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World Changing Content Delivery Advances Aren’t Just for Start-Ups

Posted on March 29, 2006

I, like many people, have logged into my computer during March Madness to watch some of the games on demand. Upon logging in I received a great product and the reviews of the service have been all around positive. However, I did notice something that seemed a tad out of place. I saw this logo on the video player:

That’s right; Major League Baseball Advanced Media (MLBAM) was distributing the content. MLBAM, launched in 2001, was brought to life for one purpose: to run the operations of all MLB’s franchises. Since it’s birth in 2001 it has done that and much more. PaidContent.org reports that, on the same day March Madness began,

in addition to managing the streaming of those 16 games for CBS, MLB.com also handled four spring-training games, the U.S.-Mexico World Baseball Classic match up, an NCAA volleyball tournament, two NCAA baseball games and the NCAA wrestling championships.

This is an incredible feat for a company that just started streaming its own video in 2002. The transition MLB has made from licensee to vendor is nothing short of remarkable. They have truly changed the public’s perception of what the web can deliver. MLB.com’s core competency in streaming video is apparent and they can now utilize this technology they have already paid for in other markets to reap large returns. It was a brilliant move and one that could be indicative of where the content industry is going.

With the advent of feeds and better streaming technologies content producers will be able to become efficient content vendors. Think of the MLB like today’s radio DJ. The MLB used to need a content partner or partners to distribute their games for them (sure, they still use these partners today but envision a future where they may not need to). Now, with the advent of efficient streaming online video, they can easily distribute their own content and may be able to phase out the middlemen or use different middlemen (MLB.com is a middleman for March Madness). The same could be true of the radio DJ. They used to need the radio station to get their voice out there. Now, if they are a big enough personality, they could presumably start a podcast or their own streaming radio show and easily distribute their own content.

The technology is also bringing more obscure sports (and presumably other content as well) to people who want to see them. For example, MLB.com is working with (and invested in) the World Championship Sports Network who’s mission is to bring the World Championships of many sports (skiing, snowboarding, bobsledding, cycling, etc.) to users desktops.

I, for example, love cycling but it is very hard to find coverage of the world championships or the mountain bike championships or even the recent Amgen Tour of California. The TV coverage is out there but it is often sparse and on at inconvenient times. I don’t blame the TV folks though. Cycling just doesn’t have the audience in the US that other sports, like baseball, do and a lower audience means lower ad revenue.

The problem is that the TV stations are distributing the cycling coverage (in this case) to a mass audience. There is a small, but passionate group, who wants to see this coverage. Streaming video would allow this group to get the content while freeing up the mass media for shows with mass appeal. The other benefit is that the content producer ends up with a very targeted audience which means higher ad rates. So, they now have a choice of three business models that would be presumably lucrative:

1. Support the content through a subscription. People probably will pay since it beats the alternative of little or no coverage.

2. Support the content through ads (my preferred method) since you are able to get the content out at a low cost and are able to charge a high ad rate since the audience is very targeted. Also, users mind the ads less (and may even appreciate them) since they are targeted and, therefore, more useful.

3. Use a mix of both or allow users to choose whether or not they want to pay for the content or view ads and receive the content for free.

The winds of change are blowing in the content industry and MLB.com is one of the companies leading the way. I am very excited to see where MLBAM and other content technologies go and how they change our lives. Really though, that piece was just an excuse to say: Go Red Sox!!!