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 Extra Innings, but Limited Access Minimize
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Posted by: James 1/25/2007 1:11 PM

While last year’s travails with Comcast wound up with me getting a free season of MLB Extra Innings (since they run on the same channels as NHL Center Ice), I was not pleased when I read a press release last week.  In the release, Major League Baseball announced that their Extra Innings baseball package would only be available on DirecTV beginning next year.  I think this is a mistake for many reasons.

 

First, the NFL is also in a DirecTV-only contract with their Sunday Ticket package.  Yes, the NFL can do no wrong the past decade when it comes to most decisions they make, I still think it’s a mistake to only have one carrier offer your product.  I’m sure they get more money from DirecTV for having the privilege of exclusivity and DirecTV can use that as a huge selling point, but I still think it limits the amount the league can actually make.

 

Baseball right now is arguably in a “renaissance” when you talk about attendance and new ballparks and player salaries and advertising revenue.  Of course if you talk about playoff TV ratings or doping scandals or clueless commissioners who think it’s a good idea to allow the All Star Game winner to get home field advantage in the World Series, you could say that baseball isn’t without its problems right now.

 

With that being said, I don’t think MLB should think it can do what it wants in regards to TV access like the NFL.  The amount of people who will actually drop their current carrier just to subscribe to DirecTV is far less than the amount of previous Extra Innings subscribers from Dish Network and all cable networks who used to be able to offer this package.  MLB.tv subscriptions allow you to see the same amount of games but I am not sold on that technology yet, as I just don’t like watching shows on my computer.

 

I don’t blame DirecTV for making these deals.  It really is a nice selling point for new subscribers but overall, I think most sports fans lose when “exclusive” deals like these are cut.  The idea isn’t as abominable as pay-per-game/view concept for regular season games (anyone in Chicago remember Hawks Vision?) but it still gives consumers less choice.  Let’s use me as an example.  I love satellite TV but I simply can’t get access because I’m surrounded by trees, thus MLB loses a potential Extra Innings subscriber since I’m stuck with cable.

 

As for us high definition TV geeks, the NFL is once again 3 steps ahead of the competition.  For an extra fee, you can have all your Sunday Ticket games broadcast in high definition.  I would gladly pay and extra $100 a year for all my NHL Center Ice games in high def and would do the same for the baseball package.

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Re: Extra Innings, but Limited Access    By JA3 on 1/25/2007 4:44 PM
You're right that NFL economics are totally different. It's pretty much understood that if the NFL opens sunday ticket to the cable companies, the value of their network TV deals would pummet. The big 4 will not pay for tens of millions of captive eyeballs who are stuck watching 1-2 games at a time if bunches of them can switch to another game. DirecTV is small enough to avoid this effect and is the NFL's "playground" to work on services like HD and all the extra interactive channels. The NFL is very careful with this stuff - they know that the day they open up Sunday ticket, they have to be ready to abandon much of their TV revenue and base their future growth on being a pay-per-view sport.

As to MLB, without doing any research, I can imagine a scenario where this is a good idea.

MLB can't really justify an expensive service that already requires satellite or digital cable as a marketing ploy or a way to bring new eyeballs to the game. As a premium service for fans, it should make money, and like any part of the business, show decent growth. If the # of MLB subscribers is stagnant, which is likely the case, then MLB has to shake things up.

I'm guessing DirecTV was able to show them that they could grow Extra Innings revenue over the term of the contract, in a few ways:

1. DTV probably pays them a VAST amount more $$$ per subscriber than any cable company, in exchange for exclusivity.
DTV's business model is all about growing the #s of subscribers who are tied into those 12+ month deals. I'll go out on a limb and say that DTV doesn't care if their net earnings from Extra Innings stay the same or drop, as long as it brings in enough new subscribers under those 12 month contracts.

Cable, as a monopoly provider with less overall bandwidth for TV channels than satellite, has completely different economics -- in terms of competition, they don't need these deals to attract subscribers because they're still the 800lb. Gorilla to satellite's chimp. Content providers are selling to THEM, trying to get to those captive eyeballs, having to prove why cable companies should invest scarce bandwidth on their product. MLB was probably on the bad side of that deal.

