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MLB's Digital Dominance | Mauricio Alejo

Fast Company

MLB's Digital Dominance

As the world scrambles to master online video, crusty old baseball already has it figured out.

For decades, the prevailing wisdom has been that professional baseball is behind the times. Its ownership rejects new voices like Mark Cuban. The game doesn't have the electric action of, say, curling. Like newspapers in a digital age, baseball is a relic that can't distract the kids from Facebook and Wii, no matter how many players pump human growth hormone.

And yet, step inside the offices of MLB Advanced Media, the digital arm of Major League Baseball, and the first thing you notice is not a beaming photo of 74-year-old commissioner Bud Selig, or black-and-whites of Joe DiMaggio. Next to a row of cubicles full of people writing code sits what appears to be a complete television studio, in which, on this day, former player Billy Sample is discussing baseball's hot stove league with an eager young interviewer named Casey Stern. The program is "Bottom Line," and it is streamed live across the planet on BaseballChannel.tv, a 24-hour video news outlet on MLB.com. It's the middle of January, the season won't start for months, but here, in a lofty space in a former biscuit factory on the west side of Manhattan, people are busy slinging out more live Internet video than any other Web site on earth -- 12,000-plus events last year -- and getting customers to pay for it, handsomely.

Take a moment to think about that: As TV and computer screens converge, and mobile devices demand ever more rich content, media companies have been in a furious dash to better monetize video online. (They had a rather nasty spat about it in Hollywood this winter; you might have noticed while watching Dance War: Bruno vs. Carrie Ann for the fifth time.) Meanwhile, MLB Advanced Media (MLBAM) has turned online video into such a cash cow that it's a major reason why analysts believe baseball is about to pass the NFL in total revenue. In 2007, Major League Baseball is expected to haul in around $5.8 billion, just short of the NFL's $6.3 billion. Its biggest growth engine is MLBAM, which last year brought in $450 million (up from $236 million in 2005). Continuing at its current pace, MLB should catch up with the NFL around 2010. "The growth has exceeded our wildest expectations," says MLB president Bob DuPuy. "No one in the game believed that the Internet would be as pervasive a commercial vehicle for us in such a short amount of time."

How did this happen? Credit Bob Bowman, MLBAM's president and CEO. When the 52-year-old was hired by Selig and DuPuy back in November 2000, he had never worked a day in the world of pro sports. A former president of ITT, he also founded howtoguru.com, a "sports instructional site," and served as CEO of consumer technology retailer Outpost.com. MLB, at the time, was equally inexperienced in digital media. Just months before Bowman was hired, the URL mlb.com directed you to a Philadelphia law firm. Yet Selig and DuPuy recognized that relying solely on the old broadcast model was leaving money on the table. The league generates so much content -- 2,500 games a season -- that no one TV network (or three) could possibly broadcast it all; fans were being underserved.

MLB Advanced Media started in 2000 with a $75 million investment pooled from the 30 clubs; that's roughly the salary of a slap-hitting utility middle infielder on each team. Bowman spent much of his early budgets buying up server space. At the time, market analysts were skeptical that American homes had the broadband capacity for massive streaming of live video. Bowman looked in a different direction: the office. "We essentially have baseball games from 1 p.m. every day until long past midnight," he says. So the focus needed to be on the fan who could pop in throughout the day.

"In 2002, the first year we tried streaming live games, we did a total of 30," Bowman says. "And it was anything but a success. It was difficult to watch." The quality improved as Bowman grew the infrastructure, and he began to expand his original vision, "to get the games immediately available on every possible device," he says. "If it takes a plug or a battery, we should have baseball on it."

Today, MLB.com comprises a vast array of options. MLB.tv allows users to watch live baseball games -- every live baseball game other than local-market games (available in audio only) and the national ESPN and FOX broadcasts -- for an annual fee of $89.95, which is less than the MLB Extra Innings package available on cable. A Condensed Game feature plays an entire MLB game in about 25 minutes -- just the action, none of the waiting. Another option, called Mosaic, allows viewers to watch as many as six games simultaneously. Yet another option alerts users of MLB.com Fantasy Baseball to when they can watch their team's players and track stats in real time. BaseballChannel.tv recently added former ESPN analyst Harold Reynolds to its stable of announcers. And this year, for $3.99 a month, Bowman and company will send video highlights to mobile devices within 90 seconds of their happening.

"The site has to work for the 90-year-old and the 9-year-old," says Bowman, so variety and adaptability are key. "They didn't cheapen out on the experience," says Jupiter Research analyst Bobby Tulsiani. "If you're going to make people pay, you have to give them something they can't get on TV.

"You could even argue that with sports, watching online is a better experience."

Users seem to agree. In a typical day during the season, as many as 11 million people visit the site. Three million watch video. The average user watches for an unheard-of 37 minutes per viewing -- only one minute less than the average time spent watching baseball on TV. The league, in a way, is becoming its own broadcast partner, even sending announcing crews to games not covered by ESPN or local stations. It's not hard to imagine how that could jeopardize lucrative TV contracts one day, but for now, says Tulsiani, "it's additional, not cannibalistic."

Meanwhile, MLBAM has such a lead on other leagues that it has taken to hiring out bandwidth and expertise to other outfits, from the U.S. Figure Skating Association (for which it hosts video) to Major League Soccer (whose entire Web operation it runs). Last year's NCAA Basketball Tournament, hosted by MLB.com, drew 17 million viewers. And that number is expected to grow this year.

Bowman admits to a personal motivation. Part of Selig's original vision was that the Internet could do for baseball what national TV rights did for the NFL -- Pete Rozelle's famous notion of parity through profit sharing. For Bowman, a die-hard fan of the long-suffering Milwaukee Brewers, that's particularly sweet: "Seeing them become more competitive might be the most satisfying part of this."

MLB's Digital Dominance | Mauricio Alejo

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2 Comments

  • Brian Ross

    Mr. Leitch's homage to BAM, above, seems to ignore the darker side of MLB's media arm and the bigger question: Is there a First Amendment right to free speech in the coverage of sports or entertainment. As BAM dominates baseball in the electronic space, what value, to MLB, is there to that pesky local and national media that have a tendency to write stories of which MLB does not approve, on players not meeting ideal standards or, oh, testing positive for substances that alter the game.

    You won't see any hard-hitting steroids stories in the MLB network.

    BAM gets information minutes to hours before MLB releases it to anyone other than the "rights holders," large old-line media companies like ESPN and FOX willing to pay big dollars for the right to cover these clubs. There was a point in time, two years ago, when the venerable Sporting News was kept out of a locker room of one of the major league clubs during the spring until the rights holders had their time with the team.

    Rights holders have an incentive to get first blush on the news, but the flip-side of that is the high level of censorship that it affords MLB. While they would never come out and outright violate "free speech" by telling any of th rights holders what they can and cannot run, because BAM controls a lot of the content origination, and access to things like photos and video clips, there are ways of arm-twisting and channeling the information flow to minimize disruption or diversion of MLB's message to sports fans.

    Of bigger concern in MLB's operation of BAM, is what happens when the local newspapers and media outlets finally migrate over to the web? MLB will really not need them. Unless they pay, of course, and play ball.

    While running a sports news system is not unique to MLB, they have escalated the command and control features of their product to Orwellean levels that are not seen in the other major league sports.

    When the medium becomes the messenger of its own message, you have the same kind of journalism practiced in totalitarian and communist countries: The official line.

    BAM is not an additional content provider. It is a content-control system. FastCompany's cheerleading aside, its role in the control of the news flow should be seen for what it is.