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SBJ/November 10 - 16, 2003/E SportsPrint All
Rivals roundtable (from left): Jerry Cover, chief financial officer; Shannon Terry, president and CEO; Greg Gough, chief technology officer; and Will Woods, vice president.
In May 2001, only scraps remained of what for five years had been Shannon Terry's personal and professional passion.
In the late 1990s, Terry helped build a network of college team and recruiting Web sites on a subscription model that at the time was a distant and foreign concept for Internet companies.
That work failed because of unrealistic expectations, but Terry never stopped believing that when the money, the IPOs and the advertisers disappeared, he still had a business model that would prove that sports content on the Internet could stand on its own.
Validation came early this year, when Rivals.com, built back up by Terry and his associates using the same model they started with in 1996, turned its first profit, according to Terry, the company's CEO.
More than 80,000 people spend $10 a month for access to recruiting information and other content from the company's network of 63 independently produced Web sites, Terry said.
July figures from The Intermarket Group, a tracking company for the Internet and technology sector, ranked Rivals.com No. 22 among all Web sites in number of paid subscribers. The only sports sites ahead of Rivals were cbs-sportsline.com (No. 12, with 240,000 subscribers), nascar.com Track Pass (No. 15, with 162,000 subscribers) and ESPN Insider (No. 19, with 130,000 subscribers).
Subscription revenue, combined with a spawning collection of A-list advertisers that are starting to take notice of the company's quiet growth, will have Rivals.com "approaching the eight-figure mark" in revenue for 2003, Terry said.
David Card, a senior analyst at Jupiter Media, said Rivals.com has managed to emerge from the ashes by doing what, even today, few Internet companies can accomplish: build a proven, loyal base of users first and let the advertising dollars fall in line.
"Getting consumers to pay for content is still brutally difficult," Card said. "But that's one of the things that Rivals is nailing. They have a [relatively] small base of users, but they're very, very loyal. That's an audience that marketers like to reach."
Rivals' current position as a market leader and profit generator completes a circuitous route for a company that was virtually left for dead when the Internet bubble burst.
Terry and current Rivals chief technology officer Greg Gough in June 1996 founded their original company under the name AllianceSports. Alliance hired writers in major college markets to provide information on recruiting and other news related to each school's teams.
"Obviously, there was a lot of reluctance to anyone selling content on the Web," Terry said of the widespread notion that Internet businesses had to be primarily ad-supported. "But we believed in what the cable [television] model had done. We built this business on the premise that content was king."
The company's success in identifying a loyal market of college sports fans brought Alliance competition in late 1998 in the form of Rival Networks, which provided similar services but also sites devoted to professional and high school teams.
After raising more that $70 million, executives from Rival Networks, led by founder Jim Heckman, in January 2000 convinced Terry and Alliance's co-founders to sell Alliance to Rivals. But things quickly went south, as it became clear to many inside the company that the Rivals board was not committed to the subscription model and instead was relying on advertising revenue that would never support expectations.
"We completely sold out for advertising, and when the market tanked virtually no revenue was there," Heckman said.
In May 2001, Rivals — which at its peak employed nearly 200 people, operated a network of 700 independent sites, filed for a $100 million IPO and sponsored the Hula Bowl in Hawaii — went out of business in a well-documented demise.
"It was very emotional," Terry said. "I had put my heart and soul into building AllianceSports. Part of selling the company was that properties we had built could go on to bigger and better things. As soon as they purchased us, it didn't take 30 days to realize that the wheels were falling off."
Unwilling to walk away, Terry, Gough, current Rivals.com executive vice president Bobby Burton and others purchased some of the remnants of the Seattle-based company, including the publishing system, trademarks, source code and many of the hundreds of partnerships the original Rivals had with sports site publishers.
Within a few months, the executives relaunched the company out of Brentwood, Tenn., under the Rivals.com brand. Through a partnership with the College Sports Publishing Association and more than 120 full-time staff writers, Rivals.com now produces independent sites covering all 63 major conference football schools (ACC, Big East, Big Ten, Big 12, Pac-10 and SEC) and Notre Dame.
