MLB Advanced Media

MLB Advanced Media, L.P.
Limited partnership
Industry Internet media
Founded June 2000 (2000-06)
Headquarters New York City
Key people
 Robert A. Bowman, CEO
Products MLB.com, MiLB.com, MLB.TV, Gameday Audio
Revenue $300 million (2006), $620 million (2012)[1]
Subsidiaries
Website mlbam.com

MLB Advanced Media (MLBAM) is a limited partnership of the club owners of Major League Baseball based in New York City and is the Internet and interactive branch of the league.

Robert Bowman, president and CEO of MLBAM, indicated in May 2012 that MLBAM generates around $620 million a year in revenue.[2] Forbes went as far as calling the company "the Biggest Media Company You've Never Heard Of".[3]

The company operates the official web site for the league and the thirty Major League Baseball club web sites via MLB.com, which draws four million hits per day. The site offers news, standings, statistics, and schedules, and subscribers have access to live audio and video broadcasts of most games. The company also employs reporters, with one assigned to each team for the season and others serving more general beats. MLB Advanced Media also owns and operates BaseballChannel.tv and MLB Radio.

MLBAM also runs and/or owns the official web sites of Minor League Baseball, YES Network (the television broadcaster of the New York Yankees), SportsNet New York (the television broadcaster of the New York Mets). It has also provided the backend infrastructure for WWE Network, WatchESPN, ESPN3, HBO Now, and PGA Tour Live.[4][5]

History

Major League Baseball Advanced Media was formed in 2000 by Baseball Commissioner Bud Selig to consolidate online rights and ticket sales for Major League Baseball teams. MLBAM was to be capitalized with $120 million with $1 million per team contributed each year for four years. The company hired an outside consulting firm to build its websites which failed to work properly, which lead them to develop their own tech. In 2002, the attempt to run a streaming package around Japanese player Ichiro Suzuki of the Mariners to little success. With these failures, MLB Advance Media used its ticket rights to get an advance from Ticketmaster in mid 2002.[6]

With its $10 million advance from Ticketmaster, MLBAM used it meet payroll and make another run at video. A Texas Rangers - New York Yankees game was produced and broadcast online on August 26, 2002. The company continued to tweak online broadcasting. A nine-game pennant race package was sold two week later followed by a $19.95 postseason package. Concurrently with 2003 spring training, MLB.tv was launched at $79.95 for a full season package, which garnered 100,000 subscribers. Those revenues halted the need for additional capital from the teams, taking only $77 million of the original planned $120 million.[6]

In 2005, MLBAM bought ticket sales company Tickets.com in a deal worth approximately $66 million.[7] MLBAM indicated at the time that the move was spurred by increased attendance at both the major and minor league levels of the sport and the need to make ticket purchases convenient for fans.[8] In 2007, MLBAM signed a five-year deal with StubHub.[9]

In April 2008, MLBAM signed with Yahoo for ad sales for three years. The company replaced Yahoo with Auditude in a multi-year deal in April 2011.[5]

On February 20, 2014, Sports Illustrated announced the formation of 120 Sports, a streaming sports video service, with financial backing from MLBAM, the NHL, and Silver Chalice.[10]

2K announced that it would not exercise its license to publish a 2015 MLB video game for the Xbox. Thus MLBAM developed a game from scratch in one and half years with only a dozen programmers. The game however was poorly received by the critics.[6]

On August 4, 2015, the National Hockey League announced a six-year deal with MLBAM for it to take over its digital properties, including its websites, mobile apps, operations and distribution of its digital streaming service NHL GameCenter Live (renamed NHL.tv outside of Canada), and migrating NHL Network to the facilities of MLB Network. The deal is worth $600 million over the life of the contract, and also grants the NHL an equity stake of up to 10% in a spin-out of MLBAM's technology business.[6][11][12]

MLB At Bat

The most successful venture to date for MLBAM is the At Bat app for the iPhone and iPad, which is downloadable from the iTunes store and also available as an Android app on Google Play.[1] In April 2012, MLBAM announced that the MLB.com At Bat 12 application surpassed the three million download mark, achieving the milestone only eight days into the 2012 MLB regular season and more than four months earlier than its record-setting 2011 campaign.[13]

MLBAM CEO Robert Bowman had this to say about MLBAM in an article entitled "What did you learn in 2012 that you will carry forth with you into 2013?":

