Pro-sports leagues pilot plays in $30 billion cellphone market

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The professional baseball, football and basketball leagues are cutting deals to tap the estimated $28 billion to $30 billion consumers will spend globally on cellphone entertainment in the next three years. But their approach to the mobile medium is as different as the sports themselves.

The National Football League last week signed an $8.9 billion, eight-year deal with ESPN for the right to air "Monday Night Football" on its cable channel. Tucked into that package are rights, starting in the 2006 season, to show Monday night games live and/or run highlights on demand on ESPN Mobile, a wireless phone service known as an MVNO, or mobile virtual network operator, slated to launch within the next year.

But the NFL is holding onto the vast majority of mobile marketing rights to screen games. "Those rights are that hot," said one executive involved in the deal, citing the target audience of 18- to 34-year-old young adults who are techno-forward and "live with the cellphone as the center of their social experience."

In parceling out the remainder of these rights, the NFL has a number of different runs in its playbook. It can cut a deal with one wireless carrier such as Verizon Wireless, or actually go head-to-head with Verizon Wireless and other carriers by going into the wireless business itself with an NFL-branded MVNO-much like ESPN's. It's also considering garnering mobile-entertainment revenue with game bundles similar to the way it packages games for Sirius Satellite Radio or DirecTV.

The National Basketball Association, on the other hand, has so far tried to make money out of mobile content deals by including rights in its presenting sponsorship deal. In other words, it offers mobile-service providers a standard NBA sponsorship package that comes with the added value that they get to package NBA content on their services.

Last fall, the NBA launched "NBA Unwired," a wireless package with content ranging from game highlights to wireless video games. Owners of three Nokia video-enabled phones with Cingular and T-Mobile service are able to view game highlights, live broadcasts of the NBA finals, and have access to scores, standing, schedules and other team data.

The NBA's official wireless service provider, Verizon Wireless, had NBA highlights on its V Cast video service. Verizon Wireless' content strategy centers on using its V Cast offerings, in effect, to position itself as the equivalent of ABC or CBS.

GOLDMINE IN CHINA

Content deals are so hot "everybody has a thought on how they should be structured," said Brenda Spoonemore, senior VP-interactive services at the NBA. "We are looking at a couple of models to determine what is best for our fans and our business," she said, noting that a good portion of the revenue is expected to come from China, where NBA.com already derives 20% of its revenue and more consumers there have access to mobile phones than PCs.

Major League Baseball, meanwhile, is going to bat with its Advanced Media unit, which has rolled all team media rights into one operation which could be spun off in an IPO. It has sold an exclusive three-year deal for live audio and video coverage of all games with MobiTV, an Emeryville, Calif. company which aggregates content, does the technological transformations to make the content playable on the hundreds of cellphone devices over different carriers, and distributes it to wireless carriers who then charge consumers for the content, usually about $10 per month on top of other required services.

Via the deal, advertising from standard TV broadcasts will not be taken out of the broadcasts to mobiles, which is part of the attraction for the carriers, said Jeff Hallock, VP-wireless data product strategy, Sprint. "It demonstrates that literally [consumers] are watching on the TV screen what they are viewing on their phone," he said. MobiTV is distributing the content via the nation's No.1 carrier, Cingular Wireless, and No. 3 carrier, Sprint.

still evolving

The moves come at a time when the cellphone is poised to take off as the multibillion dollar medium of the future. Like the Internet in the 1990s, its economic ecosystem is still evolving, with more questions than answers on how-and maybe even whether-marketers will find their role in a medium consumers consider very personal.

"Deals are taking a lot of different forms," said Sprint's Mr. Hallock, who declined to comment on the specifics of the MLB deal. "There are four or five different ways each league is thinking about mobile," he said. "At this point, I don't think any one [strategy] is better than another."

The timing is also unpredictable, requiring the unraveling of some tricky technological issues, from improvement in screen quality to battery life, as well as some key social ones, such as whether consumers will find traditional content more compelling than the entertainment value of asking one's friends "Whassup?"

But one thing is certain. Content brokers, be they the leagues, networks, studios, artists, wireless carriers, Internet media owners, or companies not even imaginable as content players today (think eBay) are salivating over a bonanza.

As the executive familiar with the NFL said, he expects the league at first will cut deals with some guarantees and a revenue-sharing upside. "Initially, they will be in the tens of millions of dollars," he said. But going forward he seemed to feel this will generate big sums for the league. "Hundreds of millions of dollars will be guaranteed."

Strategy

Sprint’s Jeff Hallock says, "There are four or five different ways each league is thinking about mobile. At this point, I don’t think any one [strategy] is better than another." Such strategies include games, MVNOs, and content such as game highlights, live broadcasts, scores, schedules, standing and team data.

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