I recall the good old days when I could follow the Chicago Cub’s loss by tuning into WGN 720AM’s internet stream. Then MLB officials banned that practice and began selling the rights to their teams’ internet broadcasts.
Now MLB officials are becoming quite the internet entrepreneurs ($$$):
More than five million people have flocked to CBS Corp.’s Web site to watch March Madness college-basketball games free online. For that, they and a growing number of sports fans world-wide owe some thanks to the entrepreneurial efforts of another sports leader, Major League Baseball.
It’s one of the more unlikely stories of Internet-inspired business evolution: In just a few years, Major League Baseball’s Web site (www.mlb.com) has become a major force in providing live streaming video — the equivalent of live television on a computer — for large audiences. MLB.com’s success isn’t just helping to transform the business of sports; it’s also transforming consumers’ expectations of what the Web can deliver.
MLB.com first mastered the technology to show baseball games live on its own site, itself a wildly popular business. Now, it sells its expertise, having already signed up 25 clients, including CBS, Major League Soccer and the World Championship Sports Network. Entertainers Jimmy Buffett and LL Cool J, too, have hired MLB.com to promote albums and concerts by streaming video of interviews and live performances.
Without providing specifics, MLB.com says that the endeavor has already become profitable, and that an initial public offering of MLB.com stock is a possibility at some point. About 15% of the site’s total revenue of $195 million last year came from managing Web sites and other partnerships like the one with CBS. An additional $68 million came from subscriptions to watch live video content on MLB.com, including the 2,400 baseball games it streamed in the 2005 season. The rest of its revenue comes from ticket sales and advertising.
Since bandwidth is subject to the scarcity problem, it will be interesting to see how entrepreneurs go about trying to solve the problem of providing high-quality streaming video.
Mastering streaming video for big audiences isn’t easy. The video is bulky; the files that must move across the Internet are typically hundreds of times as large as music files, crowding bandwidth and slowing transmission — a situation worsened by large numbers of individual viewers accessing the same video at once, as with baseball games.
In fact, MLB.com and other sites that stream video face a challenge from cable and telephone operators, which are pushing to charge more to carry content that requires a lot of bandwidth. If the carriers get their way, sites that don’t agree to pay extra would be able to transmit their videos, but the quality wouldn’t be as high as for those that paid a premium.
“Just receiving a live feed and sending a compressed version over the Web is difficult,” Mr. Bowman says. “We didn’t anticipate how in-depth it all was.”
The author of the article, Bobby White, compares this internet foray by MLB to the NFL’s decision to centrally coordinate the sale of their television rights in the 1960s. Each MLB team owner gave up the right to maintain its website and, in exchange, gets an equal share of the proceeds from MLB.com.
Might this coordination, which gave me small bits of frustration several years ago when I tried to follow the Cubbies, make MLB the NFL of the 2020s or so?