2. DirecTV probably showed MLB market surveys showing how many people will ditch their current service immediately for DirecTV and get Extra Innings. Combine this with item #1, and my guess is DirecTV was able to show MLB that they could make MORE money, the first year, from exclusivity than under their current deal.

3. New Sunday-ticket style interactive channels and HD content to draw in new subscribers. When MLB had to negotiate with a multitude of cable providers, no way would they be able to roll these out to all their subscribers. Many Cable Cos. are so streched for bandwidth that they would demand too much money or have to refuse outright. NFL is not "3 steps ahead" in interactive and HD in spite of DirecTV - it's because of them.

Of course, I'm no media maven and have done no research, so this could all be full of crap - the cynical side of me says that your main error is confusing the marketing corporations known as "MLB" and "NFL" with the guys playing games on the field. It isn't their job to get as many people as possible to watch the game. It's their jobs to deliver as many dollars to the league ownership as possible, and that goal can conflict with what the fans want.

Oh, and BTW    By JA3 on 1/25/2007 4:45 PM
GO BEARS!

Re: Extra Innings, but Limited Access    By KB's on 1/25/2007 5:01 PM
Great post JA3. I have an addendum to it. Hope it isn't to dorky and off topic for everyone, but...
The cable companies COULD have far more bandwidth than satellite. It all depends on whether a specific cable provider has built out their network with fiber optics. Cable is very ammenable to fiber upgrades. Once that occurs their bandwidth goes through the roof and is limited only by the epuipment in their equipment rooms (which always gets better). In the Chicago suburb area, I am seeing neighborhoods that have cable internet download speeds well over 10Mb/s. That does not prove anything in and of itself, but it is an indicator of the bandwidth available. An uncomprressed HDDVD/Blu-Ray are on the order of 39MB/s. That is only 3 houses worth of internet bandwidth. Granted, they are not sending that level of HD with their regular HD stations, but it is coming faster than it will with satellite. Cable went through a major bandwidth deficit as compared to satellite since it went online, but that is majorly changing.

BTW If you want HD and can get satellite, the only way to go is DISH network with their acquisition of VOOM's 40+ HD stations.

Re: Extra Innings, but Limited Access    By KB's on 1/25/2007 5:02 PM
and FUCK THE BEARS!!!!!!

Re: Extra Innings, but Limited Access    By J on 1/26/2007 12:15 AM
Blah, Blah, Blah... FUCK THE BEARS!!!! (again)

Re: Extra Innings, but Limited Access    By Milo on 1/26/2007 11:54 AM
UM, KB, you really need to get a life!

Re: Extra Innings, but Limited Access    By Syl on 1/26/2007 12:45 PM
Only Verizon is making a point of installing or using hardwire/fibre optics systems accross the nation.

However, MLB.com should be used by any true to the core baseball fan - I know I've mentioned three screens (TV, PC & laptop) all showing different games for the viewer's enjoyment. No line for the restroom. My bad for having a 'liking' for Giants, Reds, Orioles, Mariners and wanting to watch other looooosers fail (LaLosers, Braves & NYY). I will happily live in bad-ness.

Screw the NFL for killing extra Thursday and Saturday games for the PUBLIC.

Re: Extra Innings, but Limited Access    By KB's on 1/29/2007 12:01 PM
Aahh, Verizon's FiOS service. Fiber to the home will revolutionize the internet, communications, and TV. If that is offered in your area, jump on that bandwagon!!!

Re: Extra Innings, but Limited Access    By JA3 on 1/29/2007 12:37 PM
FiOS is actually offered in most of Rhode Island. Except the actual island parts, which is where I live. :( I guess I need to bend the ear of my friends in Bloomington...

On the bright side, I think the offering has put a scare into Cox, which is why I get 15Mbit down/2Mbit up cable internet. :)

And the real point of this comment, since James hasn't posted yet today: GO BEARS!


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