From the vault: Bob Bowman on the evolution of MLBAM

As Bob Bowman announces his intention to step down from his role as president and chief executive of MLBAM at the end of the year, revisit this feature from November 2015 in which the man himself discusses how a company born 17 years ago to build websites for baseball teams became a multi-billion dollar tech operation and the lead-off hitter in digital sport.

From the vault: Bob Bowman on the evolution of MLBAM

Bob Bowman, the president of business and media at Major League Baseball (MLB), has announced that he will step down from his position when his current contract expires at the end of the year. In November 2015, he spoke with SportsPro editor Eoin Connolly.

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Baseball has always prospered by finding new ways to reach people.

Some of its oldest rituals began as acts of salesmanship: themes, hot dogs and organ music to enliven game day, trading cards to enamour youngsters to players they might never see in the flesh.

Even parts of the baseball experience that have been lost to technological obsolescence were once evidence of a sport hungry for innovation. Before television, fans would gather in theatres, city centres and better-appointed private quarters to watch games unfold on ornate scoreboards, replete with lights or even figurines that depicted the positions of batters on the diamond and catchers in the outfield. 

It was in that spirit that America’s pastime moved into the digital age through Major League Baseball Advanced Media, better known as MLBAM, or just BAM.

“The way it started was that commissioner [Bud] Selig had an idea that digital media was going to be important – I don’t think any of us knew how important it might be, but he was ahead of the other media companies, not just sports leagues – and he thought that we could do a better job of utilising it and optimising it if all the teams centralised their assets,” recalls Bob Bowman (below right). “So, and this is a testimony to his political skill, that’s what he got the teams to agree to.

“We had several things going for us. One was that we were among the first to do this. Second of all, he separated it – we weren’t part of baseball, it was a separate company that basically had to live or die on its own. And third, for the grace of God, we were blessed with phenomenal content called baseball.”

The aforementioned Selig, the ninth commissioner of baseball from 1998 until succeeded by Rob Manfred earlier this year, led the creation of MLBAM in 2000. Though it would operate independently, each of the 30 MLB teams pitched in US$1 million a year for four years – a total of US$120 million – to fund an operation that would initially seek to build official websites for the league and its members and consolidate digital rights, such as they were worth in the tail end of the dial-up era. Each team still retains a 3.3 per cent stake of a 100 per cent whole.

MLBAM made US$800 million in 2014.

“I think what happened is, we got lucky,” says Bowman, spinning a line in self-deprecation that quickly becomes familiar. “We made our mistakes – we still make them, but we made a lot more in ‘01 and ‘02 – when no one was really paying attention. We bet big on broadband. Broadband was not widely distributed but we sort of built our site, which at the time was just a website, based on broadband: lots of video. Then we made another big bet on mobile in ’05, before iPhone, before the App Store, before any of that started, and that combination of mobile with video turned out to be great.

“We started streaming live games before anybody did that and now that leads us to where we are today, where live games and live content and so-called ‘over-the-top’ is what everybody’s talking about. But you combine video with mobile with broadband capability, along with a game that’s played every day, and where fans are as passionate about baseball as they are about European football, it’s a pretty good combination.”

Whether luck has as much to do with it as Bowman makes out is open to conjecture, but there are recurring elements in the MLBAM story. One is an enthusiasm about new technologies, often those a little rougher than market-ready. Live audio of MLB games was first streamed online in 2001, to coincide with the debut season of Japanese outfielder Ichiro Suzuki. The first live video feed followed a year later – looking, as Bowman would describe it in a recent interview with tech culture website The Verge, “more like a flip book”.

Neither offering attracted an audience big enough to fill a minor league stadium, but the experience of being first meant that MLBAM was learning earlier about what worked and how to make it work. It also soon decided to keep all of this in-house. The digital offering to baseball fans has evolved beyond recognition, attaining a smoothness and depth typified by the celebrated MLB At Bat mobile and tablet app, and attracting 3.5 million paid subscribers to those apps and MLB.tv in 2014.  Not only that, MLBAM has become recognised as a leader in US tech.

