This is a guest post from Brian Litvack, who blogs about sports business at LittyHoops.com.
Earlier this week I blogged that a new March Madness broadcasting rights deal for the NCAA could spell the end to March Madness on Demand — one of the most successful live streaming video programs to ever hit the web. Yesterday, the NCAA announced a 14-year broadcasting rights agreement for $10.8 billion with CBS and Turner that includes television, internet and wireless rights.
The future of MMOD was addressed in vague terms. The official release noted that MMOD will continue to be launched from NCAA.com and CBSSports.com but that Turner will operate and develop the media player and will have enhanced digital rights for Turner and Time Warner platforms. Turner’s David Levy promised that “there will be unrivalled access for viewers” but didn’t get into specifics around MMOD and live streaming.
The fact that Turner now controls “the player” is telling. My guess is that “enhanced digital rights” means that they will only show live game action if an online or wireless user can authenticate that they are a cable subscriber that receives Turner programming. This is very similar to the model that ESPN is using for ESPN3.com (formerly ESPN360). For everyone else, MMOD will include highlights, live look ins, press conferences, etc. The fact that the player will “launch” from NCAA.com and CBSSports.com seems like antiquated and inconsequential terminology. The significance probably has more to do with corporate sponsorship activation than any impact to the fan viewing experience.
The underlying issue is that the shift in programming from network television to cable broadcasters has a huge impact on the digital strategy. TNT, TBS and truTV will combine with CBS to televise every game live for the first time in the history of the NCAA tournament. Turner’s three cable networks realise tremendous value from these programming rights when negotiating new distribution deals with cable providers. A decent percentage of Turner subscribers are up for renewal in the next 10 years (right as the Final Four begins to shift over to cable) and having the rights to the tournament gives Turner favourable leverage in demanding higher subscriber rates from cable providers.
Here’s why MMOD gets lost in the mix. Cable providers don’t want to pay premium prices to Turner only to see that same programming distributed freely online. Even with its torrid growth over the last few years, MMOD reportedly generated $37 million in advertising revenue 2010. That’s certainly impressive for digital ad revenue, but pales in comparison to the tens of millions of dollars per month that Turner can realise in additional subscription fees.
I’m still holding on to my argument in my last post that the MMOD franchise was valued at close to $0 in this new deal. True, there is no agreement without digital and wireless rights included. But when dealing in billions, the online revenue is small and gets boxed out as a threat to the prevailing business model rather than embraced. If digital was really that valuable, CBS would still be the sole rightsholder right now. The digital growth of MMOD couldn’t cover the escalating rights fees and that’s why the money-making cable guys needed to step in (who aren’t as in love with digital as the rest of us).
Perhaps this signals the death of mass audience live streaming programming on the web (a concept that MMOD helped prove). There seems to be enough linear channels to carry just about any large sporting event that would get significant audience. Television viewers can be monetized at a far better rate than online viewers. Not only are there cable subscriber fees but television ads are still monetized at a higher CPM as well. An ad on 50 inch flat screen is more valuable than one a ½ inch computer screen as you multitask.
It seemed obsolete that over the last few years CBS still broadcasted the first few days of the tournament on just one linear television station. Millions of fans were at the whim of Greg Gumble and a button pusher in the CBS control room to determine what game they got to watch. That’s what made MMOD so sweet. Not only could you watch the games at work — but now you got to be the button pusher! That loses some luster if all the games are being televised in their entirety. Yes, people are still going to want to watch at work or on the go and that’s probably is what is allowing MMOD to live on in some form.
The ability for digital to allow viewers to control their experience could likely be the future of live sports on the web. CBSSports.com did a great job of that at the Masters this year. Choose your own camera angle, focus on specific athletes or employ other production tricks to augment the television broadcast. The “on the go” mobile component to viewing live sports is strictly a matter of convenience. Both of those concepts will be the next incremental revenue source assuming the revenue pie can be split between the rightsholders, content providers and cable networks.
My guess is that digital, wireless and television will eventually fully converge and none of this stuff will really matter. If you think that March Madness is dramatic, sit back and watch the broadcasters, cable networks and cable providers fight it out over the next decade!
My Final word: All true college basketball fans, including myself, breathed a sigh of relief that the NCAA decided not to mess with perfection too much. It seems as though the tournament will only slightly expand to 68 teams instead of the much discussed and maligned idea if 96 teams.
Brian Litvack is director of sales and business development for Sportsvite. He also blogs about sports at LittyHoops.com. This post was originally published on his blog, and was republished with permission.
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