SBJ/April 24 - 30, 2006/This Weeks News

Leagues wonder if new TV device is friend or foe

In a matter of mere months, Sling Media Inc. and its Slingbox device have become the hot topic of the sports and media worlds and the subject of a caustic debate few are prepared to address publicly.

Sling Media says concerns over the Slingbox
stem primarily from a lack of understanding.
The Slingbox, a $200, cigarette-carton-sized device used to “placeshift,” or geographically transfer, live TV signals, stands as the latest must-have tech gadget. Connecting to a TV similar to a set-top box and then reaching the user through software downloaded onto a laptop or mobile device, the Slingbox makes a user’s home TV feed available anywhere in the world where one can find a reliable Internet or wireless connection.

Such a simple, user-friendly concept, and the lack of any recurring subscription fee, has driven more than 100,000 people to mainstream electronics, big box and online stores to buy the Slingbox and attracted $46.6 million in venture capital funding earlier this year for Sling Media through Goldman Sachs, Liberty Media and EchoStar.

A demonstration of the Slingbox at February’s NBA Technology Summit in Houston produced audible gasps and wows among the already well-connected and technologically literate crowd. But as consumers rapidly embrace the device, sports leagues and networks remain in a private, guarded, wait-and-see mode, carefully studying whether the Slingbox poses a threat to their carefully constructed broadcast models.

“There’s a lot of people watching what we’re doing because the sports fan is a big part of our run-up,” said Sling Media CEO Blake Krikorian. “There have been some initial concerns, but in the end, most people agree this is a great thing for the fan and really fosters that frictionless relationship with the fan base.”

Executives for the major sports leagues aren’t so sure.

NBA Commissioner David Stern put Krikorian on the agenda for the Tech Summit and has given a general, but cautious, nod of approval to the Slingbox, but only after lengthy meetings with Sling Media executives and lawyers for both sides. Other leagues have yet to take a formal, public position on the Slingbox. Behind closed doors, however, significant concerns exist over copyright infringement and disruptions to geographic TV market protections that are the bedrock of local franchise survival.

At issue are several potential conflicts. A New York Yankees fan living in New Jersey but traveling in Los Angeles, for example, can easily use a Slingbox to watch YES broadcasts on a laptop or mobile device while on the West Coast. That action very easily could cannibalize viewership for competing baseball coverage on one of the local regional sports networks for the Los Angeles Dodgers or Angels, as well as ESPN, Turner Sports and online broadcast services such as MLB.TV.

Those YES broadcasts would be “dirty feeds,” in which New York-area commercials would be seen by the traveler in California. There is not yet, however, a reliable, proven way for Nielsen Media Research to measure or account for that Slingbox user, potentially disrupting local TV ratings that set advertising and programming rights fees.

Nielsen is actively seeking to develop measurement tools for place-shifted TV viewing. The company recently incorporated use of digital video recorders into its ratings data, but as is typical, the advent of new technology such as the Slingbox remains out in front.

“This is clearly a retransmission, and the Slingbox has no other purpose but to retransmit a covered piece of content,” said one senior league executive on the condition of anonymity. “What that means is yet to be determined.”

Doug Perlman, the NHL’s executive vice president of media, echoed a similar sentiment.

“We’re very conscious about the Slingbox, and it’s generated a lot of attention,” he said, “but it has a potential to be a disruptive technology. There’s a lot that’s been built up and established around territorial restrictions and so forth, and it could create some issues. Our issue is not only learning what this does now but trying to figure out what it will morph into.”

One such potential amalgamation is the licensing of Sling’s technology into standard set-top cable boxes or digital video recorders. No such deal is imminent, but the company remains open-minded to the concept.

ESPN, which has relationships with every major sports property with the exception of the NHL, has already spoken out, albeit briefly, against Slingbox. Last month, vice president Bryan Burns said at a Consumer Electronics Association conference, “those devices scare the hell out of me.” Network officials have since declined to amplify Burns’ comments.

Krikorian said all such concerns are misplaced and stem primarily from a lack of understanding of what the Slingbox does — and what it doesn’t do.

“This is all about a one-to-one transmission of that TV signal. That’s all it does. It’s not going from one home to a bunch of other people as a means to steal cable,” Krikorian said. “This maintains the broadcast as it was intended and preserves everybody’s business models. It’s really not as disruptive as a lot of people think.”

Local blackouts are also maintained on the Slingbox since the technology simply redirects a home TV signal. A blacked-out Oakland Raiders game, for example, would remain blacked out to an Oakland resident even if they’re using their Slingbox while traveling on the East Coast.

In addition to individual consumers, the Slingbox has been implemented by a number of pro sports teams for use in coaching and scouting.

“It’s been very useful to us,” said Golden State Warriors assistant coach Russell Turner. “There’s a huge time advantage in being able to still keep up with other games in real time while we’re on the road. We have access to the games both through the [out-of-market TV] package as well as NBA.com, but we find the video quality through the Slingbox is better.”

Sling Media is not without its competitors. Sony has a product out called LocationFree TV, and Orb Networks Inc., a Bay Area neighbor of Sling Media’s, also markets software enabling the watching of live TV outside the home.

But it is Sling Media’s rapid market acceptance, complimentary mentions in Time, Sports Illustrated and Business Week, and the futuristic look of its device that has captured the bulk of market attention. Furthering that buzz is last month’s release of a dedicated mobile version of the Slingbox software, better allowing use of the device with high-end smartphones, such as the Palm Treo.

“A lot of these online services [from the leagues] are really great, but they’re not always delivering all of what the fans want, so we can be complementary,” Krikorian said. “The better idea, to me, is to figure out how to work together instead of looking for reasons why we’re a threat.”

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