An HBO business model is changing the dynamics of the streaming media business, with Major League Baseball pushing the envelope hardest, aiming to cut out the middle man and broadcast directly to the consumer.
Real Networks Inc. introduced subscription pricing with its $9.95/month SuperPass product, which had drawn "over 900,000 subscribers by the end of last year," said spokeswoman Lisa Amore. SuperPass includes all the high-quality streams that Real delivers, including those from the NBA, Major League Baseball, CNN, ABC, Fox Sports, and NASCAR. However, one thing subscribers are not likely to get is advertising. "Because consumers are already paying a fee each month," said Amore, "the ads are eliminated. It's still the direct radio feed itself but the ads are stripped out. The free version of Real Player will continue to serve up ads, sometimes streams and sometimes pop-ups, and those are sold by Real Network."
"I would say Real gets the credit for moving the business models and content protection models, over AOL and Microsoft," said Richard Doherty, chief of engineering for Envisioneering Inc., the Seaford, New York, technology consultant. But one of those "content partners," Major League Baseball, is working hard to take it further.
Jim Gallagher, senior vice president for public relations with Major League Baseball Advanced Media, said he's is seeking a lot of direct sales for its Game Day Audio product, which streams full-audiocasts full season, from all 30 teams for $19.95. This year, baseball has added a separate package, featuring any single team's games, for $11.95 for the season, while 13 of the ball clubs offer streams in Spanish. Game Day Audio is part of SuperPass, Gallagher said, but baseball is rapidly expanding its product line-up of direct sale products available at MLB.com.
MLB.TV is offering video streams of three to five games per week per team, at $14.95 per month or $79.95 for the season. A Pay Per View version is offered at $2.95 per game, but the offering is subject to the industry's blackout rules. For instance, New Yorkers can only buy Yankee games that are played outside New York.
In order to draw customers from SuperPass to direct sales at the $11.95 per month price, MLB.TV is adding a set of services called Total Ticket. This includes condensed games (each pitch that results in a play), Press Pass (official game notes sent via e-mail), and access to past game archives. "We are in the third year of a three-year deal with Real, where they are our exclusive vehicle for carrying our multimedia products," said Gallagher, continuing, "In return they paid $20 million for the privilege."
While baseball has been especially aggressive, all major content providers are looking to create up-sells that will result in direct subscription revenue. Shaw called this a "channel conflict" and said the outcome will tell a lot about how the industry evolves.