“I think the difference is we didn’t grow up the way some media companies have done here,” Bowman suggests, “where they put the digital underneath the traditional. The digital always gets kind of shunted aside: baseball didn’t do that. Baseball separated it, and that’s what I think we’re trying to do. That’s what I mean by separate, but it clearly works for baseball.”

When it comes to video streaming, some of the biggest names in the sector have beaten a path to baseball’s door. MLBAM was the first major live streaming player on a whole host of US-based platforms, including the iPhone and Apple TV, Roku, Sony’s Playstation and Microsoft’s Xbox. Today those companies seek MLBAM out to test new hardware; Apple invited the team on stage for the launch of the original iPad in 2010.

That expertise and eagerness would only go so far, commercially, were it not for another quality: MLBAM likes to say yes. In 2010 it agreed to work up a new streaming service for ESPN, on a white-label basis. It has since done so again for World Wrestling Entertainment (WWE), HBO, and over a dozen other clients. That early-mover nous has been telling in each case. WWE believes that developing its new 24-hour streaming service in-house would have taken 18 to 24 months; MLBAM did it in five.

Launched this year, the over-the-top HBO Now service was a watershed for the leading US premium channel, which was making its content available to viewers for a single fee, without an initial cable subscription, for the first time. As an in-house operation, it reportedly carried an estimated completion time of three years, at a cost of anything up to US$900 million. MLBAM got it done for US$50 million in six months.

HBO tasked MLBAM with setting up streaming for its landmark over-the-top HBO Now service

It is an undeniably impressive batting record, one that has led to perhaps the most eye-catching deal anywhere in the sports industry this year. In August MLBAM completed a six-year tie-up with the National Hockey League (NHL) to overhaul its digital output – integrating live streaming, social media, statistics and analytical content and fantasy games – and take its live digital broadcast rights to out-of-market games in the US, and international markets other than Canada and Scandinavia.

From a distance, all of this looks a lot like foresight. From where he sits, Bowman sees nothing of the sort. “I wish I could say that it was genius thinking and strategic brilliance,” he says, “but neither is true. It happened because ESPN called us and asked if we could help them with streaming. They noticed that we were live streaming 2,430 baseball games. They had a live streaming product as well, and they just thought they needed a little help. So we agreed to do it.

“Our board readily agreed and quickly agreed to help somebody else out, even though in theory they were competitive. Our board, I think, wisely concluded that we really don’t compete against any of these people – we’re just trying to enlarge and enhance the level of all sports consumption in this country, and elsewhere, too. So we said yes, and one thing led to another, and that’s how we now have BAM Tech where we probably have US$200 million in revenue now which is just doing stuff for third parties.”

You combine video with mobile with broadband capability, along with a game that’s played every day, and where fans are as passionate about baseball as they are about European football, it’s a pretty good combination

All of that has now created an additional burden, one to which MLBAM is preparing to adapt. Since Rob Manfred replaced Bud Selig at MLB in January, the future of the digital body has been high on the agenda.

“I’m really in charge of nothing,” quips Bowman of the MLBAM management structure. The rest of the team splits three ways between those who do baseball, those who serve clients, “and a few of us kind of straddle the creek” of whom Bowman insists he is the “least important”.

“That will change a little bit in November and December when baseball’s over,” he continues, “but right now it’s 100 per cent on baseball because we have a post-season coming up in two weeks. It varies based on the time of the year. In March, it’s 100 per cent on baseball because we’re ready to launch all of our products for the upcoming season. So it varies from time to time but in general it’s probably 75:25. I guess one of the reasons why we’re looking to split it up and bring in other management talent is so I can continue to focus on baseball, which has a large number of things that are still in front of us. It’s not like in baseball we can pause the job. We’ve got plenty of things to do.”

