Major League Baseball Struggles to Reach Fans OnlineBy Larry Barrett Print
The subsidiary responsible for operating the Web sites of 30 baseball teams must get a line on where its fans live before selling them video streams. Or else, it will run afoul of its lucrative TV deals.
Twenty-five years removed from his last minor-league at-bat, Joe Choti is gearing up for his fourth season in the big leagues. Instead of throwing out gazelle-quick middle infielders from his knees, he'll be picking off content thieves from his desktop.
Choti backstops the information-technology team at Major League Baseball Advanced Media, the subsidiary of Major League Baseball responsible for operating the 30 individual clubs' Web sites and the MLB.com site—and, most important, delivering live audio and video streaming from 97% of all professional baseball games to more than 840,000 subscribers logging on to MLB.com throughout the season.
What started out as an afterthought—the streaming of live baseball games over the Internet—has become a $130-million-a-year business for Major League Baseball, a sizable chunk of the more than $1.1 billion consumers shelled out in 2004 for Internet TV broadcasts.
Choti, chief technology officer and a former catcher in the Boston Red Sox farm system, not only has to attract and service more customers but also identify where they are—based on their geographic location—when they log on to watch games. To MLB owners, the extra revenue is nice, but it's Choti's job to make sure the Webcasts don't infringe on the multibillion-dollar contracts paid to owners by national and local television broadcasters.
"We couldn't have, for example, someone in Manhattan getting the live broadcast of a Yankees game because that would violate the rights agreement MLB has with local and national TV partners," Choti says.
MLB's revenue from TV events shown online is peanuts compared to the national and local television rights fees that line the pockets of all 30 MLB teams. Right now, Fox is in the middle of a six-year, $2.5 billion deal with MLB. ESPN has a six-year contract paying $851 million into the teams' coffers, while local television stations are paying from $6 million (Milwaukee Brewers) to $56 million (New York Yankees) a year for the right to broadcast games in their local markets.
To MLB and other businesses selling content of all types online, the ability to physically locate the device receiving content—in essence, defining boundaries in cyberspace—creates powerful sales and marketing opportunities.
As their first step, Choti and his staff must determine eligible and ineligible ZIP codes for Internet broadcasts of baseball games.
For more on Baseball and Technology, check out Boston Red Sox: Backstop Your Business
"We have national [blackouts] and local [blackouts] to worry about, with up to 15 games a day," Choti says. "We can't afford to step on those broadcasting rights. We'd be pissing off the networks, which, in turn, would complain to the individual teams, which would then complain to MLB. It all runs downhill."
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