If 2016 will be remembered as the year in which sports broadcasting truly went digital, it will also go down as the year in which Monumental Sports & Entertainment (MSE) finally realised its ambition of becoming a digital-first, multifaceted sports media enterprise. Last year, one of the largest and fastest-growing franchise and venue operators in North America expanded again, adding new assets to its existing portfolio and venturing into unchartered waters under the guidance of its founder and chairman, Ted Leonsis.
All told, MSE now owns and operates five professional sports teams: the Washington Capitals of the National Hockey League (NHL), the Washington Wizards of the National Basketball Association (NBA), the Washington Mystics of the Women’s National Basketball Association (WNBA), and two Arena Football League (AFL) franchises - the Washington Valor and a new, as-yet-unnamed team that will be based in Baltimore. The group also operates the Verizon Center in Washington DC, the Kettler Capitals Iceplex - which is the Capitals’ training complex - and EagleBank Arena on George Mason University’s campus, while it is also co-owner of aXiomatic, a newly formed investment group which acquired a controlling interest in the Team Liquid eSports franchise and a stake in Super League Gaming towards the end of last year.
Arguably MSE’s most significant move of the last 12 months, however, came in October, when the company agreed terms on a long-awaited media rights agreement with CSN Mid-Atlantic. Under the deal, the NBC Sports Group-owned regional sports network would continue to provide live coverage of the Capitals and Wizards, airing all non-nationally televised regular-season and play-off games, as well as select pre-season games and game day shows. But the renewal of those rights, while the cornerstone of the partnership, was not what made the deal especially significant. Instead, it was an innovative equity exchange and leadership structuring between MSE and CSN that garnered much of the attention.
Described by MSE at the time as ‘an advanced media partnership’, the deal saw the company obtain a one-third stake in CSN and two positions on the network’s six-person board of directors. In return, NBC Sports Group acquired an equity stake and board representation in Monumental Sports Network (MSN), MSE’s fledgling digital sports and entertainment arm.
The deal itself was widely seen as a smart play by Leonsis, who had for years touted MSN as a potential home for the Capitals and Wizards and repeatedly emphasised the importance of sports properties controlling their own distribution channels. That the new partnership saw his network retain neither teams’ rights was beside the point. As The Washington Post put it at the time, ‘creating MSN was widely seen as a warning to CSN, with Leonsis publicly arguing that to stay competitive, Monumental would either need to launch its own cable network or receive significantly higher fees from CSN’.
In the end, Leonsis (left) was able to do both. Not only did the new deal include a significant hike in rights fees for Capitals and Wizards games, but within days of the announcement MSN launched an all-new over-the-top (OTT) subscription service to complement CSN Mid-Atlantic's exclusive coverage of the two teams. Run by Leonsis’ son Zach, the service now offers live streams of other MSE properties including the Mystics and Valor, as well as a host of additional behind the scenes programming, coverage of the Capitals’ minor league affiliate teams - the Hershey Bears of the American Hockey League (AHL) and the East Coast Hockey League’s (ECHL) South Carolina Stingrays - and local high-school basketball.
“We’ve been really trying to create this interesting, regionalised approach to the OTT subscription bundle,” explains Zach Leonsis, who serves as vice president and general manager of MSN. “I think that a lot of leagues have taken a league-wide approach to an OTT subscription, either built around out-of-market rights or, in some other leagues outside of the big four, you might get in-market rights as well. The value that those leagues push is that you can watch any game in the league. That’s wonderful and there’s definitely a lot of value there, but most people really just care about their home team and hometown sports. They’re hyperlocal. I’d be pressed to find another example of someone who is trying to bundle multiple home teams across multiple calendar seasons, multiple leagues - professional, grassroots, youth and the like.”
That one city, multiple team approach is indeed a novel one, and it is for that reason that Leonsis has taken to calling the network “a petri dish of experimentation”, both for Monumental and Comcast-owned NBC.
“We are already seeing the upside of what it’s like to have a really big strategic partner,” he says during a phone interview with SportsPro in early December. “In speaking about who to partner with on a new, sports-related broadcast venture, I don’t know how many other partners there would be outside of Comcast and NBC Sports. Obviously they are first in class on an international basis in terms of sports rights, sports production and, of course, distribution as well. They really play in the big leagues, so there are opportunities for us as a small startup within their portfolio to experiment with things that maybe they wouldn't want to try right off the bat.”
That spirit of experimentation is primarily seen in MSN’s original programming, which is produced in-house by a team of around 40 production staff. Since the network is not constrained by an affiliate deal with a cable provider or a multi-system operator, it has more freedom to be creative when it comes to producing its own shows. Leonsis points to the example of a new interview show hosted by Reggie Love, the former aide to outgoing president Barack Obama, and The Basketball Tournament, “a winner-takes-all, grassroots, March Madness-style” event that offers a US$2 million grand prize. Beyond that, he says, there is a solid helping of on-demand “bingeworthy content” to further bolster the network’s more than 80 hours of original programming per year.
“We’re doing several list shows, we’re doing a ‘hard knocks’ series with one of our Arena Football League teams, behind the scenes access, so people can see what it’s like to see the birth of a franchise from the start,” he says.
Leonsis adds that much of the original programming MSE currently produces is distributed for free via social media with the intention of drawing more viewers to the service. “We really try to leverage our great social following between the Capitals, the Wizards and our other teams,” he continues. “Through that, we see a significant amount of video views, and then we keep a lot of the more evergreen content and other original programming behind the paywall for our subscribers to enjoy.”