One of Manfred’s decisions has been to unify baseball operations, so that “all the media and all the business and all the sponsorship and things like that are all under one roof now”.

Bowman adds: “All of our partners and sponsors can just talk to one entity and get all the answers they need. I think that was a wise decision on his part, but one that can be done because of the things that we did 15 years, ten years earlier.”

MLBAM has been part of several major Apple launches

Profound changes are also imminent for the third-party operation, which has seemingly grown in scale and ambition with every new endeavour. Plans to spin off the technology operation have been in discussion for some time but with a new man at the top, and new prospects to exploit, it is in 2015 that the most positive moves have been made. In an MLB owners’ meeting in August, the board of directors approved the creation of BAM Tech as a separate media company from MLBAM, with the ability to seek new partners. 

With the teams retaining a majority stake there is a financial appeal, if not an imperative: valuations of the new company in the US business media run into billions of dollars. It is becoming equally apparent, however, that splitting off the third-party services is vital to increasing capacity.   

“We have discrete people that work solely on the streaming of product, the video streaming, and that’s end to end,” explains Bowman. “It isn’t just the technology back-end, it’s designing apps, building apps, managing apps, managing customer service, doing analytics, training analytics. It’s not just the back-end streaming, in terms of being able to be scalable, it’s also making sure you’ve got a product that consumers want and are willing to download and willing to pay for.

“Those things are not… that doesn’t happen all the time so that’s what separates us from a lot of other folks is that we do that, too. It’s end-to-end services for HBO, for WWE, for people like that. But there are discrete people working on that: two dozen here, four dozen here, five dozen there, you add it all up and it’s 300 people that are working on third-party projects. So the thought is we could spin off: we could separate those people into a separate company – separately capitalised, separately owned – give it a better chance to grow with a slightly different risk profile.

“Right now, we’re trying to manage our risk very carefully because it’s owned by baseball, and baseball owners didn’t sign up for us trying to stream some risky endeavour where we might or might not make money, but other investors or other owners might say, ‘Hallelujah! We want more of that!’ So we’re trying to recapitalise with investors who might have a slightly different risk profile than our owners.”

One such investor, as it happens, is the NHL. Reports around the time of the deal indicated that the ice hockey league would be investing US$80 million a year in BAM Tech, building up an equity stake of between seven and ten per cent.

But there is plenty of money going the other way, with MLBAM understood to be spending US$100 million a year on the broadcast rights element. Little wonder MLBAM is seeking investors with a different attitude to risk: this is a partnership which takes it into completely new territory.

“It’s slightly different in the sense that HBO is a vendor relationship with limited upside,” says Bowman. “It’s a great deal for us, and I hope a great deal for them, but it’s a vendor relationship. With the NHL, we’ve bought the rights so the upside and the downside, is completely ours. If we do better, we make more money, if we do worse we make less money, or we lose money.”

It was MLBAM that made the initial approach to the NHL.

MLBAM’s NHL tie-up will see it market digital broadcast rights as well as running the digital operation

“They were already doing something, so it didn’t make sense,” Bowman recounts. “And then as that relationship came to an end we started talking again in the last few months. Our view is that it’s great content. It’s live. It’s 1,200 games a year. The commissioner and his staff are phenomenal; they focus on fans so it’s a great fit that way. And they know it better than I, but I think they felt that we would manage their content well, that we treat content reverentially.”

At first glance, the deal could appear counter-intuitive. Their seasons may not overlap but baseball and ice hockey are two of North America’s historic ‘big four’ and are rivals, potentially, for the same media and marketing dollar, if not the same fan share. Bowman sees it quite differently.

“If you think about it,” he argues, “ESPN does this every day. They have 14 different sports on the same network every day. We all trust them to optimise the value to our fans. So while it is relatively unique that one league is partnering with another league in terms of its rights, it’s not that unique when you think that somebody’s already been doing it.

