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Monday, July 07, 2014

Maury Brown: The Biggest Media Company You’ve Never Heard Of

YR is not amused.

But what if I told you there was a company nestled in New York’s Chelsea Market near the Apple Store and across the street from Google’s offices that will see revenues of $800 million in 2014; with targeted revenues of $1 billion by 2016. That this company engaged in streaming live video of 18,000 hours in 2009 and is expected to hit 400,000 this year. That not only are they providing that, they’re a key company for online ticket sales, but isn’t StubHub. That key brands in corporate America hire them for content infrastructure, and not content with that, are a data analytics firm that rivals Bloomberg . The company has mobile technology that makes them one of Apple’s key partners and has been used at keynotes for their product launches.

This company is one that you know, right? It’s got to be someone whose logo is plastered across tech publications and a place in the forefront of the business section.

Think again.

The reason you may never have heard of this company is because when you think of it, you think baseball. Yes, that game that your dad or grandfather likes, the sport whose commissioner doesn’t even use a computer at the office, is the place where the biggest media company you’ve never heard of was started.

 

JE (Jason) Posted: July 07, 2014 at 09:54 AM | 17 comment(s) Login to Bookmark
  Tags: bud selig, business, mlbam

Reader Comments and Retorts

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   1. DL from MN Posted: July 07, 2014 at 02:14 PM (#4745324)
How long before it makes sense to sell in-market games through streaming rather than cable? 2020?
   2. Tulo's Fishy Mullet (mrams) Posted: July 07, 2014 at 02:56 PM (#4745357)
How long before it makes sense to sell in-market games through streaming rather than cable? 2020?


guessing, with no real insight on this, but I like to think that Team X at Chicago (NL) will be shown via streaming in 'in market' Des Moines, IA before we get to the point where Team X at Chicago (NL) is streaming in market in Chicago on mobile devices. So yeah, 2020 sounds like a good guess.
   3. The Chronicles of Reddick Posted: July 07, 2014 at 02:56 PM (#4745359)
The brilliance of Bud Selig and the owners
are words I thought I would never see in a sentence.
   4. DL from MN Posted: July 07, 2014 at 04:39 PM (#4745501)
Add up the MLB revenue that is currently being paid out by cable for local rights and assign that in 2020 to MLBAM and you have one helluva valuable company.
   5. villageidiom Posted: July 07, 2014 at 05:56 PM (#4745582)
How long before it makes sense to sell in-market games through streaming rather than cable? 2020?
2020 sounds about right.

If you drop the "rather than cable" part, then why not 2015? I don't see RSNs and streaming to be an either/or proposition. What's to stop any RSN from working with MLBAM to give them a streaming presence (like ESPN did with the WatchESPN app)?
   6. Bhaakon Posted: July 07, 2014 at 07:15 PM (#4745628)
What's to stop any RSN from working with MLBAM to give them a streaming presence (like ESPN did with the WatchESPN app)?


Exclusivity. Networks are just as worried about the exclusivity of their live sports broadcasts as their ratings and advertisement revenue. Their goal isn't just to make money on the broadcast, it's to hold sports hostage so that people are forced to buy cable television if they want to watch it live. Any expansion in streaming threatens that.
   7. john_halfz Posted: July 07, 2014 at 10:34 PM (#4745737)
Any expansion in streaming threatens that.


Too late. I'm streaming the in-market Mets right now. And I'm no computer wizard.
   8. cardsfanboy Posted: July 07, 2014 at 10:47 PM (#4745746)
Exclusivity. Networks are just as worried about the exclusivity of their live sports broadcasts as their ratings and advertisement revenue. Their goal isn't just to make money on the broadcast, it's to hold sports hostage so that people are forced to buy cable television if they want to watch it live. Any expansion in streaming threatens that.


Any expansion into blackout areas is going to be a plus for the broadcast networks(arguably, I would imagine any expansion would limit the users ability to choose broadcast only to the in area broadcaster...and I think I would negotiate that they air their commercials/full broadcast) The only reason to continue blackout rules is strictly because of the providers.

Not sure how they can compensate them to make up for that lost revenue. I'm fairly certain that a large percentage (by large I mean 8-12% range) of local subscribers to Charter cable are keeping their cable simply because of Fox Sports Midwest, without it, I imagine an awful lot of people drop down to the cheapest plan available(since ota really sucks...I can't even get PBS with the digital broadcast anymore) to keep the reliability of the broadcast(and the high speed internet bundle) but no reason for the middle tier and higher tiered packages if you have a cheaper alternative for your baseball broadcast($150 a year is cheaper than 6 months of lowest tier to mid tier cable)
   9. villageidiom Posted: July 08, 2014 at 08:33 AM (#4745881)
Exclusivity. Networks are just as worried about the exclusivity of their live sports broadcasts as their ratings and advertisement revenue. Their goal isn't just to make money on the broadcast, it's to hold sports hostage so that people are forced to buy cable television if they want to watch it live. Any expansion in streaming threatens that.
It really doesn't, because no RSN cares that you have to buy cable television; they care that you have to buy the RSN feed.

