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Volume 20 No. 45


Not even the biggest e-sports proponents believe that their games will bring big TV audiences, at least not this year.

But the fact that e-sports are supported by the same young male audiences that have been so elusive to TV executives has caused media companies to take a leap of faith.

The networks’ executives who have taken the lead on getting into the new space are doing their best to manage expectations about audience size. Turner Sports is guaranteeing advertisers just a 0.3 rating for the launch of its e-sports league on TBS this May — a rating that’s comparable to some of the smallest midweek college basketball audiences on cable, which most likely would mean less than 500,000 viewers.

These estimates come after the “Heroes of the Dorm” e-sports competition that ESPN2 carried in prime time last spring drew less than 100,000 viewers, an anemic audience for the network.

The lack of TV viewers, though, has not stopped media companies and advertisers from rushing headfirst into e-sports, which has become the hottest property in sports TV this year. ESPN, Fox Sports and Turner Sports already have e-sports competitions scheduled for this spring, and CBS and NBC both are monitoring the space.

The reasons for TV network interest are simple. Advertisers are falling over each other to reach e-sports’ young audience that is largely not watching television.

“This is not about doing a 10 rating,” said Turner Broadcasting System President David Levy. “But I bet our audience is highly concentrated in young males, 18 to 24 and 18 to 34 years old.”

Here’s the catch: E-sports wants networks to reconsider the concept of exclusive rights. E-sports games grew up online, and game publishers and tournament organizers are not inclined to give up streaming to get on television.

David Rosenberg, GMR Marketing chief strategic officer, pointed to exclusivity as a significant roadblock for television networks. He advises networks to think differently about e-sports. Even if TV networks share rights with a streaming platform, like Twitch for example, they still will be able to reach the coveted millennial males who typically aren’t watching television.

GMR counts NBC Sports parent Comcast as one of its clients.

“The target is an over-the-top consumer anyway,” Rosenberg said. “The consumer everyone is targeting is the same one who gets their content anywhere they can. It’s going to come down to where am I going to get the best experience as a viewer.”

Currently, there’s no agreement among TV network executives on the best way to move forward with exclusivity. Turner, for example, believes an association with a streaming company like Twitch adds a level of authenticity to its offering that old-school television executives don’t have.

Turner will not discuss Eleague’s startup costs, other than pointing out that it is creating a league, not just a TV show, from scratch. Revenue will come from advertising, sponsorship and events.

“You don’t want to have big media companies come in and take over something that is actually working,” Levy said. “What you want to do is give it more framework and more exposure. You want to make sure that you do it in an authentic way. This has to stay a digital product.”

ESPN and Fox, on the other hand, have demanded exclusivity on their e-sports offerings.

ESPN, which will carry the “Heroes of the Dorm” event again this spring, will show the semis and finals on ESPN2 exclusively. Earlier rounds will appear on both ESPN3 and Twitch.

“We’re balancing both ends of that,” said John Lasker, ESPN’s vice president of programming. “In order to get a true understanding of e-sports on television, there’s some level of exclusivity that has to apply.”

Similarly, Fox Sports’ FIFA deal (see related story) gives the media company exclusive rights to the championship round of the FIFA Interactive World Cup 2016, which FS1 will carry live from New York’s Apollo Theater next week. Fox will control all linear and TV rights to the event’s final round. Twitch and YouTube will carry the earlier rounds.

“I don’t think the viewing audience will be astronomically high,” said Bill Wanger, Fox Sports’ executive vice president of programming research and content. “But I think we’ll have a really strong concentration of young men.”

Likewise, CBS and NBC have been averse to sharing their rights on any of their program deals. But some industry watchers say that mindset needs to change with e-sports.

“Exclusivity has always been a key premise in virtually all these deals, and if in the eyes of e-sports decision-makers, whoever they may be — the publishers, the e-sports companies, the athletes — if they have trouble with the concept of exclusivity, then you’re right, there is going to be this clash of clans,” said Tom Richardson, a former vice president of AOL Sports and founder of Convergence Sports & Media.

And for the networks, the question still is how many viewers can it bring in to taste that experience.

“We have not looked at it all that seriously, but we are monitoring it,” CBS Sports Chairman Sean McManus said. “Even though the amount of gamers has exploded in this country, it still remains to be seen how much interest there will be in watching that on television.”

Turner Sports expects to sell out its ad sales inventory when it launches its Eleague with WME-IMG in May.

The network is charging advertisers about $2 million for one-year deals, and guaranteeing exclusivity in eight categories, including quick-service restaurant, soft drinks and insurance. Deals will include a combination of TV (TBS) and digital (Twitch) inventory.

The league launches May 24 and runs until the July 30 championship. TBS will carry its shows on Friday nights, in the 10 p.m. to 1 a.m. window. TBS’s first e-sports show is May 27.

“We’ve gotten more calls and conversations with advertisers and other businesses that want to join this business with us,” said David Levy, Turner Broadcasting System president. “It’s a little early to start bringing on new partners and new opportunities. But it shows you the popularity of what’s happening.”

