17. MLB Goes Mobile
iPad Disrupts MLB Distribution
MLB and iPad Market
iPad Enhances User Experience
BAM Pricing
18. “On-Base” Pricing
• Same price for MLB.TV ($100, $120)
• Charge $19.95 a month / $49.95 season for
the In-market streaming
• Charge $14.99 for “At-Bat” on the iPhone
19. “On-Base” Pricing
• Charge $19.99 for the iPad App for the 1st year
• Charge $29.99 for the Bundle of “On-Base” and
“At-Bat”
• $1.99 A-la-carte games for non-MLB.TV and non-
in-market game subscribers
America’s Pastime:Has evolved from…. Listening on the Radio Going to Games Watching on TV Accessing Online Interacting with iPad
MLB and their “big 4” peers have become competitors with their TV broadcast partners. For example, MLBN’s flagship program MLB Tonight is a direct competitor to partner ESPN’s Baseball Tonight. MLB’s rights deals with national TV partners TBS, Fox and ESPN (worth upwards of $650 million annually) expire in 2013. At the same time, the most effective way for MLBN to increase their carriage (boosting revenue from both subscriber fees and ad rates) is to broadcast more live gamesin a hint of how networks aren't thrilled about leagues starting channels and expanding online video efforts.Said Goren, as reported by Sports Business Daily: "You're going to water down the value of your major television deal. At some point, (networks are) going to say, 'Enough! We're not going to pay you what we pay you. Find other ways to get that revenue.' "ANDBrosnan suggested the MLB Network is a year-round "infomercial" for baseball that might spur interest in Fox's baseball coverage. Said Goren, "(Whether) it's great for Fox, I'm not so sure."http://www.sportsbusinessnews.com/_news/news_347260.php
The Negotiation process is extremely complex as MLB ventures into becoming a broadcaster themselves. They have to consider the interests of several MSOs, RSNs, and amongst franchises. There are positives and negatives for all parties. National and Regional Sports Networks are not crazy about the MLB or any of the sports teams for that matter creating their own sports networks, but they will have to live with it because MLB has a piece of content that plenty of consumers are keen to buy. The MLB reaps upwards of $650 million per year from national TV rights deals with Fox, TBS and ESPN.Typically teams enter broadcasting long term contracts with Regional sports networks who pay them a handsome sum for their broadcast rights – obviously there is a corellation between performance and the type of deal the team garners, but the largest indicator of the type of deal a team will work out for its broadcast rights is the size of the market. This has caused major income disparity amongst teams. The average MLB team was worth $491 billion in 2010. The Yankees earned $441 million much of that through YES and are worth $1.6B. The Pirates earned $15.6M after a $40Mrevenue sharing check made them profitable. They are worth $289M. For example, In 2007 FSN Northwest and the Mariners agreed to a 12 year / $500 million deal. TheIndians turned down an offer of “more than $30 million a season” from FSN Ohio to launch their own SportsTime Ohio channel in 06. Internal bickering exists among clubs including the evidence of financials for 8 teams leaked on deadspin.com that detailed the disparate inner workings of large and small market teams. In 2008, approximately $400 million was transferred from the high- to the low-revenue teams. The higher a team’s revenue, the more it has to contribute. The lower the revenue, the more it receivesA massive free rider problem has rocked the league exposing the fact that the once tidy coalition is actually the big market teams like the Yankees who own their own network, as well as the Red Sox and Phillies have tremendous broadcasting and media revenue, the best teams and therefore the most representation on National networks because good teams drive ratings are financing the entire operation of some small market teams. The Florida Marlins cashed a “$48 million dollar welfare check in 2009 while the Yankees paid The revenue-sharing system was "not intended to merely move money from big-market teams to small ones but was expected to be a way for smaller teams to compete by spending on players." Heyman: "The whole situation will be addressed again, as big-market teams didn't know the extent of the profitability of the teams they've been subsidizing“http://bizofbaseball.com/index.php?option=com_content&view=article&id=4274:inside-the-2010-forbes-mlb-franchise-valuations&catid=26:editorials&Itemid=39http://www.bizofbaseball.com/index.php?option=com_content&view=article&id=4132:lwib-the-compitition-for-local-tv-rights-in-mlb-plus-tidbits&catid=67:pete-toms&Itemid=155ESPN and CBS, have used MLBAM to host their video streaming.MLB's TV deals with Rupert Murdoch's FOX, Time Warner and Disney's ESPN are done in 2013.
