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The crowds were definitely heavier at this year’s International Consumer Electronics Show, held earlier this month in Las Vegas, with early attendance estimates of more than 140,000 rising well above last year’s mark of 126,641. Stars, as usual, were everywhere on site, ranging from A-list Hollywood actors and Pro Basketball Hall of Famers to rap stars. And breathless hype, perhaps the chief annual export of CES, was once again in full supply.
But beneath the glitz and gloating were developments in three key areas that could render significant impact on the sports media, technology and fan interaction landscapes. Here’s a more detailed look at each of those areas of development:
• 3-D TV
What was new: 3-D TVs for the home made their high-profile debut at CES a year ago, but sales for 2010 generally failed to meet targets. Rather than back down, manufacturers roared back even harder this year. 3-D TV sets soon will be available in a much wider array of sizes and price points. 3-D TV glasses are getting lighter and less expensive, and they’re being designed in styles more akin to ordinary sunglasses. In addition, 3-D TVs are increasingly being supported by a wide range of other 3-D-enabled products, such as camcorders, video game systems and Blu-ray players, creating a fuller ecosystem around the technology.
CES attendees try out Panasonic's active shutter 3-D glasses. The glasses that are required for 3-D TV viewing are becoming lighter and less expensive.
Why it could be a big deal: 3-D TV may never be a mainstream rage, but it’s not going away. According to some estimates, the adoption curve for 3-D TV is well ahead of the comparable curves for DVDs, Blu-ray and other major consumer electronics formats. Samsung is projecting a sixfold increase in the number of 3-D TVs it will sell this year compared with last year. Panasonic, among others, is pushing for a common industry standard for active-shutter glasses, a move that would greatly aid group-viewing events such as what often occurs within sports and could jump-start sales.
Why it might not be a big deal: Regardless of how light, cheap and disposable 3-D TV glasses may get, they remain a significant obstacle for many consumers and a definite impediment to the multitasking that is now commonplace among all forms of TV consumption. Nearly all of the major TV manufacturers at CES demonstrated some form of glasses-less 3-D, though without any projection for commercial availability. For now, experiencing the 3-D TV effect without glasses requires not moving from a specific spot. In most instances, that experience is definitely not as robust.
What to expect: More live games in 3-D, more experimentation and definitely more marketing from all involved stakeholders. ESPN at CES announced plans to shift its ESPN 3-D channel to 24 hours-a-day programming, beginning next month. The network next month also for the first time will conduct a hybrid production from a “Friday Night Fights” event in Maryland in which a standard 2-D feed will be extracted out of a 3-D game production. To date, all live sports 3-D productions have been wholly separate affairs from their 2-D counterparts. “We’re already far ahead in terms of distribution and programming of 3-D from where we were at a similar point in the development of HD,” said Bryan Burns, ESPN vice president of strategic business planning, and a key figure in the network’s 3-D efforts. “In retrospect, we might have been a little early out of the gate [with 3-D], but we definitely want to have the first-mover advantage.”
• CONNECTED TVs
What was new: Similar to 3-D TVs, connected TVs have been several years in development, but they hit a major acceleration point at CES this year. Inspired heavily by the ubiquitous “app” world of mobile, a wide range of TVs will now come specifically enabled to access an array of digital content from the Internet as well as tie directly into social networking portals such as Facebook. Cable and satellite distributors, including Comcast and Time Warner, are taking a direct part in the connected TV rush, as well.
Why it could be a big deal: The idea is to make the TV the foundation of an overall connected home and restore the set as the dominant consumer electronic appliance. The on-screen social networking and real-time chat capabilities create a virtual version of the classic watercooler conversation. The connected TV push also furthers the concept that consumers will be able to watch whatever they want, whenever they want, and with even more freedom than what is provided by digital video recorders. “Smart TV is the place where everything is converging,” said BK Yoon, president of Samsung’s visual display division.
Why it might not be a big deal: The content browsing experience on a connected TV thus far has not been anywhere near as fluid as doing the same on a computer or mobile device. Rights issues, particularly in sports, could be thorny as well, as very few existing deals contemplate this medium. Some content brands are already wary of connected TVs because of the lack of a robust revenue model for TV apps, and the very development of TV apps can be cumbersome, as well. Each manufacturer generally operates from a proprietary platform.
What to expect: A mixed bag. Revenue models, particularly around premium-level content, will continue to evolve. Some leagues and media outlets will push very aggressively in the space while others will hang back for the next year or so to see what develops. The NBA is definitely in the former camp, recently signing pacts with LG, Samsung and Panasonic to bring their total of “smart TV” deals to six. “We are simply being where our fans want us to be, whenever they want,” said Bryan Perez, NBA Digital senior vice president and general manager. “But we are also trying to be as consistent as possible within environments and across platforms.”
