If the game is not on one of ESPN’s TV networks, fans will check ESPN360.com – and in certain cases go there first.”

Added David Berson, ESPN executive vice president, program planning and strategy, “The evolution of this service reflects, and further develops, our overall programming strategy across all media. We are focused on giving fans the most extensive live and on-demand sports video content. The variety of ESPN360.com programming, in some regard, is a throwback to the early days of ESPN.”

As the first full-time, multi-sport, live sports-driven broadband channel, ESPN360.com will feature a broad array of live sports events and programming every day, delivering multiple live events at a time, spanning a global lineup of sports programming including (but not limited to):

Hundreds of college football and basketball games (including many out-of-market games);
NBA games;
NASCAR Nextel and Busch Series races;
College baseball, softball, hockey and lacrosse;
International rugby;
Tennis (including the Australian Open, French Open and Wimbledon);
Arena Football League games;
U.S. and International soccer;
Open wheel racing; international baseball;
Sports-related press conferences.

The new programming approach marks the latest evolution in ESPN’s industry-leading broadband and online video strategy. ESPN360.com currently serves tens of thousands of streams for many of its live online events. Recent programming successes include more than 500,000 streams served for UEFA Champions League soccer matches; nearly 320,000 for the 2007 UEFA Under-21 soccer tournament; more than 250,000 for both the FIFA Under-20 World Cup and the 2007 Wimbledon tennis tournament; nearly 250,000 for both college football and college basketball (not including the March ESPN360.com Championships Week All-Access trial period); nearly 85,000 for NASCAR Busch series races; and more than three million for the 2006 FIFA World Cup tournament (the service’s most-viewed event).

ESPN360.com is free to fans and is currently available in more than 15 million homes nationwide that receive their high-speed Internet connection from an affiliated service provider. The service has more than doubled its distribution since August 2006 and will expand again this fall when it will become available to all RCN high speed Internet service subscribers.

“As ESPN360.com becomes the live sports hub, the value it delivers to both sports fans and to affiliated Internet service providers is clear,” said Matt Murphy, senior vice president, digital product development. “We expect to continue to build upon the growth and success of ESPN360.com in the coming year.”

And how does ESPN generate revenue for what is billed as a free service? In order to have access to ESPN360.com one needs to agree to use a high speed Internet provider affiliated with ESPN. ESPN continues to aggressively pursue sports properties. Every agreement ESPN has signed in the last year include a clause that allows ESPN to use that content on all of their various programming platforms. ESPN may be paying a little more for rights (their recent long-term NBA agreement as an example) but they also provide programming for ESPN360.com which in turn generates opportunities for ESPN (and the mothership better known as The Disney Corporation).

Late yesterday afternoon ESPN360.com announced that, will deliver more than 150 games, including original games and simulcasts of ESPN, ESPN2, ESPN Classic and regionally produced games, throughout the season (games, dates and times will be determined on a six or 12-day basis). In addition, ESPN360.com will carry every Army home football game.

Earlier Wednesday a year to the day when the Beijing Games are scheduled to begin, NBC announced one of their more ambitious Internet streaming projects to date. According to the release Olympic fans will have access to approximately 2,200 total hours of live streaming Olympic broadband video coverage on NBCOlympics.com.

The NBA announced multi-year extensions with ABC/ESPN and Turner in late June. The agreements reportedly will pay the NBA a total of $930 million annually, up from the $766 million it currently receives. In the current deal, which expires after the upcoming 2007-08 season, ESPN/ABC pays $400 million annually, while Turner pays $366 million. The new agreement represents an increase of more than 20 percent – dramatic given the state of the television industry.

Those increases aren’t a reflection of the demand from network (over-the-air and cable) television to put games on the small screen, but clauses that give both Turner and ESPN the right to put games their televising on TNT and ESPN and ESPN2 respectively on the Internet.

“This deal is a major step forward in our burgeoning relationship with the NBA. We've worked together with the NBA and their staff. Really, our interests are aligned if you think about it. We are interested in serving fans; great NBA product globally as is the NBA and our growing international businesses led by Russell Wolff are going to be primary beneficiaries of this deal, as well as this deal embracing our digital future which we'll go into together with the NBA.