"The toughest thing to do in a poker hand and in this business is stand pat. This year we decided to make our At Bat app universal between the iPad and iPhone, which we knew going in would cost us 100,000 subscribers. We threw in At Bat for free with an MLB.tv subscription, which would also cost us revenue. And we added up a monthly At Bat subscription to get people to test the product out. We gave customers more options and a better deal, and we had a record year in paid content. We learned we're at an inflection point. Customers now understand and appreciate the nuance of content economics. You'll see more of that value pricing from us going forward."[14]

Intellectual property

MLBAM vs. CDM

MLBAM signed a five-year, $50 million interactive rights deal with the MLB Players Association in 2005 to acquire most of the players' online rights, including fantasy sports. The deal exacerbated tension between fantasy sports companies and professional leagues and players associations over the rights to player profiles and statistics. The players associations of the major sports leagues believed that fantasy games using player names were subject to licensing due to the right of publicity of the players involved. During the 1980s and 1990s many companies signed licensing deals with the player associations, but many companies did not. The issue came to a head when MLBAM denied a fantasy baseball licensing agreement to St. Louis-based CBC Distribution and Marketing Inc., the parent company of CDM Sports. CBC filed suit as a result. CBC argued that intellectual property laws and so-called "right of publicity" laws don't apply to the statistics used in fantasy sports.[15] The FSTA filed a friend of the court brief in support of CBC which argued that MLBAM's step to deny CBC a license was the first step to limit the number of companies in the market, that could result in MLBAM having a monopoly. CBC won the lawsuit as U.S. District Court Judge Mary Ann Medler ruled that statistics are part of the public domain and can be used at no cost by fantasy companies. "The names and playing records of major-league baseball players as used in CBC's fantasy games are not copyrightable," Medler wrote. "Therefore, federal copyright law does not pre-empt the players' claimed right of publicity."[15] The 8th Circuit Court of Appeals upheld the decision in October 2007.[16] "It would be a strange law that a person would not have a First Amendment right to use information that is available to everyone," a three-judge panel said in its ruling.[17]

On June 2, 2008, the United States Supreme Court denied MLB's petition for a writ of certiorari.[18]

MLBAM has lost nearly $2 million on the case and may now opt out of the agreement with the MLBPA and also faces the potential loss of millions of dollars of licensing fees from major media companies, such as Fox.[19] ESPN opted out of a seven-year, $140 million deal with MLBAM after three years in January 2008. The decision to opt out came less than three months after the CDM case was upheld on appeal as "ESPN thinks the court's decision means that it was paying a license fee for fantasy rights that others, such as CDM, were getting free."[20]

MLBAM patents and patent infringement issues

MLBAM has been issued some patents with others still "patent pending" before the U.S. Patent & Trademark Office. For example, MLBAM was awarded a patent for technology that blocked certain fans from viewing local games online.[21] MLBAM was also awarded a patent for geolocation.[22] MLBAM was particularly proud of U.S. Patent No. 7,486,943 for geolocating baseball fans for live MLB.TV games.[23] In addition, MLBAM was issued a patent for a system and method for allocating seats for a ticketed event.[24] Another example of an MLBAM patent is U.S. Patent No. 8,045,965 entitled "System and method for venue-to-venue messaging,"[25] which lists MLBAM CEO Robert A. Bowman[26] as a co-inventor (inventorship).

MLBAM has been the subject of patent infringement lawsuits. See, for example, DDB Techs., L.L.C. v. MLB Advanced Media, L.P.[27] This case began as a patent infringement suit between DDB Technologies (DDB) and MLBAM over several patents for generating a computer simulation of a live event for display on a viewer's computer as well as one patent for a method allowing a viewer to search for certain information about a live event.[28] The technology at issue was being used for simulation of baseball and other sporting activities.[29] The case was finally settled with MLBAM acquiring rights to the DDB patent portfolio.[30]

MLBAM has also been sued for patent infringement of the Front Row Technologies[31] patent portfolio[32] covering the delivery of sports and entertainment video to hand held devices such as smartphones (e.g., iPhone, Android), pad computing devices (e.g., iPad, Kindle, etc.), laptop computers and the like.[33] According to the patent infringement complaint filed in the United States District Court for the Northern District of Texas,[34] MLBAM infringed U.S. Patent Number 8,090,321[35] entitled "Transmitting sports and entertainment data to wireless hand held devices over a telecommunications network."[36]

