The first week of January 2010, Apple called Bob Bowman with an invitation shrouded in even more mystery than usual: If you want in on our next project, send us your two best people. That’s all Bowman, president and CEO of Major League Baseball Advanced Media, or BAM, had to go on. Losing two tech leads during the hectic months before Opening Day was risky. Worse, Apple wouldn’t be able to tell him what the techies were building, when its project would come out, or how long they’d be gone. But making the decision took Bowman “under 10 seconds.” Two years earlier, Apple had made a similar offer and MLB had struck gold with AtBat, its iPhone app. Bowman sent mobile developer Chad Evans and another engineer to Cupertino, California, the next day.
Bowman didn’t see Evans until three weeks later–standing onstage, during the launch of the iPad, when Evans introduced MLB’s new app to the world. It would be able to play gorgeous video of live major-league games while simultaneously displaying the latest stats. “Nice job,” Steve Jobs told him backstage. But BAM’s work was really just beginning. The dazzling two-minute demo was the equivalent of a movie trailer, and Bowman’s team still had to make the actual movie. “Everyone said no one would use the iPad,” says Bowman. “It’s the wrong size. It’s been tried before, blah, blah, blah. We said, ‘Hell, yes, we’re in.'”
BAM built a best-selling app for the new device in less than two months–the sort of execution that has made the MLB subsidiary an unlikely tech powerhouse. In fact, Bowman’s team now sets the standard for broadcasting live sports–or any live video, actually–on web-connected devices, offering viewing options that make a DVR seem primitive. On the Xbox 360, BAM’s newest platform, you can navigate with a wave of your hand or with your voice (Xbox, Rangers-Angels . . . Xbox, play). “It’s the future of watching sports,” says Todd Stevens, executive producer at Microsoft. And BAM, he says, “just gets it.”
Before The New York Times or Hulu charged online users, Bowman’s group created one of the most successful paid-content models. Last year, a total of 2.2 million people bought BAM’s AtBat iPhone and iPad apps (among the top-grossing in iTunes) or paid BAM up to $120 to subscribe to MLB.tv, the service that airs every out-of-market Major League Baseball game (most local games are blacked out). Because BAM operates behind the scenes, its technological prowess and financial success rarely attract much attention. But it now belongs to a small fraternity of digital stars. BAM’s business is more multifaceted than YouTube’s; last year, it sold more than 35 million MLB tickets, more than half of the league’s inventory. It streams more live video than any other sports entity–and any other company. How did a game that revels in tradition produce something so cutting-edge?
sports-business success. It’s “one of the great stories in American business.”
Twelve years ago, Bud Selig, the league’s 77-year-old commissioner, gave the ball to Bowman; Bowman, in turn, built a business. He’s undaunted by the inherent tension BAM creates with media partners, broadcasters, even the teams themselves. (After all, the Yankees don’t run their official website. BAM does.) “If there’s no tension, you’re not going to get better,” Bowman says. And if this centralized approach restricts the clubs, the revenue keeps them from complaining (at least publicly). Between tickets, ads, apps, and streaming subscriptions, BAM generates around $620 million a year in revenue. When the club owners considered spinning it out as a public company several years ago, the value of its IPO was estimated at $2.5 billion. Baseball’s digital arm has quietly proven itself to be New York’s top tech startup of the last decade. “I think it’s not only one of the great stories in American sports business in the past 12 years,” says Selig, “but one of the great stories in American business.”
Joe Inzerillo, BAM’s senior vice president of distribution, is sketching on a whiteboard at the company’s headquarters in New York’s Chelsea Market. He’s explaining how BAM processes, packages, and delivers live video. It’s far more complex than what its better-known peers do when serving up prerecorded TV shows, movies, and homemade clips. As he draws out how it works, Inzerillo seems genuinely amazed it’s even possible. Because until recently, it wasn’t.