“It's really a very extensive package that we have negotiated here. It's really setting a -- it's really a prototype deal for sports media deals going forward, and I'm proud that we were able to achieve that in partnership with the NBA.

“It fuels over 17 ESPN platforms which is detailed in our press release and really understates it because it counts ESPN International as one, and anyone who knows our business know that is our growing business throughout the world is certainly not one entity; 17 is a bit of an understatement.

“I'm of course pleased with the eight-year commitment. We are in this for the long term with the NBA. Sports is cyclical; they go up and down; you get short series; you get long series, this and that. But it's an incredibly consistent property for us, and to make an eight-year commitment between the two of these is significant and speaks to the comfort we both have with each other. It's an extraordinarily strong performer and I know it's going to enhance ABC, ESPN and all of the ESPN International businesses, as well.” ESPN President George Bodenheimer offered.

One issue both ESPN and Turner made crystal clear – the melding together of digital and broadcast rights was a key to the agreements and one would assume the dramatic increase in fees of more than 20 percent.

“I would, one compliment the league on their flexibility of thinking on this. In our last deal we have launched seven now platforms, and every case the NBA has been willing to work with us to get content on those platforms. What we have acknowledged in this deal is that we will probably launch five or ten new platforms during the course of this deal and we are going to work together on those platforms. That's acknowledged in the deal going forward.” ESPN’s John Skipper said.

“They are much more complex in the sense that there is a lot of things to discuss as far as rights, timing, when to get on, when to get off, VOD, broadband, wireless. The complexity of these deals when it used to be talking about the linear only has expanded the conversations dramatically and obviously kept our lawyers working to the hours that they have to work.

“But I will tell you, again, complimenting David, he realized it's an important part of all new sports rights. So while timing would have been longer and more integrated, it was necessary to get the deals done.” Turner’s Levy offered.

Given that so much focus was put on digital rights, how does Commissioner Stern and the NBA’s media partners see as far as advertising dollars?

“I think that there is a currently monetized way with respect to the cable and over-the-air. There's a little monetized viewing and it's pretty well established from the up-front to the spot, etc.

“But with respect to these new areas, you know, yes there's online video, there's banner advertising, there are pop-ups, there are product integration. We are just beginning this long journey into the monetization into the digital space so that we are -- so that we are not involved other than being supportive and working together, we don't collect the checks that our partners sell, get, with respect to advertising and other engagements, and that's going to be the same way with respect to the digital space as well.

“We just want them to make a lot of money so that these deals become every green.” said Stern.

“I would say that the advertisers are demanding it in the sense that multi-platform marketing campaigns are something that the advertiser is looking for. They want to be attached and involved with our talent from the linear side to the digital side to the wireless side so they can extend their messaging with our brand.

“And so it's all part of the process. Again, I said sort of laughingly, if you will, or jokingly that it's only '07. Think about this and how long this deal is and what happens in '10, '11, '12, '13 of 2000 and think about what this is all going to mean for our advertisers as well as media partner.” Turner’s Levy said.

“David is exactly right. I mentioned before, we had 32 million video starts on ESPN.com. They were sold out relative to advertising and our VPN on video starts, which is quite consistent with broadcast, so this is a growing business for us.” ESPN’s Skipper said.

That said – and this could be a key to the long-term success of the agreement both media partners understand they may not generate revenue from all aspects of the $7.4 billion agreement.

Monday, Turner Broadcasting announced the launch of a new broadband channel on MLB.com. TBS, home of Major League Baseball (MLB) coverage for the past 30 seasons, announced today the upcoming launch of an interactive broadband channel designed to give fans extended online coverage of the network's MLB post-season coverage. The channel, TBS Hot Corner, will offer unique live and on-demand streaming, and will be launched on MLB.com, the official website of Major League Baseball, in September in anticipation of TBS' exclusive coverage of the Division Series and the National League Championship Series (NLCS). The TBS Hot Corner broadband channel joins other Turner Sports new media properties, including NASCAR.com, PGATour.com, PGA.com and TNT OverTime on NBA.com.