What was new: Inspired in large part by the success last year of Apple’s iPad, more than 100 different tablets were unveiled by various manufacturers at CES. Arguably the most notable entry was Motorola’s Xoom, an effort aided by Verizon Wireless and Google that performs many of the same functions of an iPad but runs on the increasingly popular Android platform and Verizon mobile network.
Manufacturers introduced more than 100 tablets at CES, including Motorola's Xoom.
Why it could be a big deal: As early adopters of the iPad have found, there is something particularly immersive about the tablet environment. Sports lends itself particularly well to tablets, with the ability to push statistics, social networking, alternate camera angles and other content in concert with live action on the TV. And the blitz of new devices will provide far more consumer choice than just the iPad.
Why it might not be a big deal: Many of these tablets are not going to get enough content and attention from the third-party developer community to be worth much time or money. What has really made the iPad, and the iPhone before it, work is iTunes and the fertile market of app development. The Android platform is getting to a similar position in a hurry, but anything else is not likely to get much attention from key leagues or sports media outlets.
What to expect: Similar to mobile phones, there will be a massive array of choice among tablets. But also like smartphones, a few tablets will in short order rise above the rest to become the gold standard. “There’s a lot of fragmentation out there,” said Tim Connolly, vice president of mobile distribution for Disney and ESPN Networks Affiliate Sales and Marketing. “We’re going to need to be very methodical about how we approach this space.”
It was the first week in November — Week 9 of the NFL's regular season — and Fox Sports President Eric Shanks was not happy about Fox's slate of games.
The most compelling 1 p.m. game — at least as far as TV ratings were concerned — looked to be Arizona at Minnesota. Brett Favre always brings strong TV ratings. But Favre's Vikings were 2-5 at the time, and the Cardinals weren't much better, at 3-4.
It hardly seemed like ratings gold, and the Fox Sports executive was worried about a ratings drop.
Shanks, who was named Fox Sports' president in May, called the NFL's Howard Katz to vent. It seemed that Katz, the league executive who's become a behind-the-scenes superstar for his schedule-making prowess, had gotten one wrong.
But it was Shanks who was wrong. Fox's ratings for that window increased 6 percent from the previous year, posting a 10.8 rating for that slot, which included a thrilling overtime win for Favre's Vikings. Shanks called Katz again. This time the Fox executive would admit that his dire predictions were off.
"We had some weeks where I had to eat crow with Howard," Shanks said. "He's a mad scientist with the schedule. He's able to put just an unbelievable group of games together week in and week out so that there's always a week when there's multiple unbelievable games with story lines."
There's a reason top network executives like Shanks gush about Katz, the NFL's senior vice president of broadcasting and media operations, and his ability to craft TV-friendly schedules.
The NFL has been on a two-year run of ever-increasing ratings that have turned football games into the most popular programming on television. NFL games on Sunday and Monday have become must-see programming.
This year, Katz relied on his unit's intuition and acumen, and for the first time, a "ratings predictor" — software the league used to push the TV numbers even higher.
The numbers already were high to start with. Over the past two years, viewer numbers for NFL games across all networks are up 23 percent. This year, the league's network partners averaged an all-time-high 17.9 million viewers per game. These numbers are unheard of in the current media climate, where thousands of programming choices are siphoning viewers from popular shows.
But not from the NFL.
"Sunday Night Football" was the highest-rated broadcast show for the year. "Monday Night Football" was the highest-rated cable show. Fox, CBS and NFL Network posted all-time viewer highs for their games.
Network executives have a lot of theories about why football ratings are so popular these days. They cite everything from story lines to fantasy games to the fact that viewers generally don't DVR live sports.
But each conversation with a network insider about why ratings are up so much always comes back to Katz and his team. They believe his group has somehow figured out the secrets of scheduling.
Several NFL teams enjoyed their best local ratings eve
Household rating Change from 2009 season New Orleans Saints 49.7 1% Pittsburgh Steelers 47.3 4% Green Bay Packers 44 19% Indianapolis Colts 39.4 14% Minnesota Vikings 39.2 2% Baltimore Ravens 37.1 20% New England Patriots 34.9 16% Chicago Bears 32.9 21% San Diego Chargers 31.8* 2.0% Atlanta Falcons 24.2 16% New York Jets 15.8 22% New York Giants 15.6** 12% * Three of the Chargers' games were blacked out** Tied with 2008 season for highest-ever average local ratingNote: Records date to the 1998 season.
