Digitally Activated: Sports Centered

A Look at Online Sports Activations

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MLB and the NBA have taken different paths to achieve the same goal, producing digital content which resonates with its consumers.  MLB brought its efforts in-house with the formation of MLBAM, while the NBA effectively outsourced its digital operations to Turner Sports.  There is not an argument to be had concerning which methodology is correct.  MLB and the NBA’s organizational goals were different. 

The NBA desires to be globally recognized. Developing its own online presence would redirect resources from its goal.  The worldwide popularity of basketball allows the NBA to aspire to penetrate into the emerging markets of Brazil, Russia, India and China (BRIC).  Baseball’s limited appeal globally has necessitated that MLB focus its attention domestically.

The creation of MLBAM in 2000 enabled MLB to enter the digital sphere at a relatively low-cost.  According to Maury Brown of the Biz of Baseball blog, the formation of mlb.com was expected to cost $120 million dollars.  However, by the second year it was already profitable, after only $70-75 million worth of investment.  MLBAM has since become a reliable revenue generator for MLB.  It is speculated that MLBAM accounted for $450 million worth of revenue in 2008.  MLB’s early commitment to the Internet has created a gaping disparity between the content which its produces, and the digital content produced by the NBA and NFL.  Turner Sports has helped to close the gap between MLB and the NBA, but the NBA will never realize the profits from the Internet that MLB does. 

MLB looked at its situation and determined that they could underwrite the costs associated with entering the digital sphere. Meanwhile, the NBA evaluated its strengths to be incompatible with the development of its online presence.  MLB and the NBA made decisions in accordance with Turner and Shilbury’s (2010) recommendations.

In their paper, “The Impact of Emerging Technology in Sport Broadcasting on the Preconditions for Interorganizational Relationship (IOR) Formation in Professional Sports” Turner and Shilbury identify six antecedents which may lead a franchise, or league, to develop an IOR for their online initiatives: uncertainty; knowledge deficiency; resource acquisition; adaptive efficiencies; regulation; and strategic enhancement.  MLB was as uncertain of the Internet’s capabilities as anyone was during the year 2000; thus, it was not required that they bring in outside counsel for the development of their website.  Furthermore, they believed it would behoove them to acquire the tools necessary to develop a distinctive online presence.  MLB’s position in 2000 juxtaposed to the NBA’s position in 2008, was much more favorable.

The NBA determined the only precondition which they were in control of was uncertainty.  The NBA did not posses the capabilities, nor the desire, to manage an online presence which would be compatible with its brand image.  The NBA has become renowned for its innovation and creativity.  Were its online interface not to align with its image, the brand would suffer irreparable damage. Hence, the prudence in its decision to enter into a profit-sharing agreement with Turner Sports.  Tapping into Turner Sports’ expertise has increased the NBA’s credibility with its consumers.  

MLB and the NBA made decisions based upon the environment and organizational goals.  They assessed their current place in the digital sphere, and made decisions to strengthen their position.  MLB now has a viable business which is separated from the playing field, while the NBA is reaping the benefits of its online presence with minimal risk.  MLB and the NBA should serve as models for businesses deciding how to increase their online presence.  Sometimes you need to partner with an outside agency, and sometimes you can take it on yourself.  The only thing that is required, is a thoughtful cost-benefit analysis prior to making a decision.

Update: MLBAM launched the 2010 version of the MLB.com At Bat app on March 2nd.  MLBAM priced the app at $14.99, a $5.00 increase over last years version.  MLBAM’s revenue will increase by $2.5 million if it reaches its expected 500,000 subscribers. A $2.5 million increase is a modest projection considering MLB.com At Bat was the highest grossing app in its first day.

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Written by Peter Amador

February 26, 2010 at 12:11 PM

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