NEW YORK (AdAge.com) -- Time Warner's TV Everywhere initiative and others like it all seek to answer the same question: Will consumers pay for cable content online? If you ask George Bodenheimer, the answer is already yes.
ESPN's president launched ESPN360.com in the halcyon, pre-Hulu days of 2005 as a broadband product where sports fans could catch live streams or recaps of more than 3,000 games both mainstream (the NCAA Tournament) and obscure (the Bassmaster Elite). The catch: Unlike with Hulu and other ad-supported video sites, users can watchonly if they're verified, paying subscribers to one of ESPN 360's internet-service-provider partners.
Despite the potential subscriber hurtle, ESPN 360 has more than tripled its distribution since 2007 to 25 million homes, with more than 40 ISP partners including AT&T, Verizon, RCN, Insight and Frontier, and is in active discussions with the top cable operators.
ESPN 360 is also starting to adopt a dual-revenue, cable-network model with advertising. Earlier this month, the site introduced its first dynamic advertising inventory, giving advertisers such as Paramount and the U.S. Army the opportunity to insert display and video ads in adjustable formats throughout live streams.
ESPN 360's rise comes at a time when the network's biggest content partners, sports leagues such as the National Football League, Major League Baseball, the Big Ten Conference and others, are expanding their own cable networks with exclusive content, making ESPN's online value proposition to its fans all the more crucial when they can watch more of their favorite teams on the leagues' own channels.
That's why Mr. Bodenheimer views ESPN 360 as its own broadband platform, separate from ESPN.com or ESPN the network, and sees it as a three-way solution to the "cord-cutting" problem that seems to be accelerating with the increased availability of popular shows for free online. "It gives value to the affiliates with differentiated content, great value to the consumer with access to more than 3,000 live events this year, and allows us to serve our mission of delivering the best sports content to our fans."
Mr. Bodenheimer helped ESPN.com get headlines in 2008 by ending the site's relationship with ad networks. A year later, he maintains his content-is-king stance and opposition to the network model. "We chose to end our participation because we didn't feel that process properly valued our product and, in particular, our brand," he said. "We feel very confident we made the right decision and that it was the right to do. ESPN stands for premium content, and that's our proposition to our advertisers. We know that's what we deliver."
Nearly 30 years into his career at ESPN, Mr. Bodenheimer spoke with MediaWorks about his digital philosophies, from distribution to befriending Google and Facebook.
MediaWorks: What's your take on digital distribution from a consumer standpoint? What realities of online media consumption have accelerated features such as ESPN.com?
George Bodenheimer: We have a strategy we call "Best Available Screen" that's driving our philosophy here. While TV is still obviously primary to how we serve our customers, there are digital opportunities complementary to our existing TV and radio businesses, whether it's ESPN.com, all of our mobile devices or ESPN 360. These are all opportunities to serve fans with new business models, new products, while serving the operators at the same time. It checks off everything we want on our to-do list; that's why it's so important to our business.
MediaWorks: What has ESPN 360 taught you about fans' appetites for live sports online?
Mr. Bodenheimer: We're starting to see some serious traffic, as you would expect, with live events, during the day in particular. Some of the European soccer we are distributing on ESPN 360 is really starting to move the needle. Sports is a global marketplace, which we're starting to see as we put events on alternative distribution mechanisms during the day and it's driving traffic to international events.
MediaWorks: As we are learning through everything from President Barack Obama's inauguration to March Madness, live events are achieving record audiences online. How much of a priority is it for you to have access to live streams of big-ticket games? What restrictions with your league contracts prevent you from offering more games online?
Mr. Bodenheimer: Like all businesses that require rights, it's a mixed bag. We're constantly negotiating, working with our league friends and rights-holder friends to gain a necessary right to continue to grow that product. But we do have major sports on ESPN 360, like the NBA, MLB, and all college basketball and football. That's the thing about ESPN 360 that reminds me of ESPN in 1979. We also have many sports on 360 and mobile. They're passion sports that may not have largest audience but a very definitive and passionate fan base, like cricket, rugby and all these sports that when you can serve them, you are definitely on their radar screen.
MediaWorks: Does Google worry you?
Mr. Bodenheimer: Obviously they've got a heck of a business, and they're very good at what they do. We're very comfortable that if we stay focused on our niche of serving sports fans and serve a very digital business, that complements what Google does.
MediaWorks: What do you think of Facebook?
Mr. Bodenheimer: Obviously it's a powerful platform and connects a lot of people. When we had President Obama doing the brackets this month, there was so much publicity around that -- Facebook, Twitter, any social-networking site -- that it became water cooler talk. Any sites similar to Facebook can become water-cooler discussion for something you're doing.
There's very vibrant discussions going on ESPN.com, of course -- and part of being a sports fan is offering up your point of view, certainly -- so it's hard to speculate what would and wouldn't make a good partnership [in social media]. We try to view our business as simply as possible through our mission to serve fans. If we can do that, certainly we'll pursue any opportunity.