Disney, NBC in Battle to Stream Sports (and More)
Disney plans to introduce an ESPN streaming service, while NBC is packaging its Rio Olympics coverage through Playmaker.
As athletes compete in Rio for Olympic glory, an equally cutthroat contest is taking shape in the sports world — one for streaming dominance.
On Aug. 9, Disney revealed it will pay $1 billion for a 33 percent stake in Major League Baseball's streaming video business, BAMTech, the latest in a string of deals that underscore the value in owning emerging distribution channels.
It's a move that, during a call with investors, CEO Bob Iger said will help ensure that Disney brands, especially ESPN, "remain strong, vital and relevant in a totally changed media landscape." To that end, Disney, which has the option to acquire a majority stake during the next few years, will work with BAMTech to develop an ESPN streaming service to offer such sports as college athletics and cricket that aren't available via its cable channels. It's not exactly the ESPN over-the-top service sports fans have been clamoring for, but analysts say it's a step toward acknowledging cable isn't the only way to reach audiences.
"When you start to see the content guys like Disney invest that much money into the space, you realize just how important these services are for the future of the digital business," says Frost & Sullivan online video analyst Dan Rayburn.
Iger has been careful to note that cable subscriptions are still the best way to monetize ESPN, but during the investor call he acknowledged that in the future Disney could look to hold back content to put on its own platforms instead of a third-party distributor — though he said it was "really premature" to have those discussions now.
The company that would help Disney do that is BAMTech. It's an outgrowth of MLB Advanced Media, which is owned by the league's 30 teams and offers the popular At Bat app and MLB.tv for streaming out-of-market games. During the 16 years since launching, MLBAM has become a dominant force in streaming video, powering everything from HBO Now to the WWE Network online service. MLBAM is projected to earn as much as $1.3 billion in revenue in 2016, BAMTech more than $250 million. (An undisclosed piece of Disney's investment will get paid back to MLB owners.)
With Disney's investment, BAMTech becomes a $3 billion business and has what MLBAM CEO Bob Bowman calls a partner that "sees the need and understands the vision" that content will be distributed over-the-top. He's long had the vision to spin BAMTech into its own business, the seeds of which were first planted, he says, when it began working with ESPN to power WatchESPN, the network's cable-authenticated streaming service. "That they trusted both our technology and the fact that we were agnostic, that we would give them the best that we give baseball — that was quite a gutsy move on ESPN's part," he says "Then and there we started realizing that we could start to grow the business."
With BAMTech's business booming, it's no surprise other companies are jockeying for a piece. Turner in 2015 acquired a majority stake in video tech provider iStreamPlanet, and NBC Sports has packaged its streaming technology into a new service, Playmaker, that it has begun licensing to partners including the International Olympic Committee. Playmaker was among the services the NHL considered to power its TV broadcasting and streaming operations, but the deal ultimately went to BAMTech, in exchange for $100 million a year for six years and small stake in the business. While BAM may have snagged that deal, NBC Sports digital GM Rick Cordella says Playmaker can compete by focusing on powering the live sports experience.
He notes Playmaker is being put to the test in Rio, where NBC is live-streaming 4,500 hours of coverage over two-plus weeks. The broadcaster says viewers already had logged 1.86 billion live-streaming minutes after day 10 of the Games. "This isn't a business we're starting from scratch," says Cordella. "We already do this, and we are a client of ourselves. When you go through a big event like the Olympics, which really stretches you, I think the clients benefit from that."
Now, flush with Disney's investment, BAMTech plans to continue to bid for sports rights of its own. Bowman acknowledges that the move will create a complex dynamic, potentially putting BAMTech up against new owner Disney. But he also points to the opportunity to work together with ESPN to bid for rights, noting that the leagues are increasingly divvying up digital and linear rights to multiple platforms. "They see these big dollar signs and, equally important, they see a big footprint and huge traffic," he says, adding, "we're all fighting over the fans and trying to develop the fans of the future."
A version of this story first appeared in the Aug. 26 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.