MLB Advanced Media gets its start
In late-2000, following months of lobbying by a few forward-thinking Major League Baseball (MLB) owners, Baseball Advanced Media (BAM) was formed, pooling the digital rights of the entire league into one jointly owned entity. BAM’s main goal at the time was leveling the internet playing field among all 30 teams and establishing a foothold on the web for baseball. Despite the rise of the internet in the late-1990s and the dot-com bubble (that had yet to burst) leading to incredible excitement about opportunities in a new digital economy, baseball did not even own “MLB.com” and many individual teams had yet to build websites.1 Initially, BAM attempted to leverage external expertise and outsource website creation, but after a disastrous first attempt that resulted in consultant-built MLB.com barely functioning, BAM decided to bring all technology development in-house.2 It was this decision to control the core technology that would enable BAM to become a digital powerhouse over the next decade.
Historically, MLB video broadcast rights have been split into local and national distribution agreements. Under this distribution system, each MLB team has the right to telecast their games on TV in their home market (except those covered by national TV deals) and individually negotiates with local TV networks, primarily regionally focused sports stations on cable, to sell these rights. Additionally, MLB separately negotiates with national TV networks, such as Fox, TBS, and ESPN, to sell the rights to nationally broadcast a smaller number of games, including all playoff games. While a small number of games would be shown on freely available broadcast TV, fans had to purchase increasingly expensive cable packages to watch the majority of games.3 Prior to 2001, MLB had no direct distribution channel to connect fans with baseball broadcasts.
This started to change following the arrival of Japanese superstar Ichiro Suzuki to the Major Leagues’ Seattle Mariners in 2001. To allow Japanese fans to follow Ichiro’s transition to US baseball, BAM experimented with live audio streaming of Mariners games, building the required technology from scratch. This initial effort failed to attract a significant fan base, but the seeds of direct distribution had been planted and the following year in August 2002, BAM decided to experiment with its first online video stream of a regular season game. While the video quality was choppy at best, due to both the early stage of BAM’s streaming technology and lack of widespread high-speed internet at the time, over 30,000 fans watched the game. This successful experiment led to BAM launching the first paid online streaming package for US professional sports, enabling fans all over the world to watch nine important regular season games and the playoffs. The following year, BAM made a bold move and launched an online package that let fans stream all games outside their home market that were not on national TV. This proved to be a tremendous success, with over 100,000 customers buying the $79.95 package in the first year, enabled BAM to become financially profitable for the first time.4
This digital success led Major League Baseball’s BAM to becoming an unexpected pioneer in both online video streaming and direct content distribution, two trends that have shaped the media landscape over the past decade. BAM’s early entry into online streaming led to the development of advanced technology and established infrastructure that they leveraged to create a white label streaming service for other companies. BAM services now run the backend streaming for other sports leagues, including the NHL and WWE, and for global entertainment companies, including HBO, ESPN, and Sony. Additionally, BAM enabled Major League Baseball to go directly to consumers with their content, disintermediating the traditional distributors, over a decade ago. Despite widespread pushback from cable and satellite providers, other entertainment companies, including HBO (using BAM’s technology), are now attempting to adopt this model as well.5 Direct distribution to consumers should enable content providers to both capture additional margin and to create a closer relationship with their consumers.
Where BAM goes from here
Earlier this year, MLB spun BAM off as an independently run subsidiary. As part of this deal, Disney acquired a 33% stake in the company for $1 billion, with the option to acquire majority ownership in the future. One of the first projects the newly independent BAM is taking on is working with ESPN to create a direct-to-consumer streaming channel.6 With their established technology, infrastructure, and proven business model, BAM is well positioned to take advantage of the industry-wide move towards direct-to-consumer content distribution and should aggressively pursue this plan.
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- Salter, Chuck. “MLB Advanced Media’s Bob Bowman is Playing Digital Hardball. And He’s Winning.” www.fastcompany.com/1822802/mlb-advanced-medias-bob-bowman-playing-digital-hardball-and-hes-winning, accessed Nov. 2016.
- Goldman, Shayna. “An In-Depth Look at the Groundbreaking Partnership Between the NHL and MLBAM.” www.sporttechie.com/2015/08/23/sports/mlb/depth-look-groundbreaking-partnership-nhl-mlbam, accessed Nov. 2016.
- Thurm, Wendy. “MLB Strongly Defends Local Broadcast Territories in Court.” www.fangraphs.com/blogs/mlb-strongly-defends-local-broadcast-territories-in-court, accessed Nov. 2016.
- Popper, Ben. “The changeup. How baseball’s tech team built the future of television.” www.theverge.com/2015/8/4/9090897/mlb-bam-live-streaming-internet-tv-nhl-hbo-now-espn, accessed Nov. 2016.
- Fisher, Eric. “Sony, WWE extend MLBAM’s non-baseball business.” http://www.sportsbusinessdaily.com/Journal/Issues/2014/01/13/Media/BAM-Sony.aspx, accessed Nov. 2016.
- Castillo, Michelle. “Why Disney is spending $1 billion on the MLB’s technology unit.” www.cnbc.com/2016/08/09/how-disney-mlb-advanced-media-deal-sets-them-up-for-the-future.html, accessed Nov. 2016.