BAMTech

In February 2015, it was reported that MLBAM was planning to spin-out its streaming technology business into a separate company with outside investors. The formation of the company, known as BAM Tech, was approved by MLB Advanced Media's board of directors on August 13, 2015.[6] Under the plan, MLB-specific properties (such as MLB.com) would remain under league control.[37] The company's major clients include the NHL, HBO (for its HBO Now service), the PGA Tour, Riot Games, WatchESPN, and WWE Network.[38][39]

In August 2016, The Walt Disney Company acquired a 1/3 stake in the company for $1 billion, with an option to acquire a majority stake in the future (which was exercised in 2017).[39] Disney's investment is connected to a planned ESPN over-the-top service,[40], which was planned to primarily draw from content that ESPN holds rights to but does not air on television.[41]

On November 1, 2016, BAM Tech announced a partnership with Discovery Communications to form a European joint venture known as BAMTech Europe. Its first client is Eurosport, the pan-European rightsholder of the Olympic Games beginning 2018.[42] The following month, Riot Games announced a deal with BAM Tech for the company to distribute and monetize broadcasts of professional competitions in its multiplayer video game League of Legends through 2023. BAM Tech will pay Riot at least $50 million per-year, and split advertising revenue.[43][44]

On August 8, 2017, Disney announced that it would increase its ownership in the company to a 75% controlling stake for $1.58 billion, subject to regulatory approval. Disney concurrently announced that it planned to launch an over-the-top subscription service dedicated to its entertainment content in 2019 using BAMTech infrastructure. It will draw from Disney and Pixar's film libraries, as well as content from Disney Channel, Disney Junior, and Disney XD's libraries. It will replace Netflix as the exclusive subscription VOD rightsholder of future Disney and Pixar theatrical releases in the United States following its launch. It is currently unclear if subsidiaries Marvel Studios and Lucasfilm will be involved in the service. Disney also reiterated its plan to launch an ESPN-branded OTT service in early-2018, drawing from ESPN-owned college sports and tennis rights, as well as MLB, NHL, and Major League Soccer content.[39]

