In an agreement billed as one of the largest-ever Internet-only content deals, Microsoft has won the right to offer streaming audio and video of Major League Baseball games through its MSN service.
As part of their monthly US$9.95 fee, MSN Premium users also will get MLB.com’s All Access service, which MLB.com sells directly for $19.95 per month. The service includes live game audio and video, plus features such as condensed games and video highlight reels.
Analysts said the deal could help set MSN apart from AOL, Yahoo and other competitors and could drive upgrades by MSN subscribers to the high-level Premium service.
Real Bad News
The agreement also is being viewed as a major blow to RealNetworks, which previously had been the exclusive provider of licensed MLB.com broadcasts and replays. A longstanding exclusive contract between RealNetworks and MLB expired earlier this year and was replaced with a deal that enables MLB to offer content in other formats.
RealNetworks did not respond to requests for comment. Microsoft has been in a dogfight with the company over dominance in the Internet media player sector, with RealNetworks accusing Microsoft of anticompetitive behavior and cutthroat pricing in recent years.
MLB spokesperson Jim Gallagher told the E-Commerce Times that the MSN deal gives the 30 major league baseball teams the greatest reach for online distribution of MLB content, which has proven hugely popular with fans.
Last year, MLB.com sold more than 500,000 premium subscriptions to its site and 150,000 subscriptions to its live video-feed service, which enables fans to view out-of-market games they might not normally have access to on television. Baseball has expanded its reach into Latin America and Japan in recent years with the addition of more foreign-born players to the league.
“The reach of MSN is what makes the partnership right for Major League Baseball,” Gallagher said. “We have fans around the world who want to follow their favorite teams.”
The companies did not disclose the financials behind the deal, though published reports suggest it could be worth $40 million or more over a five- to seven-year period. MSN advertising also will appear on parts of the MLB.com site as part of the agreement.
Top of its Class
MLB.com is one of the most popular — and likely most profitable — online sports sites, Nielsen//NetRatings analyst T.S. Kelly told the E-Commerce Times recently. Because MLB has exclusive license to all of its content, it can tightly control its distribution.
Moreover, baseball lends itself to year-round content viewing of statistics, trade rumors and other information that can be offered on a paid premium basis, Kelly said, which has helped make the site “one of the paid content success stories” on the Web.
The agreement also gives MSN something it lacked but competitors had — exclusive, high-profile content. Yahoo inked a slew of media deals during the dot-com heydey to bring content into its portal, and AOL has the advantage of having Time Warner as its parent company, giving it access to music, news and movie content.
Content is seen as so vital that it helped lead to since-squashed rumors that Microsoft was considering buying both Walt Disney Co. and AOL in recent weeks.
“Portals and Internet services are changing because broadband is changing how people use them,” Forrester Research analyst Charlene Li told the E-Commerce Times. “Web users expect to be able to do more with their services — to get more bang for their buck.”
The Next Google?
In the wake of the Microsoft deal, published reports this week have suggested MLB could be weighing a possible spinoff and IPO for its Internet arm, with some estimating the Web property could have a stand-alone value of more than $1 billion. MLB declined to comment on the reports.
Separately, MLB has announced it will offer AOL for Broadband subscribers access to live audio feeds and condensed video game highlights at no extra charge. That deal, however, does not include the access to live video feeds that MSN Premium subscribers will have.