MLB.tv is already loaded with cash.Owners are already getting a huge dividend.Selling a billion dollar stake in MLBAM any time soon would make it very hard for owners to argue that they're broke in upcoming labor negotiations with players.Selling a stake could further complicate the ownership stake and perhaps even force a dreaded shotgun IPO.Who's calling MLBAM? A source close to PE circles speculates that it's most of the biggies: TPG, Blackstone, Bain Capital, Elevation, Spectrum, and Quadrangle
#2 App of all time! MLB At-BatMLB has rich history. In fact, the availability of stats and the consistency of the game make comparisons of current to retired players easy. How does someone in 2011 compare with someone thought to be the best player in the 1920’s? I don’t know, but the stats are there and accessible. This legacy effect has allowed MLB to retain fans, making them life-long, loyal customers.iPad/Apple users are also a defined group of individuals. Innovators by nature, they are an affluent group who can afford the product, the purchase of apps, and the network expenses. Thus, the understanding exists that this enhanced, interactive and mobile content offering is with these users in mind.
So, who is this market?Nerds, Dads, Innovators = Spread, perpetuate & enhance brand!We need to remember to serve our core, provide baseball users with content that promotes and perpetuates the MLB brandAlso, rake in the innovators, those who purchase the iPad Demographic information on who visits mlb.com and those who buy iPads are strikingly similar affluent, older gentlemen with younger children Nerds, innovators, stats geeksiPad users have pride of their connectivity, multitasking, app diversity Make MLB On-Base so freakin’ cool, iPad users will feel they need to have it in their ‘app’ arsenal
After viewing and discussing the different perspectives about baseball and what the iPad brings to the table for each of us, there were three things that really stuck out and that were benefits for all of us. By using the iPad as a new channel to distribute content to our fans, “On-Base” is interactive, enhanced, and mobile. These are all steps that are bettering and building on what BAM had with the At-Bat app.
One of the aspects of the iPad channel that we as BAM and MLB need to take advantage of is the larger screen that draws the user in and the use of the user’s hands to interact with the touch screen. These two aspects need to be taken advantage of and so “On-Base” needs to also be interactive with both the Fan and the Game. The Fan will have access to use facebook, twitter, foursquare, and chat to interact with other fans and make comments about the game and even to let everyone know where you are watching the game or even at the game. There will be challenges such as Trivia, Call the Pitch, and keeping the Boxscore (whether you are at the game or at your home). The Fan will be able to make their own highlight videos at home or be able to watch the replay that just happened in the game and that the tv did not show again. And for those Fantasy players like myself, the Fan will be able to keep track of his whole team while he is watching his Phillies team (able to see highlights of the plays that your fantasy players are making). Boxscore/GamebookFantasy BaseballCall the PitchTrivia Challenges4squareFacebookTwitterChat (Open or Just Friends)
One of the reasons that we wanted to give the iPad app a different name, “On-Base”, than “At-Bat” on the iPhone is that it is everything that “At-Bat” had, but that it is also so much more. The user will still have the highlight videos, boxscores, league overview, and live games from mlb.tv (which BAM will still have a free game of the day, similar to the iPhone app), but they will additionally have access to more videos, more camera angles, additional statistics, historical statistics and stories. Fans will also get coupons sent to them (for example to buy their teams baseball hat or tickets to the next game). Also, no longer will you be missing out on the blackouted in-market games. Fans will be able to watch in-market games on their iPad. This has been one of the biggest requests and complainants in the past. BAM expects almost half the teams to have in-market games available to watch on the iPad.More videos/camera angles, in market games, statistics, history, upgrade tickets, coupons, free game of the day
Additionally, all of these are enhanced features will now be on one screen and situated just the way each fan wants.
