InformationWeek
Defining The Business Value Of Technology
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April 9, 2001 |
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Redefining Business:
A New Game Plan
continued...page 2 of 2
By Clinton Wilder (cwilder@cmp.com)
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Many of MLB Advanced Media's employees were hired directly from the Web staffs of the individual teams or their technology partners. To work on the Giants site, for example, the company hired three people--a writer, an editor, and a Web technologist--all of whom originally worked on the team's site. That helped ease the migration of the Giants site, considered one of the most advanced in baseball--not surprising given the team's high-tech hometown. "It's been a tougher transition for us than most other teams, but at least our people didn't change," says Giants VP and CIO Bill Schlough, one of the few people in baseball with a CIO title. "We feel we were way ahead of most teams, and the fan reaction [to the new site] has been pretty mixed. People aren't MLB fans. They're team fans."
To fund the initiative, each team agreed to provide $1 million a year for three years, giving MLB Advanced Media an annual budget of about $30 million. To help set it up, baseball acted much like any large company developing a nascent Web strategy: It retained business consultants from McKinsey & Co., financial advisers from Morgan Stanley Dean Witter, and tech integrators from Scient Corp. "It was a little like, 'You get the costumes, he'll get the actors, and I'll get the hall, and we'll build ourselves an Internet company,'" DuPuy quips.
The goal, clearly, is a whole that's greater than the sum of the parts. "The real benefit will be a lot of cool new services that we couldn't afford to do individually, but collectively we can," says Larry Witherspoon, VP of technical services for the Seattle Mariners, which in 1994 became the first team to have its own Web site.
Among the most anticipated features is game highlights delivered by streaming video that will be searchable by parameters such as player, type of play (e,g, home runs), and game situation. The highlights are also a core piece of the answer to the obvious question: How will baseball make money on the Web? "The notion that everything put on the Internet should be free is being tested here," says Bowman. MLB plans to offer a set of video highlights for free, but charge subscription fees for deeper multimedia content--$9.95 per season for audio broadcasts of all games, and a price to be determined, but less than $10 per month, for searchable video highlights.
That risks ruffling the feathers of baseball's golden goose--the TV networks. ESPN and Fox pay millions for broadcasting rights, and both--ESPN in particular--view their own Web sites as key components of their business. Bowman says MLB.com's highlights--available one hour after game time in 56 Kbps or 300 Kbps streaming formats--aren't a threat to the networks. The TV networks want to make sure they're not left out of the picture. "As baseball's premier broadcaster, we're waiting with open arms for the chance to work with MLB .com," says Ross Levinsohn, senior VP of FoxSports.com. "Our intention is to figure out how to work with them and where we fit in the mix." ESPN officials declined to comment.
Other potential revenue streams are hosting fantasy leagues, selling merchandise, and auctioning authentic memorabilia such as game balls and baseball cards. Advertising and sponsorship are other key revenue sources, and probably the biggest ones in the near term, despite the frosty climate for Web ads. Baseball has Web sponsorship deals with Marriott Vacation Club and Century 21 for undisclosed amounts.
Then there's the business of simply using the Web to sell tickets. Major League Baseball sells $945 million in tickets annually, and Bowman expects a small slice--more than $10 million worth--will be sold online by 2004. The centralized sites make it easier for fans to buy tickets for their team's road games from the home team's site.
In a sense, MLB.com is a symbol of something that many who follow baseball believed the sport would never achieve: a collaborative, coordinated effort by the owners on a potentially valuable resource. And it moved quickly on the technology migration, bringing every new site up in time for the first exhibition games March 1.
So the hard part's over; now comes the hard part. The grand old game has brought itself to the point where it can face the same challenge as thousands of other big businesses: how to harness the Web channel for revenue, marketing, and enhanced customer experiences. But it certainly helps when you sell a product that millions of customers care passionately about. As James Earl Jones said in Field Of Dreams, "The one constant, through all the years, has been baseball."
It's a stretch to say the owners' willingness to share online revenue signals a change in the sport's economic structure that could bring management and labor peace. But at least Major League Baseball finally recognizes the Internet as a channel to serve the one part of the sport that ultimately matters most: the fan.
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Photo of Schlough by Bryce Duffy/Corbis Saba
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