October 30, 2001 12:05 PM PST

Baseball officials plan live video streaming

As the Arizona Diamondbacks and the New York Yankees duke it out in the World Series, Major League Baseball officials are warming up for a contest of their own that could help decide the future of sports broadcasting.

Next season, the professional baseball organization plans to begin streaming real-time video of games over the Internet, according to the head of its online division.

The move, which will be targeted largely at employees with high-speed Net access at work, would represent the first time a major sports league has made live games available in their entirety online, according to an MLB representative.

Sports leagues have been reluctant to embrace the Internet, partly out of fear of jeopardizing lucrative television contracts. As a result, what baseball does with its online broadcasts will be watched carefully in the industry to determine if the computer has a place alongside the TV set.

"Certainly technology (exists) today to stream live games through broadband, and it looks good," said MLB Advanced Media CEO Bob Bowman. "It's not as good as TV, but if you can't be near a TV, this is not a bad second place."

Bowman, whose company runs MLB.com, added that the first streams would be offered by next spring.

The league will initially limit the streams to a few dozen games and institute local blackouts to avoid a confrontation with TV and radio broadcasters. Nevertheless, the move would be a first for baseball, which started charging fans to hear online audio broadcasts this year and which increasingly sees the Net as a lucrative outlet for its programming.

Video Webcasting could open the door to a new source of revenue for the MLB organization and its franchise teams, as well as provide a model for other sports leagues. But success is far from ensured. Quality Webcasts require consumers to connect to the Internet at high speeds, using cable, DSL (digital subscriber line) or satellite services, which are not yet widely available outside of the workplace.

The league's move to closely control distribution over the Web could spark regulatory concerns like the ones the major record labels face over plans to create online music-subscription services.

And the experiment by MLB, which significantly enhanced its Net presence this year, could touch off conflicts with traditional broadcasters wary of the arrival of a competing medium--even if early renditions do not appear to pose an immediate threat to their businesses.

Asking fans to pay
For years, Web companies such as Yahoo were free to cut online distribution deals with local TV and radio stations that owned the broadcast rights to baseball games. But that changed last spring, when the league pulled in its Internet broadcast rights and began charging subscriptions for access to live audio Web feeds.

MLB also signed a three-year, $20 million deal that made Web streaming media company RealNetworks the exclusive technology and online distribution partner for baseball. The model for the RealNetworks deal mirrored exclusive deals between sports leagues and broadcast networks, albeit on a much smaller scale, by limiting access for online audio broadcasts to Real.com or the league's site.

The audio deal has helped RealNetworks drive membership to its GoldPass subscription service, which charges $9.95 a month for baseball games and a host of other video and audio content. The company recently said that it has signed up 400,000 paying active subscribers since August 2000, when the service launched.

In its first season, MLB.com signed up 120,000 paying subscribers, according to the league. Even though MLB may view this as a success, the organization ran into some birthing pains when its site went offline under a crush of fans on opening day.

MLB will continue to work with RealNetworks on the live video feeds, Bowman said. He wouldn't comment on how much those feeds would cost consumers, but said MLB.com would be justified in charging higher rates than it does for audio streams because of the additional expense of delivering video. He said, however, that keeping the price less than $20 a month would be "important."

MLB.com already lets people view online videos of archived games for $2.95 each or $14.95 for unlimited access. It also sells $9.95 subscriptions for season-long access to a searchable database of recorded plays called Custom Cuts, with new plays becoming available about an hour after a game ends.

According to MLB.com spokesman Jim Gallagher, the site lifts those recordings from satellite feeds provided by TV broadcasters. The league does not compensate broadcasters for those products.

The upcoming live video streams also will be re-purposed from local broadcasters that purchase rights to carry the games. Thus, if MLB.com decides to show a New York Yankees game online, it will stream the local MSG Network's broadcast.

As a result, MLB will need the close cooperation of local TV broadcasters to succeed. Gallagher said contract negotiations with News Corp.'s Fox Network, which owns national TV broadcast rights to MLB games, and local TV broadcasters over live video programming are in "extremely preliminary discussions and will be continued in the off season."

Local broadcasters and Fox did not immediately return phone calls seeking comment.

The league does not publish its revenues from TV licensing fees. Nevertheless, TV rights clearly represent a huge opportunity that it does not want to jeopardize.

"We are slaves to our rights holders," Gallagher said. "We are proceeding very carefully and in a very cordial fashion."

History of disputes
Still, cooperation may not be easily won. In one conflict that highlights the innate tension between traditional broadcasters and the Net, Walt Disney-owned ESPN earlier this year clashed with Charter Communications over terms for broadcasting ESPNews on Charter's cable TV network. The disagreement centered on Charter's proposed limits on how much ESPNews programming could be streamed via the Net, causing ESPN to balk.

The economics of Webcasting vs. television also have been on prominent display in wrangling over Olympics coverage, which has so far shut out the Net largely because of fears of cannibalizing lucrative TV contracts.

Since 1995, the International Olympics Committee has inked long-term deals with broadcasters from around the globe that run through 2008 worth an estimated $5.1 billion. NBC had the rights to cover last year's Summer Games in Sydney, Australia.

During those games, however, Web reporters were shunted from the Olympics playing field, leaving online news organizations dependent on stories produced by traditional media wire services.

Forrester Research analyst Eric Scheirer, who wrote a report titled "No Gold for These Online Olympics," criticized such policies as shortsighted.

"NBC worries that Internet viewing would cannibalize its TV audience and jeopardize its ad deals," Scheirer wrote. "But this protectionist stance is misguided. Internet distribution can effectively complement televised coverage--and attract its own audience and attendant revenues."

MLB.com is now taking some of the most aggressive steps yet among sports programmers to prove online broadcasts can stand alongside TV ones.

To protect TV broadcasters from unwanted Internet competition, the league plans to Webcast only locally televised games, holding off for now on nationally shown games. In addition, the league plans to limit Webcasts to fans who live outside the areas where games are broadcast locally.

"We can make sure certain people of certain geographic areas can't get games," Bowman said. "If we're going to stream a Red Sox game, the last thing we want is to get it into New England."

A high-speed pitch
Despite its long-range promise, turning the Internet into a moneymaking medium for the league, like television and radio, remains an experiment for now. One obvious barrier is the lack of broadband penetration in homes across the country. Most people still access the Internet through telephone wires, and the slow speeds would make it difficult to watch games comfortably.

The population of U.S. households with broadband access is expected to reach 8.6 million this year, according to Internet research company Jupiter Media Metrix. By 2005, that figure could reach 28.8 million.

"It's very far from being mass market by the sheer numbers of consumers with broadband connections," Jupiter analyst Patrick Keane said.

That hasn't deterred MLB.com. Sports leagues have traditionally acted like copyright holders, charging TV stations fees to broadcast their primary content. But with the Internet, leagues are stepping out of their roles as exclusive content owners and taking on the roles of distributors as well.

"The nice thing about the Internet is the middle person isn't as essential as it might be in other forms of media," MLB Advanced Media's Bowman said. "We can go directly to our fans and put it right up there for them to get."

That may sound ideal in theory. In reality, the vision of using the Internet to build a new type of broadcast network that circumvents traditional means has been difficult for many to achieve. Whether MLB.com can pull it off will also depend on whether people will enjoy watching baseball on the computer screen--oftentimes at work.

"Despite how fast your connection is, the PC isn't a very elegant place to sit back and watch a game," Jupiter's Keane said. "It will take a really intensely rabid fan base to ever be interested in this."

News.com's Evan Hansen contributed to this report.

 

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