Final 2010 NFL Game Viewership Network 2010 (000s) 2009 (000s) Change from 2009 2008 (000s) Change from 2008 NBC 21,848 19,418 12.50% 16,638 31.3% Fox 20,100 19,097 5.30% 16,992 18.3% CBS 18,747 17,211 8.90% 16,211 15.6% ESPN 14,657 14,382 1.90% 11,962 22.5% NFL Network 5,705 5,548 2.80% 3,738 52.6% Sources: NFL, Austin Karp/SportsBusiness Daily
"There are more big games on the schedule now than there used to be," said Sean McManus, president of CBS News and CBS Sports. "And so many of those games this year were very, very competitive, down to the last minute."
It may seem like there are more big games this season. But it's more likely that the NFL has become more adept at scheduling them. Katz initiated some changes to this year's schedule, like scheduling division games in the first and last week of the season, which led to record high ratings on those weeks and the perception that the league had more marquee matchups than it had in the past.
"I truly believe that the job Howard Katz and his team, under Roger Goodell, do to create the NFL schedule around 'the spine' of the NFL season (CBS and Fox's late afternoon windows, Sunday and Monday night windows) has taken the ratings to new heights," said NBC Sports & Olympics Chairman Dick Ebersol. "That is evident by the fact that each and every one of the NFL television partners have seen viewership gains in each of the last three seasons."
The biggest schedule-making change came from a piece of software the NFL used this year that Katz described as a "ratings predictor." Developed by the British Columbia-based Optimal Planning Solutions, the software assigned a minimum ratings level for every TV window on the schedule. This helped Katz focus on making the early Sunday afternoon games more appealing to television.
"The whole scheduling process is far more sophisticated than it's ever been, and it's a combination of manual input and allowing the software to solve the rest of the puzzle," Katz said. "It was the first year we used the software. We learned and we can improve upon it. It was successful because it helped us ensure there weren't any really bad television windows anywhere. Even our weakest weeks were better than our prior years had been."
The ratings predictor software helped the league guard against events that typically would cause ratings to drop. Take "Monday Night Football," for example. From Nov. 15 to Dec. 20, five of the six games were blowouts, where the average margin of victory was 30 points. The sixth game competed against the Giants-Vikings game in the New York and Minneapolis markets, rescheduled from Sunday because of a snowstorm.
Still, ESPN posted record-high viewership for its "Monday Night Football" schedule. The software can't predict blowouts. But it can predict the teams and matchups that will draw ratings, even in a blowout.
"I keep kidding Howard after every year that he should retire and have a big parade down Park Avenue," said John Wildhack, ESPN's executive vice president of programming and acquisitions. "Nothing lasts forever. Then he does it another year and the ratings continue to go up."
Katz is already thinking about tweaks to the schedule to keep the ratings rolling. "I'd like to see if we can play an even heavier dose of division games in the last three weeks," he said. "That worked very well."
Related story: NFL’s TV partners already jockeying for next year’s best matchups.
The NFL playoffs had barely started this month, and already the NFL’s television partners were jockeying to pick up the best matchups from next year’s schedule.
With the AFC East slated to play the NFC East, several high-profile games are scheduled for next season, and the networks want to make sure they get their fair share.
“You have to start looking at games that you want to fall on the sword for and make sure those games stay in your package and don’t get given away,” said Eric Shanks, president of Fox Sports. “There are some pretty unbelievable games — on paper — going into next season.”
Potential Fox matchups include the Cowboys at the Patriots, the Giants at the Jets and the 49ers at the Ravens, pitting the two Harbaugh brothers (Jim and John) against each other as coaches.
Other marquee games the networks will look to secure — in addition to division games — include the Colts at the Patriots, the Patriots at the Steelers and the Bears at the Eagles.
“We had our first internal meeting last week,” said John Wildhack, ESPN’s executive vice president of programming and acquisitions. “We haven’t come to any specific conclusions yet.”
The NFL’s main schedule maker, Howard Katz, said it generally takes up to eight weeks to come up with a schedule, with computers spitting out literally tens of thousands of possibilities.
“We’re just beginning the process for next year’s schedule,” Katz said.
With its broad content-providing arrangement with AOL Sports announced late last week, it's clear that Sporting News is making an aggressive push to become a top-10 sports website. By creating Sporting News on AOL, targeted for a March 1 launch, the aim is to instantly give the 125-year-old sports brand digital relevance. Meanwhile, for AOL, the deal could be seen as a signal that it's less interested in creating original content in some of its original focus areas.
"We've made a lot of headway as far as adding video and developing a social media strategy," said Sporting News President and Publisher Jeff Price. "Adding scale was the last thing advertisers were asking for, and this deal allows us to deliver that."