As BAM just announced, with the addition of being able to view in-market games on the iPad through mlb.tv, Fans will now be able to watch every one of their teams games no matter where they are (all they need is a wi-fi or a 3G signal on their iPad). The iPad truly makes the MLB mobile and watchable because of the increased screen size. Fans are no longer tied to their tv, having the correct channel, or to their computer. Additionally, with all of the interactive and enhancements made to “On-Base”, fans can now use the app while they are watching the game on tv or even while they are actually at the game. Fans can take their iPad to the game and watch replays of the live game they are watching, keep a boxscore, follow the stats of the game, look up other games scores, get coupons for food and merchandise, and even get offers to upgrade their tickets when they check into the game. Or while you are watching the game tonight, buy a ticket for tomorrow’s game that isn’t sold out.Mobile
Charge $19.99 for theiPad App for the 1st year – in order to not only prove to the fans/users that it is worthwhile, but also to get fans invested in the App. - After a fan uses the app for a year, they will be inclined to continue to use it in the future for many years because they have an invested interest and use of the app. - Also, increasing the price the following year will probably not cause a lot of customer loss due to the ‘need’ to have the app again and the invested interest and time in the app from the year before. - We want to charge a higher price than the iPhone App (at $14.99) because quite frankly you get more with the iPad App and it is better overall quality and we want that to be insinuated in the price as well.1.99 a-la-carte games - The thinking behind this is that unlike before, the iPad gives the fan/user an actual screen to watch the game (unlike the iPhone). Therefore, fans who normally have games through their local provider for in-market games will be willing to purchase the game a-la-carte if they are traveling or away from home/their tv.29.99 bundle for both apps – iPhone and iPad - This is to try and help sell the new price on the iPhone as well as get greater customer buy-in for the iPad app. Once again, once the customer is invested in the app and becomes dependent on using it, BAM will get these return customers even if they slightly increase the price.
Charge $19.99 for theiPad App for the 1st year – in order to not only prove to the fans/users that it is worthwhile, but also to get fans invested in the App. - After a fan uses the app for a year, they will be inclined to continue to use it in the future for many years because they have an invested interest and use of the app. - Also, increasing the price the following year will probably not cause a lot of customer loss due to the ‘need’ to have the app again and the invested interest and time in the app from the year before. - We want to charge a higher price than the iPhone App (at $14.99) because quite frankly you get more with the iPad App and it is better overall quality.1.99 a-la-carte games - The thinking behind this is that unlike before, the iPad gives the fan/user an actual screen to watch the game (unlike the iPhone). Therefore, fans who normally have games through their local provider for in-market games will be willing to purchase the game a-la-carte if they are traveling or away from home/their tv.29.99 bundle for both apps – iPhone and iPad - This is to try and help sell the new price on the iPhone as well as get greater customer buy-in for the iPad app. Once again, once the customer is invested in the app and becomes dependent on using it, BAM will get these return customers even if they slightly increase the price.
MLBAM is viewed as "in-play" in private equity circles mostly because of its awkward cap structure; it's owned in equal parts by all 30 MLB teams.This we believe is irrelevant. The entity has patents on geo-location giving it customer identificationand its video guys are the same ninjas behind everything ESPN does online. MLB.TV and the MLB On Base app are on the crest of a wave of video content meeting the demand for the ideal video mobile screens like the iPad. This same problem will likely arise as the future of TV is sorted out. Apps will eventually move to every TV within the decade. Content providers will look at this everywhere. We think with this thing at $500 million in revenues, we can use average club revenue as growth basis as a content provider of comparison - we perceive it growing at double which is 8%. The video screen gives the iPad an entirely different user experience. We believe On Base is a better way to describe the way you feel when you watch video on the iPad – a part of the action. Like you are taking a lead off of second base after you rip a double down the left field line. You have classic games (they should dust of some old “This week in Baseball” anthology purely for content purposes. MLB should not let internal squabbles amongst teams to squander this dynamic organization. The league is one of the only independent content providers in the world and stands to benefit from broad economic growth and the digital technology adoption trends (consumers demanding premium content everywhere) that are pushing up revenues and turning the media and entertainment industry on its head. Many both inside and outside the pro sports industry view local digital rights as a potential source of untapped riches. In September 08 the SportsBusiness Journal quoted an anonymous MLB club official, “…it’s no doubt the single biggest economic issue our industry is facing.” And as recently as July 09 the SportsBusiness Journal reported that MLB executives believed, “…in-market game streaming has the economic potential to rival the more than $40 million in annual revenue brought in by the established MLB.TV out-of-market service” This will only help BAM.Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/01/19/businessinsider-private-equity-throws-a-billion-dollars-at-mlbcom-gets-stonewalled-2011-1.DTL#ixzz1BpJiROrkMLB is underselling with the name At Bat for iPad