“Now the question is, in a direct to consumer world, do you need a third party? And it’s not clear you do. You do for pay-TV and you do for a lot of things, but maybe in a limited direct to consumer way of an added arrow in your quiver of how to reach fans, you might be able to do it yourself and that’s what we’re trying to see with the NHL.

“We don’t think we really compete for fans. I think we’ve all sort of come to the conclusion here that football fans are going to love football and baseball fans are going to love baseball, and sometimes they overlap, but we don’t sit in this office and worry about competing with this league or that league. We’re just trying to do the best we can for our baseball fans in every way: the game on the field, the teams themselves getting parity, and also how we distribute that game. And I’m sure the NHL will do the same thing. To us, we don’t do it as competitors at all. We think the better the leagues do, the better off we all are.”

Bowman is speaking in late September, with the new NHL season a few weeks away, and as MLBAM staff get stuck into their new project his impression is: “So far, very good.” There are more rigorous metrics to be applied, of course, and Bowman accepts that the “economic test” will be whether MLBAM can “distribute more to more people in a better way that fans find more user-friendly”.

He says, “It’s very clear that we worry about distribution first and money second. The more we can distribute the product, the more fans love the product, the more likely we are to have an economic success – rather than trying to have an economic success on day one, we want to try and get distribution and that means better apps, localised apps for more countries, better and more timely distribution of what’s going on in the league, particularly for our international fans, and that’s what we’re going to be focusing on. We’ll be spending a great deal of time focusing on the European fanbase.”

As the reach of baseball’s digital arm extends, the intention is “probably not” going to be to burnish the brand of the MLB itself. “You won’t see our brand anywhere,” Bowman insists. “So it really is not about brand building for us, it’s really about being a white-label solution that no one knows or has heard of, and actually they’re ascribing the benefit, the value and the love to HBO, to the NHL, which is what we want.”

Nonetheless, MLBAM will continue to foster its reputation and seek to expand its client base. International expansion is the natural next step, particularly with the NHL deal taking it into wintrier territories where baseball has no historical foothold.

“Latin America is on our horizon, as is Europe,” Bowman adds. “In fact, I’m coming to Europe next month to further that cause. It’s very much on our site plan. We’re thinking about building data centres, too, just to make sure that we have a basis there, a land base. It’s very much in our sight. Obviously Europe is a little bit different than the US in terms of the intersection of pay-TV and over-the-top, and we think there’s a lot to be done over there. I think the reason to do a spin is that we want to get better at being international.”

Within that slightly altered broadcast landscape, Bowman still expects to depend on MLBAM’s “bread and butter” of “live content delivered through apps that are both free and pay”, from rights holders seeking value from advertising and subscriptions. “There’s plenty of those that exist out there in Europe,” he says. “Also, it’s getting European rights and delivering them here in the US.”

On the technical side, meanwhile, additional partnerships will drive new knowledge through the organisation.

“I mean, you can’t help but get R&D,” Bowman says. “You get R&D three different ways. The first is you’re building things, and every time you build something you learn something. You can’t help but do it in this business, so you’re always doing R&D.

We’re just trying to do the best we can for our baseball fans in every way

“Second of all, you’re working with clients. Whether it’s HBO, WWE, or now the NHL, they have a lot of thoughts and they’ve done a lot of things, so you get R&D that way. It’s not as technical but in terms of what people want and what clients want, you learn a lot. So that’s valuable, too.

“Then, third, you work with the infrastructure of the tech system – whether it’s Apple, whether it’s Android, whether it’s Cisco, you learn things there, too. So every time we’re out building a new app, or managing a new app, or launching a new app, there’s a lot of R&D that goes on. Some of it’s our own work but a lot of it’s from third parties – clients as well as the technology infrastructure here in America.”

It would not take much research to discern that the overwhelming trend in media consumption over the past few years has been the migration to mobile. “We build for the mobile device first – that’s the number one screen, it’s not any other screen – and how people interact with that and what kind of content they want on it, how quickly they want it, notifications, the intersection with the Apple Watch or any watch for that matter, is just now vital in terms of getting to people and getting them information that they want on a timely basis,” says Bowman, who believes MLBAM is reacting to this shift quicker than anyone else.