“I’m simplifying,” Inzerillo says. But let’s take one pitch–one of around 300 thrown in a typical game. When Detroit Tigers ace Justin Verlander releases the ball, a TV camera captures the pitch. BAM gloms onto the feed at the local- or national-TV production truck outside Comerica Park and relays the video to its data center in New York in less than a second. There, in a control room where an entire wall is a patchwork of screens, engineers ensure that the video and audio are in sync. At the same time, pitch speed and location data, measured by computer-vision cameras throughout the ballpark, are integrated to correspond to Verlander’s pitch. Then a bunch of encoders do, well, whatever encoders do to convert video for web streaming. BAM’s ingenuity lies in transforming the broadcast feed into a standard format that can quickly be adapted for various tech platforms and screen sizes. Teams of loggers and cutters, working under the watchful eyes of every imaginable baseball-player figurine and bobblehead, tag the highlights so that they can be packaged.
In as little as 25 seconds, Verlander’s pitch in Detroit reaches a fan’s iPhone in New York or PSP in Austin or Xbox in San Francisco. (Just as broadcast TV has a built-in delay, so does web streaming.) BAM performs this process simultaneously for a dozen or more games in a dozen or more cities, creating more than 5 million data files a day for distribution and archiving in its state-of-the-art data center.
The technical expertise is impressive; it’s also surprising, considering the league didn’t even own the MLB.com domain when BAM was formed in 2000. (It belonged to the law firm Morgan, Lewis & Bockius.) At the height of the dotcom bubble, Jerry Reinsdorf, owner of the Chicago White Sox, met with then-MLB president Paul Beeston at a Manhattan restaurant to discuss their concern that big-market teams would exploit the web, widening the economic gap with small-market teams. They suggested to Selig that a central entity run the team sites and share any revenue. After months of lobbying, the owners, some of whom were concerned about jeopardizing their lucrative broadcast deals, voted unanimously to pool their digital rights. Selig regarded the move as a milestone akin to NFL commissioner Pete Rozelle getting football’s owners to share TV revenue in the 1960s. But Reinsdorf says it didn’t feel particularly historic at the time. “A lot of [MLB] clubs thought, Okay, we’ll go along. We don’t think this will amount to much,” he says.
The first couple of years didn’t dispel that notion. Early video wasn’t much to look at, the audience was small, and the company lost money. But BAM was “trampling snow,” to quote the Bowman lexicon (translation: pioneering). At a time when few websites dared to charge viewers for content, BAM had paying customers. “Our philosophy was just because it’s on the Internet it shouldn’t be free,” says Bowman. “It was a risk.” As high-speed web access became more available, the business grew, recouping the owners’ $77 million investment. And Bowman and his team essentially reinvented baseball broadcasting, allowing viewers to watch any game, pause and rewind, choose from multiple camera angles, and call up real-time stats. BAM helped redefine the league.
BAM now licenses its online highlights and real-time game data to ESPN and other media companies. It employs the largest staff of beat writers in baseball, one at every ballpark, publishing its own game stories and competing against the rest of sports media. During the season, tens of millions of fans visit MLB.com each month. And BAM delivers live HD video directly to fans, which makes it a broadcaster in its own right. But perhaps the least-known aspect of BAM is that it streams video for other companies. Much as Amazon’s cloud service grew out of the infrastructure needed for its e-commerce operation, BAM realized that its software and data center weren’t getting much of a workout in baseball’s off-season. Now it streams all of the live web video for ESPN, a major competitor, as well as Glenn Beck’s online talk show. Last year, BAM broadcast 18,000 live events, including all 63 games of March Madness.
It’s no accident that BAM is located some 30 blocks south of MLB’s corporate offices. Without question, BAM’s success stems in part from its autonomy. “It’s unlike other things in baseball where someone is meddling,” says Gary Gillette, coeditor of ESPN’s Baseball Encyclopedia. Bowman, who answers to a board of club owners, is free to make decisions about pursuing new devices or new technologies. BAM has its own P&L and its own culture, which still feels like a startup. The pace is unrelenting. In January, a month from the start of spring training, Bowman’s team is juggling a mind-boggling number of projects: alerts that show instant highlights of fantasy-league players and league rankings the minute they change; an automated commentary that interprets pitching data and notes when someone’s fastball slows down; the new Xbox; new game apps; new Tumblr blog. All that amid rumors of an iPad 3.