While traffic trends on AOL Sports have fluctuated during the last year, it is still considered a destination site. According to December comScore data, AOL Sports attracted 9.7 million unique users, while SportingNews.com garnered 2.9 million. Even assuming some duplication, combining those two numbers would put Sporting News on AOL easily in the top 10 among sports sites for the month.
"The vision is one of providing real-time breaking sports news with a dynamic social media strategy and high-quality columnists and overall great journalism," said David Eun, president of AOL Media.
Sporting News is owned and operated by American City Business Journals, parent company of SportsBusiness Journal/Daily.
Sports content for AOL has been under its internally developed Fanhouse brand for two years. Starting in March, Sporting News will provide and develop a majority of the content for the site from its current staff, which is primarily based in Charlotte. Sporting News will license the Fanhouse brand from AOL and use it as a home for the site's "voice," or columnists. Sporting News is expected to add a handful of top sports columnists from AOL, but sources said a number of AOL Sports editorial staffers have already been seeking jobs at other sites.
TOP 10 SPORTS SITES
FOR DECEMBER 2010
Ranked by No. of unique visitors SITE VISITORS (000s) Yahoo! Sports 52,123 ESPN.com 40,158 FoxSports.com 26,719 NFL.com 26,276 CBSSports.com 22,938 Big Lead Sports 19,059 Turner-SI Digital* 17,270 FanHouse (AOL Sports) 9,728 NBCSports.com 8,742 BNQT.com 7,849 * Portfolio includes NBA.com, NASCAR.com and PGATour.com Source: comScore
It was unclear if any AOL Sports' management will join Sporting News.
Sports covered by Sporting News — the NFL, NBA, NHL, MLB, NASCAR, and college football and basketball — will be the core of the site, but it also now will include soccer coverage. Editorial coverage of the Olympics, tennis, golf and some niche sports, which aren't covered by Sporting News, will continue to reside on AOL under AOL's direction.
All Sporting News on AOL content will continue to be free.
According to media industry sources, other companies looking at a similar relationship included Turner, NBC, CBS, Fantasy Sports Ventures and ESPN.
Price said he was pursuing a similar alliance with Yahoo! for some time, but when that deal didn't come together, he reached out to AOL Chief Executive Tim Armstrong late last year. While both sides were mum on the structure of the deal, others who considered the proposal said AOL was looking for a deal in excess of five years that would pay AOL a fee for traffic directed, along with incentives for increased traffic and advertising. Sporting News will sell the ad inventory.
"Anyone would look at a deal that adds that much traffic," said Jimmy Lynn, former AOL Sports vice president of partnerships and strategic development, who's now an independent consultant. "It makes the most sense for Sporting News, because they'll have a seat at the table now in a lot of important ad buys across Web sports. What's amusing to me is that Jeff tried to do a deal like this with AOL so many times when he was at Sports Illustrated."
Price was president of SI Digital from 2005 to 2009.
American City Business Journals bought Sporting News from Paul Allen's Vulcan Sports Media in 2006. The granddaddy of U.S. sports titles has been striving to find relevance against entrenched print and broadcast competitors that embraced the Internet earlier and more successfully, like Sports Illustrated and sports-heavy TV networks such as ESPN, Fox, NBC and CBS. It has made dramatic changes to its biweekly magazine and launched the digital Sporting News Today in 2008, and while it did a massive relaunch of SportingNews.com in August, it had yet to find a national audience.
This deal, even with a declining trend in AOL Sports traffic, will likely change that.
"Of the top 10 sites, we will be one of very few not tied into TV programming," Price said. "That should allow us an independent voice — something fresh that we can bring to advertisers."
Like Sporting News, AOL is seeking new relevance in a market with changing dynamics. In announcing the deal, Armstrong said that he would begin outsourcing other key areas, AOL's health and real estate sections. Such moves indicated that AOL was moving away from premium content for a shift toward being a portal, getting content from elsewhere. But the value of portals is increasingly questioned by consumers, now accustomed to an endless variety of sites on nearly any subject, no matter how niche. For AOL, the deal counters a similar MSN/FoxSports.com content alliance. How partnering with Sporting News fits into Armstrong's overall content strategy is unclear, as AOL has acquired technology site TechCrunch, social networking site AboutMe, and Patch, which calls itself a collection of "hyperlocal news sites." Some analysts have said AOL sees its future as a provider of local/personalized content.