One marketing executive with a national brand described his company as eager to get involved in e-sports because of the advertiser-friendly demographic that follows the competition so rabidly — the young men and women who make up e-sports’ fan base are difficult to reach. To underscore that interest, the executive said that his company is looking to sponsor an e-sports team in addition to negotiating an ad deal with Turner and WME-IMG’s Eleague.

Because this marks the Eleague’s first year, Turner is limiting its ad sales deals to one year. After this year, Turner will look to cut three-year ad deals for the league.

“It’s year one, and we’re learning,” said Seth Ladetsky, Turner Sports senior vice president of ad sales, considered the team’s e-sports expert. “It’s so new. We don’t want to undersell ourselves. Our clients also don’t want to be locked into something that maybe they don’t want to move forward with.”

Turner describes its e-sports ad sales push as a joint sales effort with WME-IMG.

Its focus on eight categories is so each advertiser can stand out. Turner would not say how many spots it will run during each telecast, allowing that the competition will have natural breaks in the action during which it will run commercials.

“It’s about a less cluttered environment,” Ladetsky said. “Sponsors can stand out more because we’re moving forward with a lower commercial load than normal.”

Longtime Turner executives say they have never seen as much interest in a property as they’ve seen in e-sports. Jon Diament, Turner Sports executive vice president of ad sales and marketing, called it “the easiest sport ever to get a meeting on.”

Fox Sports has signed a rights deal to carry the e-sports event FIFA Interactive World Cup 2016, live from New York’s Apollo Theater next week, marking the media company’s first move into the white-hot e-sports market.

FIFA executives approached Fox earlier this year about televising the event’s final round. Fox, which holds FIFA World Cup rights through 2026, agreed. A Fox executive would not say whether the deal included a rights fee.

“Our strategy is to work with some of our current partners if they have a tournament like the FIFA tournament,” said Bill Wanger, Fox Sports’ executive vice president of programming research and content strategy. “UFC just announced the release of a big game. If they came to us and wanted to do something, I think we would totally entertain it. It would have to be strategic with our current partners.”

The final round will be carried from 6-8 p.m. ET on FS1, FoxSports2Go and FoxSoccer2Go, with the preliminary rounds available on YouTube and Twitch.

Fox’s final-round production will focus on finalists as they play EA Sports’ “FIFA 16” game via PlayStation 4 and Xbox One consoles culminating in a winner from each group. Programming will incorporate the crowd at the Apollo, which should come close to selling out its 1,500 seats.

NBC Sports Group has put senior vice president Rob Simmelkjaer in charge of coming up with an e-sports strategy.

To date, NBC has not developed or acquired any e-sports content. But by placing the longtime media executive in charge of its e-sports efforts, NBC is demonstrating that it is taking this new category seriously. The network would not elaborate on its e-sports plans, describing its work as exploratory.

One potential snag that Simmelkjaer has to solve deals with exclusivity. NBC, in particular, is averse to sharing programming rights. Its deals with the NHL and EPL, for example, give the network exclusive rights. NBC’s NFL and NASCAR rights give the network exclusive broadcast windows.

In e-sports, though, game publishers and tournament operators see TV networks as an extension of their streaming coverage, not a replacement.

NBC’s work as the Olympics broadcaster may provide a blueprint for how it would address e-sports, with linear TV programming that focuses on telling the stories behind the gamers as much as covering the competition. “Most people are not all that knowledgeable about the Olympics, but they watch it,” said David Rosenberg, chief strategic officer at GMR Marketing, which counts NBC parent Comcast as a client. “And they watch it because they want to understand more things about sports they don’t see normally, and they want to hear the stories about the athletes.”

Simmelkjaer has a background in developing new properties and programming concepts. He joined NBC Sports in 2011 from ESPN and has overseen the network’s action sports and radio programming strategies.

Eric Grilly, former president of NBC’s action sports division, also was involved in the e-sports strategizing, according to a memo he sent colleagues before his January departure.

Trade publications are littered with stories about the promise of virtual reality, mostly filled with quotes from people with a stake in the game. They are pushing virtual reality just as forcefully as they pushed 3-D television a few years ago.

But my ears perked up when SportsNet New York President Steve Raab evangelized on the technology during an interview last week. We were talking on the occasion of SNY’s 10th anniversary — it launched March 16, 2006 — and I asked a standard question about how SNY will look in 2026. That was when Raab started talking about virtual reality, a technology that he described as jaw-dropping.

"[Virtual reality] hasn't really reached up today. But, boy, when you see it, it's pretty breathtaking."

“I’m really bullish on virtual reality,” he said. “Ten years from now, that’s going to have made real inroads. … It hasn’t really reached us today. But, boy, when you see it, it’s pretty breathtaking.”

Raab is not an executive known for hyperbole. Having spent his career in the sports business — he was a 24-year-old general manager of the CBA’s Sioux Falls Skyforce in 1989 — Raab has earned a reputation as a measured, forward-thinking executive.

While he sees virtual reality as being a potential boon for networks like SNY, he also thinks that it could become a big disrupter for pro sports teams.

Today’s VR experience is good. Eventually, the VR experience could get so good that it could keep people from attending games.

