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Streaming sport | Discovery and BAMtech joint venture explained

Adrian Pennington explores how linking up with technical services expert BAMTech will turbocharge multi-sport paid online services for ESPN and Eurosport.

IT’S 2020 and viewers at home wearing virtual and augmented reality headgear are competing against athletes in the 100 metres final live from the Tokyo Olympics.

It’s the sort of scenario being toyed with by Discovery Communications – which holds Olympic Games rights across 50 European countries and territories from 2018 – and made technically possible through a partnership with BAMTech, arguably the most proficient and multifaceted video-streaming service on the planet.

The pair have formed BAMTech Europe, a joint venture aimed at supercharging Discovery’s digital business by implementing BAMTech’s video platform and services across products that include Eurosport.com and Eurosport Player – ambitiously dubbed the “sports Netflix” by the operator’s president and CEO, David Zaslav.

The deal also has potentially seismic ramifications for sports rights-holders across the continent.

Discovery’s story

Discovery has spent the bulk of its 31-year history as a purveyor of non-sports factual programming on cable and satellite networks. Like many conventional broadcast businesses, it saw revenues from carriage of its content on pay-television channels eroding and its future as a direct-to-consumer proposition on the internet.

Under Zaslav’s command, Discovery set about overhauling its content and distribution business. With a maturing US market for its channels like Animal Planet, Discovery turned to Europe’s 700 million residents to stimulate growth and identified live sport as the prize asset to spearhead demand.

Alongside Eurosport, which it finally took full control of last July, the Maryland-headquartered group began hoovering up rights. These include all the tennis slams, Bundesliga soccer and a raft of cycling events often sharing rights with broadcasters in certain territories. It topped the lot with a $1.45bn swoop in June 2015 for European rights to four editions of the Olympics from 2018.

At the same time, it relaunched streaming service Eurosport Player, charging fans $8 per month as part of a wider rollout of web-delivered products dubbed D-Play.

The goal is to help Discovery amass one million paying internet subscribers globally by 2017, a figure forecast to rake in $100m in extra revenue.

“If we can get to a million, I think it could be a tipping point for us,” Zaslav told analysts following Discovery’s full-year results last February. “If we can get to a million, why can’t we get to three?”

To do this, Discovery has to deliver top-tier sports content by using the latest technology to enrich the viewer experience, as well as package, process and distribute content for any device and for any digital and social media platform, rapidly and at scale. That’s where BAMTech comes in.

BAMTech’s story

Major League Baseball Advanced Media (MLBAM) was formed in 2000 by the league to create websites for the 30 MLB teams and to consolidate their digital rights.Long before Netflix began delivering films on demand online, MLBAM pioneered video over the net by delivering over 2,500 live, often simultaneous baseball games per year to MLB.tv.

“The hallmark of what we’ve done is scale,” executive vice-president and chief technology officer Joe Inzerillo told trade show IBC last year. “We had to deliver over a million streams concurrently and routinely. When we started doing this, the technology simply wasn’t around. We had to build our own in-house and figure out compression, geo-fencing and multi-application delivery at scale.”

The runaway success of MLB.tv and its mobile app, ‘At Bat’, which this year contributed over $1bn to the MLB’s staggering $10bn in revenues, attracted other content owners.

In quick succession MLBAM took responsibility for handling the back-end duties for World Wrestling Entertainment’s streaming channel, Turner Sports’ coverage of college basketball’s March Madness, the online delivery for the PGA Tour’s golf events and the on-demand services for Sony PlayStation Vue and Game of Thrones maker HBO.

In August 2015 it signed a $600m, six-year deal with the National Hockey League (NHL), with the intention of replicating the MLB model. MLBAM took control of NHL’s digital and broadcast rights, including NHL.com, while NHL took a 10-per-cent stake in MLBAM.

Shortly afterwards, the New York-based unit was spun off into a business so highly regarded it is valued at $3bn.

Who benefits?

The pact with Discovery gives BAMTech its first major foothold in Europe, allowing for further expansion.

“The deal will give it access to a larger viewership and the ability to exploit the sports rights which Discovery owns, now and in the future,” says Daniel Gadher, an analyst at Ampere Analysis. “The partnership also allows access to selected European sports rights for BAMTech.”

For both Eurosport and BAMTech, the partnership “could allow for a greater exploitation of sports rights which are currently owned or potential future rights,” he adds.

By developing its digital offering, ESPN aims to gain access to a larger audience as well as increasing the choice its customers have

Eurosport’s main aim is to increase its digital presence. “It offers access to a range of sports content, live and archived, to a greater number of customers over a greater number of screens,” according to Gadher.

Eurosport chief executive Peter Hutton has also spoken of creating digital communities for ‘super-fans’ around its key properties. That task falls to Ralph Rivera, who is now heading up Eurosport’s digital operation.

This is a reversal of Eurosport’s historic model, which had been to broadcast the same video feed across territories, but with localised commentary to keep production costs down. Under Discovery’s ownership, the brand plans a different editorial and monetisation emphasis for each territory.

There could, for example, be fee-based offerings for specific sports, such as a season pass for cycling or an app subscription to tennis majors – monetisation and marketing services that BAMTech is an expert at delivering.

Discovery might be expected to dip further into its pockets and go after more premium sports rights to augment Eurosport’s traditional second-tier sports offering. In the past couple of years it has been linked with bids for football’s English Premier League and Italian Serie A, while Discovery also has a link to Formula One through board member and stakeholder John Malone, with the tycoon’s Liberty Media recently having acquired the motor-racing series for $8bn.

The ESPN angle

Discovery’s strategy is similar to that of US sports broadcaster ESPN and for similar reasons. In August ESPN parent company Disney acquired one-third of BAMTech for $1bn to launch an ESPN-branded multi-sports subscription service.

“It will not, however, include any current ESPN channels or its content,” Gadher says. “This cautious approach is perhaps due to a fear of cannibalising its audience. ESPN’s new service will exploit rights held by BAMTech, MLB and the NHL.”

There have been suggestions that ESPN has struggled with customer growth and retention recently. Data from audience measurement company Nielsen indicated that the broadcaster lost 621,000 pay-television subscribers month-on- month through to October 28, although ESPN challenged the figures and said that the results do not include those who subscribe through digital services and other new distributors.

“By developing its digital offering, ESPN aims to gain access to a larger audience as well as increasing the choice its customers have to where they access sports content,” Gadher adds. “With younger demographics increasingly shifting towards digital platforms, this strategy allows ESPN to engage with this group.”

The direct-to-consumer offering, which is yet to launch, could allow subscribers to purchase specific seasons, teams or dates.

Disney’s deal gives it an option to buy BAMTech outright in the future, potentially extending the organisation’s reach into Europe via Eurosport.

Olympics as never before

BAMTech’s reputation not only rests on delivering a technically superior streaming product. It has innovated in editorial areas too.

From special features, like being able to watch multiple games at once, to pioneering the ability to synchronise in-game statistics with video and graphics to yield rich analytics, the team has raised the bar in terms of sports interactivity.

“We see opportunities because we’re starting afresh and not having to drag technologies from the past,” Discovery Communications’ chief technology officer, John Honeycutt, said in September. “We will be studying the emerging technologies of VR, augmented reality, extreme high-resolution pictures and artificial intelligence [serving in-game insights]. You could imagine virtually racing alongside [Usain Bolt].”

Some of this could even make its debut in coverage of the 2018 winter Olympics in PyeongChang.

“We are coming at this by reimagining how we can use a piece of technology or code in a different way,” Honeycutt concluded.

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