IN PROFILE: Fanhouse (AOL Sports) Dec. 2009 Jan. '10 Feb.'10 March '10 April '10 May '10 June '10 July '10 Aug. '10 Sept. '10 Oct. '10 Nov. '10 NO. OF UNIQUE VISITORS (000s) 12,162 12,432 13,973 11,212 11,202 10,363 10,203 9,666 9,991 9,435 10,695 10,615 MINUTES SPENT PER USER 10.7 7.5 8.9 8.3 8.5 7.6 7.8 9.3 9.6 15.5 13.6 15.1 Source: comScore
Whatever the overall AOL content strategy, this much is clear: AOL touted Fanhouse as its own sports content play; now, it is seeking sports content elsewhere.
"AOL is looking for dramatic ways to improve its business in a variety of content areas," said Derrick Heggans, the former general manager of AOL Sports, now managing director of the Wharton Sports Business Initiative at the University of Pennsylvania. "So this could be a test run for some other content areas. For the Sporting News, this looks like a great way for them to challenge the competition with scale that matters."
Eun said content decisions are being made on a case-by-case basis.
"We look at our current presence, the competitive landscape, our financial upside, what interesting companies we could possibly acquire — those are all the factors being weighed," he said. "In this particular case, we just thought the Sporting News/Fanhouse combination was a very intriguing one."
These are the 10 questions that seem to be asked most frequently.
• What does ESPN’s increase mean for CBS, Fox and NBC’s NFL deals?
All of the NFL’s broadcast deals run through 2013, so there will be no change for now. But they all will have to pay a lot more money if they want to keep a league package. I expect the broadcast networks’ new NFL deals to each average more than $1 billion a year, starting in 2014. Look for each of the broadcast networks to fork over an average annual increase in the 50 to 60 percent range. The die was cast this fall during Fox’s retransmission battle with Cablevision. Why did Cablevision buckle in the end? It was because Cablevision feared massive subscriber defections if it failed to carry too many New York Giants games — even moreso than the World Series. NFL executives took note when Cablevision agreed to pay Fox $1 a subscriber a month. It’s also watching as the deep-pocketed Comcast takes control over NBC. The league will cash in during the next round of rights negotiations.
• Given Verizon’s exclusive deal with the NFL, what kind of mobile rights is ESPN trying to get?
ESPN and the NFL still are negotiating the mobile part of the deal. As I understand it, ESPN most likely will be able to stream its games to tablets, not mobile phones. (Think wireless versus mobile.) What’s especially interesting to me, though, is how quickly mobile rights have become important parts of these negotiations. All future sports rights deals will be three-screen deals — TV, broadband and mobile. ESPN clearly has led the charge on this. Sports leagues and networks slowly seem to be coming around.
• How likely is it that another cable network will bid on an NFL package?
It will happen. The NFL is going to sell a full-season, 18-game package to another cable network. Right now, Comcast (Versus), Fox (FX) and Turner (TBS, TNT or truTV) are the front-runners.
• What does that mean for NFL Network?
Not much. Expect live games to remain on NFL Network. It’s possible that the NFL will put a full season of games on its network. The channel still doesn’t have deals with most of the big cable operators, and those aren’t coming any time soon. But with a distribution of 57 million homes, the channel makes money for the league, regardless.
• Can’t $2 billion a year buy a Super Bowl?
BCS ratings were great for ESPN. The championship game was the most-viewed cable telecast of all time. Overall, however, the average audience for the BCS’s five games was down 13 percent from last year, when the games were on broadcast TV. It remains important for the NFL to keep its biggest games on broadcast, which means neither ESPN nor any of its cable brethren will come close to telecasting a Super Bowl for the next decade.
• What about the playoffs?
Still uncertain. Right now, all the games are spoken for, and the broadcasters will not want to give them up. But ESPN has made it clear that it wants at least a wild-card game, which is a request the league is looking into. I expect it will happen.
• What does this mean for an 18-game season?
It seems obvious that the size and scope of ESPN’s proposed deal is predicated on the NFL expanding to an 18-game schedule.
• Does this type of payout mean ESPN will pass on the Olympics?
The NFL deal should have no bearing on whether ESPN bids on the Olympics. ESPN was paying for the NFL before this deal; it’ll pay for the NFL after this deal. ESPN already had that money budgeted. It likely would have been a different story if ESPN picked up the rights to the NCAA tournament, which would have meant a new payout. But the increase in NFL rights has to come from somewhere. Current ESPN partners NASCAR and MLS should probably be more worried than the Olympics.
• Will your cable bill go up?
Yes, which, of course, means a whole new round of tough carriage negotiations with cable and satellite operators.
• Will government get involved?
There will be some noise in D.C., but regulators will not interfere with a private business decision.
John Ourand can be reached at firstname.lastname@example.org. Follow him on Twitter @Ourand_SBJ.