"TBS Hot Corner is an important extension of our postseason MLB coverage as it gives us a comprehensive platform to interact with fans and deliver unique in-game access like never before," said David Levy, president of Turner Sports. "Through our linear coverage of the Division Series and the National League Championship Series on TBS, and complementary coverage on MLB.com, we're proud to give fans a multiplatform experience to enjoy all of the not-to-be-missed moments that the MLB postseason has to offer."

In early September, TBS will launch the TBS Hot Corner on-demand player that will feature 90-second daily (Monday – Friday) news updates and player interviews from around the league. Beginning Oct. 3rd in conjunction with the start of TBS' postseason television coverage, TBS Hot Corner will also prominently feature a live, hosted pre-game webcast that will allow fans to interact and chat live with the host, as well as participate in polls and an interactive trivia game.

In addition to the on-demand daily news reports and live webcasts, the new broadband channel will also feature multiple streams of exclusive coverage from MLB match-ups carried on TBS, including a unique "Dugout Cam" that will give fans a birds-eye view inside both team dugouts during each game. Additional on-field cameras will be announced upon the Oct. 3rd launch.

TBS television announcers, who include baseball Hall of Famers Cal Ripken Jr. (studio analyst) and Tony Gwynn (game analyst), two-time Emmy® award-winning host Ernie Johnson, MLB veteran Joe Simpson (game analyst) and Chip Caray (play-by-play), will contribute to regular features to the channel. The studio show featuring Ripken and Johnson will be available on-demand on TBS Hot Corner following the live telecasts. The network begins its 2007 MLB postseason coverage on Wed., Oct. 3rd with the first games of the Division Series.

And when the last golf major of the year gets underway today at the Southern Hills Golf Club in Tulsa golf fans (many who will be at their desks working Thursday and Friday when the first two rounds are played, but with access to hi-speed broadband Internet) will be able to follow the final major of the year at PGA.com.

If you're a golf fan, then there isn't much that's cooler than PGA Championship Live, an exclusive online video experience from Turner Sports New Media and PGA.com that is sure to enhance your enjoyment of the 89th PGA Championship.

For the uninitiated, PGA Championship Live is a video service accessible through PGA.com that allows you to be in control of how you watch the action from Southern Hills by giving you four different video streams -- or pipes -- from which to choose.

On Pipe 1, you'll be able to watch TNT's live coverage from 1 p.m.-5 p.m. ET even if you're nowhere near a television. On Pipe 2, you'll find "playercam," which is exclusive coverage of select groups that you'll only find online. On Pipe 3, you'll get an inside look at the PGA Championship, including flyovers, classic highlights and player interviews.

Finally, on Pipe 4, you can help your own game with golf tips from the PGA Learning Center, including special in-tournament tips with PGA Director of Instruction Rick Martino outlining how players pulled off the shots that make the difference in the tournament.

Turner Sports New Media executive interactive producer Pete Scott says it takes considerable teamwork to pull off such an undertaking.

"We use the television infrastructure that's already there, the cameras that are already on the course (for Pipe 2)." Scott said. "We use that for about 70 percent of our coverage. We basically say, 'Can we get all the holes coming into our truck,' so that it allows us to bounce around the course using cameras that are already being used by CBS cameramen.

"We can't talk to them, but at least we have a feed and a picture of them and most of them know that while we're on camera, don't do anything crazy, so we basically use their pictures to help us tell the story.

"We're basically renting their facilities and personnel to basically produce our feed," he added.

There are, however, some original pictures being used as well, as Scott explained.

"We have two unilateral cameras and they're RF cameras, which means they're not hooked up to a cable, they're basically wireless," Scott said. "They can travel anywhere we want on the course with the blessing of the PGA of America."

There will also be some bonus TNT coverage available exclusively online on Pipe 1.

"(TNT) is basically going to come up an hour earlier, with the TNT branding, for Thursday and Friday to give TNT bonus coverage just for online," Scott said. "Then, at 2 o'clock, when the rest of the world is tuning to TNT, people will get the same feed on Pipe 1."

Clearly if you’re a sports league you either have a complete understanding of the potential the Internet represents and you embrace those opportunities or you unfortunately be left behind, losing money each and everyday you’re not a big part of leveraging your content on the Internet.

For SportsBusinessNews this is Howard Bloom

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