Just to take the Red Sox and their RSN (NESN) as an example... The people at NESN don't give a damn if you are forced to buy cable or satellite to get their network. They don't care that you have to get a package that includes the Food Network and HSN and whatever just to be able to get NESN. They care that you have access to NESN, that they're getting appropriately compensated for it, and that they get to advertise to you as well.

As part of that, yes, they want exclusivity of the content they provide. They don't get the fees, and they don't get the ad revenue, if you're able to avoid the NESN feed and still get the games live. But streaming doesn't necessarily mean they would have to give that up.

NESN could set up an online feed of NESN, available to NESN subscribers, through MLBAM.

One step further, NESN could work with MLBAM to create an "MLB.tv plus one" package that gets you access to all out-of-market games, plus the full NESN feed, for an additional fee that goes to NESN.

One step further, NESN could set up an "online only" subscriber option, again partnering with MLBAM to get it done.

None of these are the in-market puzzle piece missing from MLB.tv that most people are thinking of when we talk about streaming of in-market games. But they are all streaming options that maintain exclusivity for the RSN. All of them could exist alongside traditional cable/satellite offerings of the RSN. (Again, it's not either/or.) And any of them could happen by 2015.
   10. The District Attorney Posted: July 08, 2014 at 09:17 AM (#4745910)
MLBAM could agree to that, but why would they, really? "We'll provide the product and the broadcast, you'll provide the fact that you exist for some reason, and we'll split the money."

(I assume here that the number of people willing to pay for RSN programming other than the games is negligible, which I think is fair.)
   11. DL from MN Posted: July 08, 2014 at 10:08 AM (#4745960)
I think we'll see that happen eventually but aren't most RSNs owned by Fox Sports and the rest by Charter?
   12. boteman Posted: July 08, 2014 at 12:26 PM (#4746070)
There are far too many Fox and Comcast affiliates, but I know for a fact that MASN is owned mostly by Peter Angelos and the Orioles juggernaut, with a tiny slice owned by the Nationals. There are a couple others whose exact ownership escapes me, but are not affiliated with the major networks. Isn't Y.E.S. another independent?
   13. Randy Jones Posted: July 08, 2014 at 12:33 PM (#4746074)
Isn't Y.E.S. another independent?

Fox now owns 80% of YES, the Yankees own the other 20%.
   14. TVerik, the gum-snappin' hairdresser Posted: July 08, 2014 at 12:40 PM (#4746081)
Just to take the Red Sox and their RSN (NESN) as an example... The people at NESN don't give a damn if you are forced to buy cable or satellite to get their network. They don't care that you have to get a package that includes the Food Network and HSN and whatever just to be able to get NESN. They care that you have access to NESN, that they're getting appropriately compensated for it, and that they get to advertise to you as well.


NESN gets big checks every month from cable providers' subscription fees. If, as suggested here, they took the sub fees independently of the cable companies, that relationship would be damaged forever. Content companies can't play with the distributors in a quest for bigger profits - the distributors would fight back. And even if a lot of people defect, the distributors still give the consumers the vast, vast majority of the access to the content.

If you're going to shoot at the king, you'd best not miss.
   15. DL from MN Posted: July 08, 2014 at 01:02 PM (#4746119)
the distributors would fight back


From the article it looks like MLBAM is trying to become the distributor.
   16. villageidiom Posted: July 08, 2014 at 10:25 PM (#4746687)
MLBAM could agree to that, but why would they, really?
Why would they agree to handle WatchESPN, which carries the ESPN feed (including MLB games) streaming?
NESN gets big checks every month from cable providers' subscription fees. If, as suggested here, they took the sub fees independently of the cable companies, that relationship would be damaged forever.
False.

1. They get sub fees from satellite providers, and have not damaged their relationship (forever!) with cable companies.

2. Distributors of cable/satellite TV signals also dominate the ISP market. They are still distributing the lion's share of the content, just in a different form. They will get their cut, because when people drop cable for streaming they will increase their internet fees. It's already happening.
   17. cardsfanboy Posted: July 08, 2014 at 10:46 PM (#4746696)
False.

1. They get sub fees from satellite providers, and have not damaged their relationship (forever!) with cable companies.

2. Distributors of cable/satellite TV signals also dominate the ISP market. They are still distributing the lion's share of the content, just in a different form. They will get their cut, because when people drop cable for streaming they will increase their internet fees. It's already happening.


Satellite is still a content provider which means the consumers have to pay an outrageous fee to get that content. If NESN or anybody(Fox sports etc) attempted to provide an internet subscription broadcast it would reduce the value of the stations to the cable/satellite providers, because the people who are only paying for cable for the sports package, have less incentive so they'll lose a portion of their subscribers who value those channels. In response they would have to reduce their charge to the cable/satellite provider or they might end up getting dropped. (plus I'm fairly certain that their contracts require a non-compete clause...which is why you can't subscribe to an HBO streaming site without already being an HBO subscriber)

I wish this would happen, but it's not going to happen any time soon. At best what will happen is that the teams will slowly reduce their claim areas and maybe at some point in time, MLB might actually dictate a radius as legitimate claim area.

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