Bowman, 56, has what must be the most unusual resume in baseball: Harvard and Wharton educated. Stints at the Treasury Department and Goldman Sachs. At 27, he became the state treasurer of Michigan, the youngest such officeholder in the country. At ITT Corp., a multibillion-dollar conglomerate that owned Madison Square Garden as well as the New York Knicks, he rose from a divisional CFO to president and COO of the parent company. When Starwood took over in 1998, Bowman left with a generous stock package and dabbled in Internet startups.
He didn’t need the job at BAM, but the opportunity was irresistible. He recognized the potential immediately, estimating that revenue would exceed $600 million at the 10-year mark, which the company might well have hit if not for the recession. A company that owned the rights to its digital content would have a huge advantage navigating this new space. The fact that the content was baseball was almost too good to be true, both from a business and personal standpoint. “He’s a baseball freak, a baseball junkie,” says Reinsdorf. As a kid, Bowman lived 2 miles from the ballpark in Milwaukee and usually attended some 70 games each summer. At Goldman, he had a knack for blending work and baseball. “Somehow I had a lot of deals in Baltimore when the Brewers were there,” he says wryly.
Bowman’s desk is flanked by the framed jerseys of Brewers stars Robin Yount and Paul Molitor. “My heroes,” he says. Bud Selig was one, too. In 1966, Bowman was 11 years old when the Milwaukee Braves relocated to Atlanta. He was crushed. Selig, an executive at a family car-leasing business, led the ownership group that four years later brought in a new team, which became the Brewers. “People my age from Milwaukee think Bud Selig walks on water,” says Bowman. Even though the new team wasn’t very good, he recalls how he would buy a $2 ticket and sit on the cold metal bleachers. As a teenager, he watched Selig, then in his thirties, in the owner’s box above the field. “He did a lot of pacing,” Bowman says.
When he interviewed with Selig for the BAM job, in 2000, Bowman recalls, “We sat down and talked about the business for 15 minutes and the Brewers for 45 minutes.” Curiously, the commissioner is a notorious technophobe. He doesn’t own a smartphone. He doesn’t even use a computer. He says his staff prints out MLB.com stories for him to read. “I’m living in the Dark Ages,” Selig says by phone from his office in Milwaukee. Upon hearing this, Bowman offers a don’t-fall-for-it smile. “I think it’s factually accurate, but it leads one to the wrong conclusion,” he says. Selig’s wife, children, and grandchildren are digitally active. “He observes what everyone does,” says Bowman. “And we know he watches the Brewers [online] if he’s not near a TV.”
With his dark hair, deep voice, and dry wit, Bowman comes across like a compact Alec Baldwin. His trademark uniform is a black fleece vest over a button-down and white sneakers. Behind the informality, though, there’s an intensity, an undercurrent of impatience. Catching himself in a windy answer, he blurts, “Get to the freaking point, Bob.” He’s a fast talker, a fast thinker, and all business until the topic turns to baseball, when he gets downright poetic. In the weekly staff meetings, Bowman doesn’t do all the talking. Rather, he steers a boisterous debate between senior executives and young staffers, almost all men. “I think it’s modeled on Lincoln’s team of rivals,” says Inzerillo. “Bob’s big on U.S. history.” Bowman alternates between refereeing and diving into the scrum, often with, “just to play devil’s advocate. . . .” As Inzerillo puts it, “Bob doesn’t just kick the hornet’s nest. He plays soccer with it.”
Bowman is known to be abrasive. “Bob is smart and aggressive, and it can rub some people the wrong way,” says Selig. In the beginning, he adds, “I told him, ‘Let me handle the political problems.’ But he’s gotten good at that too.” Or perhaps as Bowman’s power has grown, those who do deals with him have become more deferential. In baseball’s insular world, people are loath to criticize him on the record. If they’re not already working with BAM, they might need to at some point. Partners use the loaded phrase “tough negotiator” so often Bowman should add it to his business card.
As Bowman sees it, he doesn’t fight to get his way. He fights to ensure the health of a digital business that’s crucial to owners, fans, and the future of baseball. “Remember, baseball was the first [sport] to be on radio, the first to be on TV, on cable, and now digital media,” he says. “Think back to 1950 when the three sports that mattered were baseball, boxing, and horse racing. Two of them disappeared. Not baseball.”