Rivals.com's primary competition is Seattle-based TheInsiders.com, which was started by Heckman and others from the original Rivals, under a subscription model, shortly after the Rival Networks folded.
TheInsiders.com, which charges a monthly fee of $7.95 for access to more than 100 college and NFL sites, has between 50,000 and 100,000 subscribers, Heckman said.
Rivals.com executives expect to have 100,000 paid subscribers by early 2004. And while advertising thus far has accounted for only a fraction of the company's revenue, the prospects of a more balanced income stream are good thanks to an industrywide advertising rebound and recent accounts that include Volvo, Pepsi, Maxim and SBC.
Ken O'Donnell, interactive media director for Euro RSCG Circle, which handles online ad buying for Volvo, said Rivals was one of the first properties the auto manufacturer tapped when it launched its latest campaign for the XC90, an SUV tailored for the college-educated, 25-54 demo.
"You can get the Coaches' Poll [and other college sports content] on USA Today, but the [lack of] depth and the stickiness of the content isn't going to allow for much branding," O'Donnell said. Rivals.com visitors spend, on average, more than 54 minutes on the site, ranking it fifth among all sports sites, according to September figures from Nielsen/NetRatings. "On Rivals we're able to get a duration of involvement and a high level of interaction."
Rivals.com's primary weakness, most in the industry agree, is a failure to market itself adequately. To that end, Rivals, which provides certain information for espn.com's Campus Insider, recently completed plans to run at least three 30-second commercials on each ESPN GamePlan telecast during the final four weekends of the college football season.
"We've had a lot of success, and we've had a lot of [advertisers] that have sought us out this year," Terry said. "We're very excited about the future."
ESPN.com last week relaunched espnradio.com, adding video content and an expanded section of archived interviews to the redesigned page, according to ESPN executives.Gilbert
The relaunch is the latest effort by ESPN Radio to capitalize on ESPN's reach — espn.com in September led all sports sites in traffic with a record 15.5 million unique visitors, according to Nielsen/NetRatings — and inch forward in an area in which the sports media behemoth has struggled to establish itself.
"This is a marathon, not a sprint," said Bruce Gilbert, general manager of ESPN Radio, of the radio network's efforts in recent years to build a listener base in major media markets. "We want [espnradio.com] to be a place where, when our fans visit, it's a perfect connection to the audio that we provide every day. The possibilities are endless."The site shows radio hosts’ TV appearances.
The centerpiece of the redesigned site is ESPN Motion, the video delivery system that allows espn.com to feature embedded video clips and TV commercials.
Video content from Motion, now available on 10 espn.com pages and averaging 900,000 views a day, will include highlight clips of players who were interviewed on ESPN Radio that day. ESPNRadio.com also will show clips of radio hosts' appearances on television, such as "Hot Seat" interviews given by Dan Patrick or Mike Greenberg, and some original video programming, such as certain personalities offering their sports predictions.
The NFL's effort last off-season to diversify revenue from its Internet operations has brought better-than-expected results for the NFL Internet Network, said Chris Russo, the NFL's senior vice president of new media.
Midway through the first season in which the league began charging for subscriptions to some premium content, nfl.com is on pace to exceed 100,000 subscriptions to its two new multimedia content packages for the 2003 season, according to Russo.Russo
Industry sources estimate that revenue from subscriptions, advertising, e-commerce, rights fees and content licensing should bring the league's Web operation between $50 million and $60 million for the season, with profits in the eight figures.
That doesn't include revenue from online ticket sales or from individual team sites, some of which bring in as much as $2 million annually, according to team officials.
"We've really focused this year on the monetization side of the equation," Russo said.
The NFL last spring decided to incorporate paid content into its offerings, rolling out two multimedia content packages and two fee-based fantasy football games.