See also

References

  1. 1 2 "MLB Advanced Media's Bob Bowman Is Playing Digital Hardball. And He's Winning.". Fast Company.
  2. ↑ "Major League Baseball's Advanced Media is a Hit - NYConvergence.com". NYConvergence.com.
  3. ↑ "A closer look at NHL’s partnership with MLBAM". Sportsnet.ca. Retrieved 4 August 2015.
  4. ↑ "PGA Tour-MLBAM initiative began around Augusta picnic table". Sports Business Journal. Retrieved 30 June 2016.
  5. 1 2 Spangler, Todd (April 6, 2011). "MLBAM Inks Ad Deal With Auditude". Multichannel News. Retrieved April 7, 2011.
  6. 1 2 3 4 5 Ben Popper. "The Change Up: How baseball’s tech team built the future of television". The Verge. Vox Media.
  7. ↑ "Company News Major League Baseball Unit Purchasing Tickets.com". New York Times. February 16, 2005. Retrieved August 17, 2016.
  8. ↑ "MLB Acquires Tickets.com". internetnews.com.
  9. ↑ Stone, Brad; Richtel, Matt (Aug 2, 2007). "Baseball Gets Into Resale of Tickets". NYTimes. The New York Times Company. Retrieved August 1, 2016.
  10. ↑ "Time Inc, sports leagues to launch online streaming sports network". Chicago Tribune. Chicago Tribune Media Group. Reuters. February 21, 2014. Retrieved August 17, 2016.
  11. ↑ "Pro Baseball’s Streaming Video Unit Gets Ready for a $3 Billion Spinoff by Adding Pro Hockey". Re/code. Vox Media. Retrieved 4 August 2015.
  12. ↑ "MLB’s Tech Unit Wins NHL Streaming Business". The Wall Street Journal. Retrieved 4 August 2015.(subscription required)
  13. ↑ Brown, Maury (August 13, 2015). "MLB Approves New Digital Media Company Spin-Off That Will Create Billions In New Revenues". Forbes. Forbes Media LLC.
  14. ↑ "MLB Advanced Media CEO Bob Bowman On Users Adopting And Adapting". Fast Company.
  15. 1 2 "Fantasy leagues permitted to use MLB names, stats". ESPN. 2006-08-08. Retrieved 2007-07-28.
  16. ↑ "svmedialaw.com" (PDF). svmedialaw.com. Retrieved 2012-10-14.
  17. ↑ Van Voris, Bob; Jeff St. Onge (October 16, 2007). "Fantasy Sports Win Right to Player Names, Statistics". Bloomerberg. Retrieved 2007-07-28.
  18. ↑ Order List - June 2, 2008
  19. ↑ Fisher, Eric (October 22, 2007). "Fantasy challenge costly for MLBAM, union". Sports Business Journal. Street & Smith's Sports Group. Retrieved 2007-11-01.
  20. ↑ Ourand, John; Eric Fisher (January 21, 2008). "ESPN seeks better MLBAM terms". Sports Business Journal. Street & Smith's Sports Group. Retrieved 2008-01-25.
  21. ↑ Klayman, Ben (2009-05-15). "Major League Baseball awarded geolocation patent". Reuters. Retrieved 2012-10-14.
  22. ↑ "MLBAM Issued Patent for Geolocation. Could MLB Extra Innings for Mobile Be Far Behind?". Bizofbaseball.com. 2009-05-14. Retrieved 2012-10-14.
  23. ↑ "MLB.TV granted landmark U.S. patent | MLB.com: News". Mlb.mlb.com. 2012-06-19. Retrieved 2012-10-14.
  24. ↑ "Patent US8121872 - System and method for allocating seats for a ticketed event - Google Patents". Google.com. Retrieved 2012-10-14.
  25. ↑ http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-bool.html&r=1&f=G&l=50&co1=AND&d=PTXT&s1=8,045,965&OS=8,045,965&RS=8,045,965
  26. ↑ "Robert A Bowman". patentbuddy.com.
  27. ↑ http://www.filewrapper.com/index.cfm/2008/2/14/Discovery-needed-to-determine-effect-of-employment-agreement-on-patent-ownership-but-no-jury-trial
  28. ↑ "DDB TECHNOLOGIES v. MLB ADVANCED MEDIA". Findlaw.
  29. ↑ http://www.ebglaw.com/files/19912_DDB%20Technologies%20Client%20Alert.pdf
  30. ↑ "DDB Technologies and MLB Advanced Media Reach Patent Portfolio". Bloomberg.
  31. ↑ http://www.frontrowtechnologies.com
  32. ↑ http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-bool.html&r=0&f=S&l=50&TERM1=Front+Row&FIELD1=ASNM&co1=AND&TERM2=Ortiz&FIELD2=INNM&d=PTXT
  33. ↑ "Front Row Hits MLB With Hand-Held Video Patent Suit". law360.com.
  34. ↑ "Front Row Technologies v. MLB Advanced Media et. al.". Scribd.
  35. ↑ http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-bool.html&r=5&f=G&l=50&co1=AND&d=PTXT&s1=%22Front+Row%22.ASNM.&s2=Ortiz.INNM.&OS=AN/%22Front+Row%22+AND+IN/Ortiz&RS=AN/%22Front+Row%22+AND+IN/Ortiz
  36. ↑ "Patent US8090321 - Transmitting sports and entertainment data to wireless hand held devices ... - Google Patents". google.com.
  37. ↑ "MLB considers spinning off its powerful streaming business". The Verge. Retrieved 4 August 2015.
  38. ↑ Spangler, Todd (2014-12-09). "HBO CTO Otto Berkes Resigns After Network Enlists MLB to Build OTT Platform". Variety. Retrieved 2017-08-09.
  39. 1 2 3 Spangler, Todd (2017-08-08). "Disney to End Netflix Deal, Sets Launch of ESPN and Disney-Branded Streaming Services". Variety. Retrieved 2017-08-09.
  40. ↑ "What’s Behind Disney’s $1 Billion Investment in Major League Baseball’s Digital Arm". Variety. Retrieved 18 December 2016.
  41. ↑ Miller, Daniel (August 9, 2016). "Walt Disney Co. buys stake in video streaming service BAMTech". Los Angeles Times. Retrieved August 17, 2016.
  42. ↑ "Discovery, MLB's Streaming Business Partner to Launch BAMTech Europe". The Hollywood Reporter. Retrieved 1 November 2016.
  43. ↑ "League of Legends’ maker inks rich broadcast contract, with an eye on premium content". Polygon. Vox Media. Retrieved 18 December 2016.
  44. ↑ "‘League of Legends’ E-Sports Contests Lure Newest Fan: Major League Baseball". Wall Street Journal. Retrieved 18 December 2016.
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