“Everything changes quickly in new media,” Bowman is saying one afternoon in his New York office. “You’re king of the hill one day and on the wrong mountain the next.” You have to be paranoid, he adds. Very paranoid. And you have to be willing–and able–to adapt.
Early on, BAM had the luxury of selling directly to consumers. In a world of multiple devices and proprietary platforms, though, it needs to go through Apple and Microsoft to reach iTunes’s
225 million shoppers and Xbox’s nearly 40 million users. That exposure comes at a price. BAM has to follow Apple’s rules, which now require selling the MLB.tv subscription and premium apps ($125 for the package) within AtBat, giving Apple a 30% cut. Bowman is banking that any short-term financial loss will be alleviated by new customers. Once people try MLB.tv, 85% renew.
The primary goal of all this fancy video, though, is not to boost digital earnings. It’s to get more people to attend games. Just as the music industry relies on concerts, the majority of baseball’s $7 billion in annual revenue comes from the ballpark–tickets, food, parking, souvenirs. Bowman and his team believe that a digital ticket stored on a smartphone or retrieved from a kiosk at the ballpark could dramatically increase sales. With paper tickets, teams only know the buyer, who may or may not come to the game. A digital ticket linked to a credit card and an MLB.com account would enable BAM to recommend food or merchandise based on previous purchases and to reward repeat customers through a loyalty program. The clubs support the approach philosophically, just not financially. So BAM, along with other ticket vendors, is footing the bill (less than $10 million) to make sure nearly every park has kiosks by Opening Day. Then it’s largely up to the clubs to educate fans so they’ll opt for the new digital tickets. That’s the paradox of the Internet, says Bowman: “It’s instantaneous yet it takes a long time for things to evolve.”
There’s inherent tension between BAM and the clubs. This stems from BAM’s control over the clubs’ digital rights and websites but also from its mission to be innovative. (For instance, BAM is trying to assemble corporate partners to cover the costs, more than $3 million per team, to wire each ballpark for high-speed web access, so fans can check and download BAM’s apps to see video and make purchases.) The teams often serve as labs, but BAM reserves the right to say no to a team’s experiments, often because an idea won’t work for the other 29 teams. “We have our fights now and then,” says Bill Schlough, CIO of the San Francisco Giants. “It’s just the way it is. We have to recognize that we’re a one-thirtieth owner in this entity and we have to respect each other. I know the value and equity produced by BAM is worth any of the smaller struggles.”
From the beginning, the biggest concern was BAM’s impact on broadcasting rights, which generate more than $2 billion a year. That’s why Braves fans living in Atlanta can watch away games on MLB.tv, but home games are blacked out to avoid competing with the local TV broadcast. Only three teams have introduced in-market streaming, starting in 2009. “The concern was that we’d siphon off viewers and hurt ratings, but it’s not happening,” Bowman says. As with digital tickets, there’s a learning curve. The number of people paying for in-market streaming is tiny, less than 10,000 in New York. Bowman, who expects a few more teams to add local games this season, is patient about its growth. “There are lots of people at the table who need to be fed and fed carefully,” he says.
Meanwhile, BAM is pushing into other frontiers. On its new Xbox app, fans can pull any game from the past two years and watch it on a big TV screen–or, better yet, filter the action by highlights. Watch just the home runs in a Rangers-Yankees slugfest. Or every hit. Or great defensive play. It’s like an espresso of baseball, pure concentrated action. And it may sound like a gateway product for cord cutting and abandoning cable altogether, but Bowman suspects few viewers will give up having hundreds of channels. He’s just covering all his bases for the future. “If you worry about the fans, you’ll get to a good economic model,” he says.
Bowman is looking ahead to when baseball everywhere will be a reality. But at that point, will he still be around? Two years ago, he filed the paperwork to explore a run for governor in Michigan. He says now he was just feeling restless. And it’s possible he won’t need to leave the game. Selig signed a two-year extension, but there’s no clear successor. Bowman laughs at rumors that he has his sights on the commissioner job. “That’s never going to happen,” he says, insisting he has “one of the best gigs of all time.” He goes to spring training every year. And every now and then he gets to play ball. Softball, that is. Bowman doesn’t make every BAM team game. But when he does, he plays shortstop and leads off. “For some reason,” says product-development chief Gregg Klayman, “we never lose when Bowman plays.”