But original programming is just one aspect of this unique content laboratory. Plans are also in the works to explore helmet cams, cheerleader correspondents during games, and the use of new user interface experiences such as presenting game coverage vertically to suit smartphone viewing. “We also want to experiment with different content types,” says Leonsis. “I think our competitive advantage, our strategic advantage, is that we’re small and nimble, so we’ll throw a lot of darts up on the board in year one and learn quickly and adjust accordingly.”
MSN is offered to subscribers at an affordable price point, similar to other streaming services such as Netflix, Hulu and Spotify. Subscriptions are priced at US$8.99 per month with a full-year commitment, or US$12.99 per month with no commitment, and will be bundled within Capitals and Wizards season-ticket plans starting later this year. Yet Leonsis sees plenty of other ways to monetise the service, too. A presenting sponsorship has already been sold to Ticketmaster, and he believes the network is also capable of offering further value to Monumental’s existing corporate partners.
“We really think that offering them the opportunity to also advertise and be a part of Monumental Sports Network is valuable because of the audience base that we’re trying to reach,” he adds. “Millennials and Gen-Z consumers are typically a top priority of chief marketing officers at all the biggest and major brands, so this is really a platform where we can reach out to them."
"We’re doing our best to experiment and try new things out here.”
MSN also offers more creative ways to integrate brand partners into what Leonsis calls “real-life events and experiences”. As well as producing original programming, the network offers or plans to offer perks to its subscribers in the form of limited-edition merchandise, autograph sessions, and other experiential events such as mixology classes and workouts with coaches and athletes. “We know that millennials really find a lot of value in real-life touchpoints and experiences,” says Leonsis, “so if you’re a subscriber you get access to monthly events that leverage our ability to access players, venues and the like. We have had a lot of interest from corporate partners and I think that people want to be associated with something that is different and new, so we’re enjoying that upside right now.
“I think that’s what people are interested in,” he adds. “We try to pitch this as a personal sports network - it’s local, it’s about your team, you can get to know the players. I think that a lot of the teams that we’ll be streaming - ie our AFL teams or the Mystics - are more accessible than teams in the major four leagues as well. It really lends itself to flexibility with creating really unique broadcast experiences and real-life experiences. We’re doing our best to experiment and try new things out here.”
MSN is currently available across a variety of devices and platforms, including iOS, Android, Roku, Amazon Fire, Apple TV, and online at MonumentalSportsNetwork.com. There are also plans, according to Leonsis, to secure distribution on Xbox and Playstation consoles “in the not-too-distant future”. Though he won’t reveal subscriber take-up to date, Leonsis says early download numbers have been promising. Video views, he says, are approaching ten million on a monthly basis, with rates spiking around popular live events involving MSE properties. “We’ve had huge growth since launch,” he adds. “We haven't even hit the two-month point of being live and we’re happy with what we’re seeing so far.”
Leonsis puts much of MSN’s initial success down to the size and demographics of the Washington DC market and surrounding areas. He calls the region “a real hotbed for millennials and Gen-Z consumers”, with “a disproportionately high number of millennial purchasers” making up its roughly 7.5 million population between Richmond to the south and Baltimore to the north. And then there is the fact that that population is projected to double over the coming decade.
“We think that is one of our best and greatest assets, so we really wanted to try to be forward-thinking and reach consumers in ways that they hadn't been reached in the past,” says Leonsis. “We have to find a way to reach consumers who may never be cable customers, and I think there is going to be a growing subset of sports and, frankly, audience communities that will never have a home on cable, eSports being one of them.”
Given the nature of the DC market, Leonsis sees eSports as a particularly compelling opportunity for MSN. Though he believes the sector and its leading leagues, teams and athletes will continue to find their primary outlet on existing distribution channels like Twitch and YouTube, he sees no reason why team-owned networks like MSN cannot be complementary, just as other OTT services like Netflix are now widely seen as viable supplements to the traditional cable bundle.
“I don’t think that we have any misconceptions about how difficult this is to try to prove a new model."
“People are really engaged into who these players are,” he says. “If you’re in the community, you quickly find out that people worship some of these players the same way they’re fans of LeBron James or John Wall or Alex Ovechkin or any traditional athlete. I think that there are some people who are just getting exposed to the eSports world and really enjoy it. We’ll try to use that. I also think there are growing opportunities around regionalised approaches to eSports, and we’ll look towards being a testing ground for a regionalised approach as well.”
Though MSE is something of a first mover in the team-operated OTT space, others are also exploring the creation of similar direct-to-consumer streaming services as the sports industry adapts to changing market trends and consumption habits. On the US west coast, for example, Los Angeles Clippers owner Steve Ballmer has designs of his own, having secured a new local TV deal with Fox Sports Prime Ticket in September that included plans to conduct ‘in-market tests for new, innovative digital offerings on a trial basis to a targeted number of fans’.
For now, though, MSE is venturing out alone, trialling an untried and untested distribution model that Ballmer and others will no doubt be monitoring closely.
“I don’t think that we have any misconceptions about how difficult this is to try to prove a new model but I think we have the great advantage of being a large sports and entertainment enterprise,” notes Leonsis. “This would probably be difficult for a one-off group to do on its own but, within the infrastructure of Monumental Sports & Entertainment, we think that really provides us with huge strategic advantage and a platform from which to launch this with. We have so much content in our existing base bundle, if you will, that we can be additive.
“And also, I don’t think the OTT world is really going anywhere. I think we’re playing a long ball here, trying to take a strategic long-term view of five, ten, even 15 years out of ‘what does the world look like?’ In that regard I think we are strategically hedged and obviously NBC Sports Group feels the same. They’d love to see this work, obviously, and see if maybe it’s applicable for other markets. So yes, I do feel that people are watching with great intrigue and I’m thrilled that that’s the case. Hopefully we can live up to peoples’ expectations. I think we’re doing some interesting stuff and it will be fun to see how it pans out.”