A large chunk of the NFL's Internet revenue comes from a 2001 deal in which AOL (the league's Internet service provider), CBS and SportsLine.com agreed to pay the NFL $110 million over five years, according to sources, for a share of the league's Web revenue. The league and AOL before this season altered the terms of their deal so that the NFL is licensing more video content to AOL for its broadband service.
NASCAR.com recently won an Emmy award for its TrackPass with PitCommand from the National Television Academy, said Drew Reifenberger, executive vice president of programming, acquisitions and interactive at Turner Sports, which operates NASCAR's official site. The Emmy was in the category of outstanding achievement in advanced media technology for the enhancement of original television content.At the Oct. 23 ceremony (from left): Sportvision’s Russell Quy; Turner Sports Interactive’s Scott Haney, Peter Scott and Scott Bailey; Turner Sports’ Drew Reifenberger; Turner Sports Interactive’s Michael Adamson, Lee Bushkell and Jonathan Kropp; and Sportvision’s Steven Roberts.
The award, presented Oct. 23 at the annual Technology and Engineering Emmy Awards in New York, marks the first time a Web site has been awarded an Emmy by the National Television Academy.
"This validates our original hypothesis, which is we're headed to a world where there's no longer a need to bifurcate all of the different forms of media," Reifenberger said. "That's what the next generation of interactivity is really all about."
TrackPass with PitCommand, developed with Sportvision Inc., is a live streaming application that allows users to track each car's position and dashboard information in real-time and to listen to live in-car communication between drivers and their teams during a race.
NASCAR.com boasts more than 160,000 paid subscribers to the product, according to Reifenberger and to July figures from the Intermarket Group, which ranked TrackPass 15th among Internet products with the most paid subscribers. Reifenberger noted that millions of other consumers have access to TrackPass thanks to partnerships with RealNetworks, Roadrunner and AOL.
Reifenberger said Turner and Sportvision have several additions and enhancements planned for 2004, including the ability to follow qualifying rounds on Fridays, as well as wireless accessibility.
Sports Illustrated has reaped immediate rewards from a recent move to make an enhanced magazine section of si.com available only to subscribers, according to SI executives.
In the less than two months since its launch, "SI Exclusive" has lured "thousands" of new subscribers to the magazine, while "tens of thousands" of existing subscribers have registered to receive the exclusive content, said Jonathan Shar, SI's consumer marketing director.Subscriber-only content on SI’s Web site is paying off.
"It's still early, but it's going pretty well," Shar said, noting that the focus is not on the raw number of new subscriptions but rather on the percentage of those people who will stick with the magazine for the long run. "My hypothesis is that number's going to be really strong, because we're driving people to subscribe through our use of relevant content. We're going to get some really committed folks."
"SI Exclusive" gives subscribers access to beat coverage from the magazine's Insider columns, Scorecard articles, columns from Rick Reilly and Steve Rushin and the cover before the magazine arrives on newsstands. The online section also includes a weekend preview section, the SI Adventure and Golf Plus sections, photo galleries from swimsuit issues and select archived articles.
The purpose of the launch was to add value for existing subscribers and to bring new subscribers by capitalizing on the traffic to si.com, which in September drew 5.8 million unique visitors, according to Nielsen/NetRatings.
Those readers, a substantial portion of whom are not SI subscribers, have grown accustomed to a site that shares little overlap with the magazine, said si.com President Gordon McLeod. The distinction between the two is largely the result of SI's decision early on not to make magazine content available online for free, thus creating a "magazine ghetto," McLeod said.
"We didn't want to give it away," McLeod said. "It devalues the magazine, and it doesn't create a unique online experience."
But now that si.com has established itself as a separate property from the weekly publication, Shar and McLeod said, SI executives want to make SI and si.com more complementary properties by showing the site's visitors what they are missing by not subscribing to the magazine.
SI.com will soon have more to dangle in front of potential subscribers upon completion of a recently launched online survey to determine what "SI Exclusive" subscribers like most and what they would like to see, Shar said.