Still, if mobile is the future, what will the future on mobile be? Even as fans do more on their devices, Bowman does not anticipate a radical change from current patterns of usage or behaviour.

“Navigating between apps will get easier, technologically,” he says. “I’m not sure that’s how, at least today, users are thinking of their world. They are thinking that their apps are pretty distinct.

“They have this app and that app, and there’s not ‘Matthew Gould’s App’,” he continues, with a sly nod to his head of communications, “where he can do everything he wants. I think people are happy to download 15, 20, 100 different apps and use them how they see fit. That may change but right now, like the way Facebook does between Facebook Messenger and Facebook, there’s easy access between two apps but you’ve got to have both apps because that’s how people – at least today, anyway – are using their apps on their phones.”

There will be challenges ahead – in everything from cultural change to what Bowman has previously called the “Napster effect” of easily shareable video – there is only so much that future-proofing that can achieve. Soon after the creation of MLBAM, the parent league set about purchasing optimal domain names for all of its teams’ websites. The pre-Selig MLB had, not uncommonly in sport, been a little slow to appreciate the value of these URLs and the new commissioner was keen to reclaim what had been lost.

Bowman says that MLBAM now “build for the mobile device first” when creating products and apps

Steadily, and at no little cost, the best available .com URLs were secured for 27 of the 30 MLB teams. Of those that remained, one is owned by the NFL’s New York Giants, who share a name with San Francisco’s World Series winners of 2014. Another, which might otherwise be the property of the Tampa Bay Rays, is instead held by a landmark Seattle restaurant.

The outlier is Twins.com, which the league has been trying to secure for Minnesota. That was registered back in 1994 and has lain more or less completely dormant – ‘under construction’ – since 2002, carrying nothing but a static business card for owners Durland and Darvin Miller.

In August, not too long after MLBAM became a TV rights distributor for the NHL, US sports website Grantland tracked the Millers down near San Francisco. They are, indeed, twins. They had picked up the URL for free and conceived of the site as a resource for other twins, but the plan has been postponed again and again, life going on in its place. They still insist the site will be finished some day and, until then, will reject every offer from MLB or anyone else.

“That was a really good story, wasn’t it?” laughs Bowman. “It’s a really good story. It’s largely true – it wasn’t entirely accurate but the Twins part was. We did try and buy it. They haven’t moved. They’ve come down a little bit in their price but they’re not at any point where we can afford it. We’d love to own it, but not at that price! And the conclusion was that URLs are less important today than they were ten years ago, and that time has worked against those two guys, but you read that story and it’s hard not to love them.”

Bowman cannot give an exact figure for the price quoted to Durland and Darvin. “I just know that we’ve paid, on average, around US$150,000 to US$200,000 for the optimal names,” he says, “and they’re a multiple above that.”

It may be that the brothers have held out too long on a digital gambit. It may be that they one day create an online platform for twins everywhere to congregate. For his part, Bowman has seen too much to make firm predictions.  

“We went out and bought .baseball but we don’t know what’s going to happen,” he says. “We’re not smart enough to see the future. When we bet on mobile, we didn’t see the iPhone coming, we didn’t see the App Store coming. We’ll be the first to admit we’re more paranoid than we are geniuses. So I don’t know. I mean, that’s why we’re still interested in Twins.com. Right now, maybe it’s not worth as much but who knows? Some day it may be.”

So the crucial condition will always be culture. MLBAM will stay open to new experiences, new opportunities and new concepts, wherever they originate.

“Ideas come from everywhere,” Bowman says. “Hierarchy doesn’t matter; clubs don’t matter. It’s a meritocracy.

“Two ears, one mouth: get the ratio right.”

This feature originally appeared in Issue 82 of SportsPro magazine. Subscribe to the magazine here.