Olson’s Observations

I saw an article a couple weeks back that really made me happy. It turns out that my beloved Boston Red Sox are the techiest (is that even a word) baseball team in all of Major League Baseball. Turns out the Red Sox rely on two servers, one that is mobile for road trips and one that stays in the office. The road server holds digital video of every at bat for 2005 and select at bats from 1999 - 2004. Since teams aren’t allowed to bring technology into the dugout, the players just head into the clubhouse to view the video when they need to.

The Red Sox even credited their road server with some of the 2004 playoff success saying it was a crucial tool that brought about the greatest comeback in sports history and the eventual 2004 World Series title. This is what Red Sox IT Director Steve Conley had to say about it:

“In the sixth inning of that game, Dave Roberts pulled up every at-bat he could find of [Yankees reliever] Mariano Rivera pitching with a runner on first base,” Conley says. “He played that on a loop. He was trying to gain an edge. Then he went in as a pinch runner in the ninth inning, stole second base and scored, and we turned things around. Having that video was another tool in the shed.”

The Red Sox have an IT budget of around $1.5mm which is about the cost of an average utility infielder. While it is hard to determine the ROI on their technology spending since it does not have any direct financial implications, the ownership and players really believe that it works. I have to say I agree with them.

Baseball is a very unique sport. Statistics can be used very effectively (see Moneyball and Bill James) to gain an edge and there is time to review prior at bats in the club house and study the other team via (digital) video. This is true because there are so many measureable/recordable instances that happen in a game. Teams (and players) that are embracing and studying this special aspect of the game are doing incrementally better than they would just by spending the money they have. In essence, they are creating higher alpha through technology and mathematics. It’s a beautiful thing!

Disclaimer: I am a huge baseball nut and a proud member of Red Sox Nation so this article is admittedly a bit biased. Go Sox!

I, like many people, have logged into my computer during March Madness to watch some of the games on demand. Upon logging in I received a great product and the reviews of the service have been all around positive. However, I did notice something that seemed a tad out of place. I saw this logo on the video player:

That’s right; Major League Baseball Advanced Media (MLBAM) was distributing the content. MLBAM, launched in 2001, was brought to life for one purpose: to run the operations of all MLB’s franchises. Since it’s birth in 2001 it has done that and much more. PaidContent.org reports that, on the same day March Madness began,

in addition to managing the streaming of those 16 games for CBS, MLB.com also handled four spring-training games, the U.S.-Mexico World Baseball Classic match up, an NCAA volleyball tournament, two NCAA baseball games and the NCAA wrestling championships.

This is an incredible feat for a company that just started streaming its own video in 2002. The transition MLB has made from licensee to vendor is nothing short of remarkable. They have truly changed the public’s perception of what the web can deliver. MLB.com’s core competency in streaming video is apparent and they can now utilize this technology they have already paid for in other markets to reap large returns. It was a brilliant move and one that could be indicative of where the content industry is going.

With the advent of feeds and better streaming technologies content producers will be able to become efficient content vendors. Think of the MLB like today’s radio DJ. The MLB used to need a content partner or partners to distribute their games for them (sure, they still use these partners today but envision a future where they may not need to). Now, with the advent of efficient streaming online video, they can easily distribute their own content and may be able to phase out the middlemen or use different middlemen (MLB.com is a middleman for March Madness). The same could be true of the radio DJ. They used to need the radio station to get their voice out there. Now, if they are a big enough personality, they could presumably start a podcast or their own streaming radio show and easily distribute their own content.

The technology is also bringing more obscure sports (and presumably other content as well) to people who want to see them. For example, MLB.com is working with (and invested in) the World Championship Sports Network who’s mission is to bring the World Championships of many sports (skiing, snowboarding, bobsledding, cycling, etc.) to users desktops.

I, for example, love cycling but it is very hard to find coverage of the world championships or the mountain bike championships or even the recent Amgen Tour of California. The TV coverage is out there but it is often sparse and on at inconvenient times. I don’t blame the TV folks though. Cycling just doesn’t have the audience in the US that other sports, like baseball, do and a lower audience means lower ad revenue.

The problem is that the TV stations are distributing the cycling coverage (in this case) to a mass audience. There is a small, but passionate group, who wants to see this coverage. Streaming video would allow this group to get the content while freeing up the mass media for shows with mass appeal. The other benefit is that the content producer ends up with a very targeted audience which means higher ad rates. So, they now have a choice of three business models that would be presumably lucrative:

1. Support the content through a subscription. People probably will pay since it beats the alternative of little or no coverage.

2. Support the content through ads (my preferred method) since you are able to get the content out at a low cost and are able to charge a high ad rate since the audience is very targeted. Also, users mind the ads less (and may even appreciate them) since they are targeted and, therefore, more useful.

3. Use a mix of both or allow users to choose whether or not they want to pay for the content or view ads and receive the content for free.

The winds of change are blowing in the content industry and MLB.com is one of the companies leading the way. I am very excited to see where MLBAM and other content technologies go and how they change our lives. Really though, that piece was just an excuse to say: Go Red Sox!!!