It is, as these deals in the past week show, a remarkable time in sports and content as the change in distribution routes also affects the $40bn advertising industry.
US-based media group Walt Disney paid $1bn for a 33% stake in Major League Baseball’s (MLB) online video technology spinout BamTech in 2016 and it has now added a further $1.58bn to hike its stake to 75% as it prepares to launch its own streaming services which will cover sports and entertainment.
“We’re very proud of the content distribution innovations driven by [MLB Advanced Media] and BAMTech over the past 15 years,” said commissioner of baseball Robert Manfred Jr, possibly while swimming through a Scrooge McDuck-sized mountain of money (a metaphor by Rob Lavine, GCV’s news editor).
This pile of cash for MLB could increase, given Japan-based conglomerate SoftBank is reportedly also set to invest $1bn in online sports merchandise retailer Fanatics at a $4.5bn post-money valuation.
Fanatics partners with major sports leagues across the US to sell licensed products, and some of those partners, including MLB, the US National Football League (NFL) and the NFL Players Association had already invested $150m in the company, which also counts China-based e-commerce firm Alibaba as a backer, earlier this year.
(We are delighted that Olivier Glauser, who advised Alibaba CEO Jack Ma on its sponsorship of the International Olympics Committee’s latest sponsorship and technology rights deal, will be leading a discussion on sports at the GCV Asia Congress on September 21 alongside Jeffrey Li, managing partner at China’s largest internet games and media group, Tencent, and Alvin Wang, China regional president of Vive at HTC, among others.)
PCCW OTT, the over-the-top video spinout of mass media group PCCW, has raised $110m from Foxconn Ventures, the corporate venturing arm of manufacturing services provider Foxconn, as well as Hony Capital and Temasek. The three have picked up a total stake sized at 18%, valuing PCCW OTT at about $610m.
As these deals in the past week show, it is a remarkable time in sports and content as the distribution routes change which in turn affects the $40bn advertising industry.
As Peter Diamandis, co-founder of Singularity University, notes in his latest Exponential blog, Disney turned itself around over the past dozen years under CEO Bob Iger with a focus on its “massively transformative purpose (MTP)” as a storyteller (either through their own products, sports rights or the acquisitions of Marvel, Pixar and Lucasfilm), then leveraged the successes through merchandising and theme parks.
As Diamandis said: “Disney’s first foray into the Star Wars universe was The Force Awakens, which has exceeded $2bn in box office revenue since its release. This is on top of an astounding $5bn-plus in Star Wars merchandise sales within the first 12 months of the acquisition [of Lucasfilm] alone.”
Disney’s acquisition of a majority stake in BamTech focuses the company on how it can distribute those stories, given most of the main cable and networks have been losing viewers since the start of the decade while Netflix has seen a near-sevenfold increase to jump into fifth place thought its online streaming service and original content, just behind Disney, which also owns the ESPN sports brand.
Sports could perhaps offer the most exciting area for exploitation. As news provider The Atlantic said in its article on Disney ditching Netflix: “Disney’s streaming products will debut in a crowded marketplace. Netflix has 50 million domestic subscribers. Hulu has 12 million. Tens of millions more subscribe to Amazon Video, as part of their Prime subscriptions. Disneyflix will start from way behind, and it will have to offer something compelling – on price, quality, or convenience – to get millions of people to pay for yet another TV thing.”
Mat Kaliski, venture capitalist at Rubicon, said in a blog on electronic sports (eSports): “The rapid professionalisation of eSports has captivated many in the gaming, sports, marketing and advertising industries about how to make sense of the recent developments and how to engage with this rapidly growing industry and its affluent and engaged fanbase.”
But he warned the advertising had effectively yet to catch up. With a shift from television to online viewing habits, Disney has given itself two years to get up to speed, even excluding the augmented/virtual reality platform shift that is underway.
As any manager knows, turning a team round once is tough, doing it a second time is perhaps even harder.
Picture: Scrooge McDuck is a fictional character created in 1947 by Carl Barks during his time as a work-for-hire for The Walt Disney Company.
