Strike Poses as Real Curveball for MLB.com
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In its two-year history, Major League's Baseball's Internet arm has been a story of swing-and-miss but with the specter of a baseball strike just a week away, there are nervous jitters that money will be flushed down the drain.
As millionaires (players) and billionaires (owners) squabble over how to cook the golden egg, executives at Major League Baseball Advanced Media (MLBAM) are tight-lipped about the ramifications for MLB.com, the league-owned portal that runs the Internet operations for all 30 franchises.
"We are hoping there won't be a strike and that's all I'll say. We'll remain optimistic that an agreement will be reached (between the players and the owners). Until that changes, we're not going to talk about what happens if," MLB.com spokesman Jim Gallagher told internetnews.com.
Gallagher refused to discuss back-up plans to deal with a work stoppage but with down-to-the wire wild card races in several divisions and the playoffs around the corner, MLB.com officials are nervous that its cash cow would be put out to pasture.
as part of a $20 million, three-year deal inked in March 2001.
The GameDay Audio service sells audio webcasts for the full 162-game season direct from the MLB.com and Real.com Web sites and it is also the jewel in Real's premium service. Officials from RealNetworks could not be reached to discuss what would happen if there is no baseball after August 30 but insiders say there are plans to offer alternative streams to affected users.
The returns on the play-by-play audio, which goes for $14.95 per season on MLB's own site, have been disappointing since MLBAM introduced the subscription-only plan at the start of the 2001 season. Minor technological hiccups initially marred the service but, once things were straightened out, the sites signed up about 120,000 paying members in 2001.
This year, the subscription base has grown to around 155,000, a number Gallagher claims was "on track with our projections" but, privately, MLB.com officials aren't happy with the returns. Although the 155,000 subscribers (for all the site's paid services) is over and above those that pay through the RealOne premium service, it is barely equal to a three-game attendance total at a Yankee home series.
"For something this exclusive, we really should be doing much better. This is really the only place to find a baseball broadcast online and we should really be above the half-million mark for subscribers," said a source familiar with the inner workings of the New York-based MLBAM.
"A strike would absolutely kill us," the source said, noting that the post-season games generate a lot of business, mostly in memorabilia and apparel sales from MLB.com's e-commerce operations.
Not much is known about sales via RealNetworks' gold pass subscriptions. In 2001, Real sold about 500,000 MLB audio subscriptions.
RealNetwork officials declined repeated requests for interviews.
Gallagher, who refused to even discuss a post-strike scenario, confirmed the playoffs are a major source of business. "We're on track to get to where we expect to be in total (subscribers). A lot of fans sign up in anticipation of the playoffs so there's definitely a real opportunity there," he said.
The GameDay Audio service is not the only premium service that will be thrown a curve by a work stoppage. MLB.com also makes money from the Condensed Games package that offers a pay-per-view condensed version of all games, minus the boring parts.
Condensed Games is a 20-minute on-demand highlight package of every game played. It has developed a following, ironically, among New York baseball fans that have been blacked out by the ongoing dispute between the Yankees Entertainment and Sports (YES) network and Cablevision. For $4.95 per month, fans with broadband access can view the entire game, minus foul balls and long pauses.
All the site's paid services -- GameDay Audio and Custom Cuts -- are bundled together into what MLB calls 'Total Ticket' and sells for $9.95 per month. An extended baseball strike, if it runs through the playoffs and World Series, could badly hurt the MLB.com portal, which is financed by the league's 30 owners.
MLBAM, which has a $120 million commitment over four years from the league, is believed to have used up about $90 million so far. The company, which runs like a start-up out of offices in Manhattan, was expecting to be cash flow positive by the time the World Series ends in October but a strike could strikeout those plans.
"We just started our sophomore year and we're projecting profitability this year. This is unheard of in terms of a dot-com," Gallagher said of his 200-employee firm earlier this year.
More importantly, MLBAM officials are also bracing for the public relations fallout that will filter down from the fans' disdain for a work stoppage. Baseball owners and players are already feeling the wrath of fans on Web message boards and radio shows. It is certain to affect MLB.com's operations too.