“Remember when Ted Turner’s original

WCW used to be wrestling in a studio on the Turner campus with 400 seats around the ring,” Raab said. “That’s what I’m starting to feel like we might see one day in professional sports. The venues will really be quite small because virtual reality will give you such a terrific experience. You’re not going to be able to get 20,000 people to a basketball game, so you’re going to build a 4,000-person arena. Then you’re going to have another 200,000 watching it from home on VR.”

That’s certainly more than 10 years away. But Raab said that fans are consuming sports today in ways that were not even considered 10 years ago. Ten years from now, consumers will be using some sort of technology that does not exist today.

In fact, when Raab described the media business from 2006, he made it sound quaint. High definition was still growing and flip phones were all the rage. iPhones didn’t launch for another year.

“Ten years ago, when we were negotiating the first distribution deals, you know what the big point of discussion was outside of price? HD,” Raab said. “That’s remarkable. We didn’t even carry all the Mets games in HD that first year. That was not the norm at the beginning.”

Raab was SNY’s top marketing executive when SNY launched in 2006. He was promoted to president a year later when Jon Litner left to take a bigger job at Comcast.

At the time of the launch, SNY set a strategy of staying close to cable operators as a way of making sure they could get carriage. Majority owned by the New York Mets, SNY also allowed New York’s two dominant cable operators to take ownership stakes — Time Warner Cable holds 27 percent of the RSN and Comcast owns 8 percent.

While pay-TV distribution still is the biggest issue facing TV sports channels today, all are looking at different platforms and exploring options of selling their service directly to the consumer.

The hottest issues for RSNs today — in-market streaming and over-the-top delivery — seemed the stuff of science fiction 10 years ago.

“These are all a byproduct of advancement in technology over 10 years,” Raab said. “2006 just seems archaic now. The whole digital media for RSNs — RSNs saw themselves solely as TV networks. Back then, a lot of RSNs had websites because it felt like you had to have a URL and you needed to have something on a home page. But nobody was looking to invest or even staff in those areas at that time. Now, we’re talking about being platform agnostic and maximizing the different platforms.”

John Ourand can be reached at Follow him on Twitter @Ourand_SBJ.

Joe Lunardi is the point man for ESPN's Bracketology, but it's strictly seasonal work.
For six weeks every year in the run-up to the NCAA tournament, Joe Lunardi turns into one of ESPN’s most visible on-air stars. Since 2002, Lunardi has appeared on several ESPN studio shows throughout February and early March as he predicts the college basketball teams that will be dancing in March.

Once Selection Sunday hits, he disappears for the next 11 months, returning to his job at St. Joseph’s University’s marketing and communications department.

I asked Lunardi about how he deals with such a schedule that goes from so much attention to relative anonymity. The Philadelphia-area native responded by making a comparison to another Pennsylvania mainstay, the groundhog, Punxsutawney Phil.

“I come out for six weeks and see my shadow: We get six weeks of bracketology and then I disappear,” he said. “I love it when it starts and I love it when it ends. There was no plan for this. I’m not that smart. And I’m not a good businessman. I never did it for that. I’d still be doing brackets on napkins if I was home and nobody was paying attention to it.”

— John Ourand

Every time I write about television ratings, I think of the Mark Twain phrase about the three kinds of lies: lies, damned lies and statistics.

For media executives, a TV ratings number is never just a number. They can make a huge number on a rival network seem like a disaster just as easily as they can make a tiny number on their own network seem like a huge accomplishment.

That brings us to this year’s Big East basketball ratings on Fox, which are either disastrously low (according to Fox’s rivals) or right on target (according to Fox executives).

Using a standard “average viewership per game” metric, this year’s Big East games on Fox and FS1 rate lower than mid-major conferences such as the Missouri Valley, Horizon and American Athletic.

Disaster, right?

Not necessarily. Fox and conference executives say the Big East’s total viewing on Fox this season — not average viewing — puts the conference among the power five conferences. Fox argues that the total viewing metric — which essentially adds up all viewers across all games — gives the Big East more exposure than other conferences get from their TV deals. Fox’s 12-year, $500 million Big East deal mandates that every men’s basketball game gets carried nationally on Fox or FS1.

“If it were all about average viewership, we would just take our best 10 or 15 games, put them in the best time slots that we could, and we would be able to throw a number up that would be comparable to the biggest of the power five conferences,” said Mike Mulvihill, Fox Sports senior vice president of programming and research. “There’s not that much value in that for us, and there’s no value in that for the schools. A lot of the value in our relationship is to allow to schools to go out and recruit and saying that such a higher percentage than in any other conference of your games is going to be televised nationally.”

For the 2015-16 season, Fox’s 125 Big East games logged 2.382 billion minutes watched, 53 percent higher than the first season of this deal, when 128 Big East games logged 1.555 billion minutes watched, Fox said.

“We have the only relationship within college basketball where every game within the conference is televised nationally, which hurts average viewership but helps total viewership,” Mulvihill said. “When you look at the total time spent, where we project to finish the regular season, the Big East is among what we think of as the power five conferences.”

How that explanation falls into Twain’s phrase is in the eye of the beholder.

— John Ourand