The NBA and Twitch have agreed to a multi-year partnership that makes the video streaming service the league’s first official media rights partner. The agreement ensures that the inaugural season of the NBA 2K League will be broadcast live, in its entirety (up to 199 games); with all games featuring live commentary and updates from around the league. Twitch has announced plans to introduce “Extensions” to increase viewer engagement during broadcasts (they’re going to need to draw viewers first, see Fan below). Twitch is a Founding Partner (i.e. they’ll have an equity stake) of the upstart league.
Howie Long-Short: Twitch was acquired by Amazon (AMZN) for $970 million, back in 2014. The company increased concurrent viewership +21% during Q1 ’18 (to 953,000), growing its already large lead within the game streaming market over 2nd place YouTube Gaming (GOOGL, -12% to 272,000). Facebook (FB, +103% to 56,000) and Microsoft’s (MSFT, +90% to 9,500) also reported significant growth with their streaming audiences last quarter.
As for AMZN, the company posted its most profitable quarter ever in Q1 ’18. It grew revenue +43% to $35.7 billion, while net income rose 121% to $1.6 billion. Cloud computing (+49% YoY to $5.44 billion), subscription services (+60% YoY to $3.1 billion) and ad revenue (+139% YoY to $2.03 billion) all contributed to the record quarter.
Fan Marino: The NBA 2K League’s inaugural season kicked off yesterday, with Bucks Gaming and Pistons GT participating in the league’s first ever game (Pistons won 49-44). Just 9,000 watched the contest, a particularly disappointing total considering OWL’s opening day drew 408,000 concurrent viewers. This league is far from the slam dunk predicted following last month’s successful gamer draft.
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The Seattle Seahawks are using Microsoft (MSFT) technology (Microsoft Azure and Power BI) to analyze and plot sports-science data as the team tries to prevent player injuries. MSFT’s Sports Performance Platform utilizes machine learning, predictive analytics and historical data to spot trends between “practice loads and player durability”, with coaches and trainers using the actionable insight gained to customize training regimens for individual athletes. Not everyone is on board though: some players are concerned that the data collected could be used against them (and lead to cuts), while others question the efficacy of the program, with several key Seahawks on season-ending I.R. (Sherman, Avril, Chancellor). Microsoft has plans to “deploy the platform to a broader set of customers.”
Howie Long-Short: MSFT grew revenue 12% YOY (to $24.5 billion) in Q1 ’18, with net income up 16% (to $6.6 billion) over the same time frame. Sparta Science is another company playing in the sports-science space; creating money ball methods to assess injury risk. The company which already works with the Cavs and Falcons, recently signed its first EPL partnership with Stoke City F.C. Sparta Science is privately held, but Qualcomm Ventures, the investment arm of Qualcomm, Inc. (QCOM) participated in the company’s seed round.
Fan Marino: Speaking of Microsoft, the company will remain the NFL’s official sideline technology sponsor through the 2018-2019 season; meaning MSFT will continue to supply Surface tablets (it’s not an iPad, Mr. NFL announcer) for officials to use on video reviews. Coaches and players will also have access to Surface tablets on the sideline, giving them the ability to review previous plays. The deal comes as the existing 5-year $400 million contract comes to an end. Financial terms of the new deal were not disclosed.
How the Seahawks use Microsoft’s new high-tech performance platform to prevent injury and plan practices
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Qualifying tournaments for EA Sports’ (EA) FIFA eWorld Cup 2018 are underway and will run through July ’18, narrowing the field down to 128 participants (64 PS4 (SNE), 64 Xbox One (MSFT)) who will compete in the FIFA ’18 Global Series Playoffs. The tournament will include both players signed to professional teams as well as amateur tournament winners. Those who advance will play in in the FIFA eWorld Cup Grand Final, with the winner of each playoff (PS4, Xbox One) receiving a $35,000 prize.
Howie Long-Short: EA Sports announced fiscal Q2 revenues rose 7.4% YOY on an adjusted basis (to $1.18 billion), reducing the company’s net loss to $22 million (from $38 million in ’16). CEO Andrew Wilson called it a “strong quarter”, writing that “the company benefited from the customer’s response to EA Sports games (Madden NFL, FIFA), and its mobile games”. CFO Blake Jorgensen said that the company had experienced notable growth in its high-margin digital business (+21.7% to $689 million) during the quarter. As of the close on Wednesday, the stock is up more than 45% on the year.
Fan Marino: More of an NBA 2K (TTWO) gamer than a FIFA one? 2K Sports has announced that the latest release of NBA 2K18 features verified users. That means gamers will know if they’re playing against NBA players, celebrities or members of the 2K development team. Fans are going to flip when they realize they’re playing as LeBron, against LeBron.
FIFA and EA announce the first eWorld Cup
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Youtube (GOOGL) will be the presenting sponsor for the 2017 World Series; using commercials during the fall classic to promote YouTube TV, the company’s live cable-like streaming service. The ads will run on Fox (FOXA) during games, gain exposure across MLB’s digital platforms and be visible to fans within the stadiums in which games are played. YouTube TV, now available in 49 of the Top 50 markets for $35/month; targets sports fans with 40 channels (including ESPN (DIS) & Fox, the most watched sports channels on television). Financial terms of the deal were not released.
Howie Long-Short: The race to turn cord cutters into skinny bundle subscribers is picking up. Direct TV Now (AT&T’s (T) service) is trying to onboard subscribers by offering Netflix (NLFX) for just $5/month, while Hulu has made itself available through the X-box (MSFT) video game console. The goal of this campaign is to raise the sports fan’s awareness of the 6-month-old service, so having access to 40 million (2016 WS audience) engaged baseball fans gives YouTube the right audience. If the company can effectively convey that viewers will save +/-$100/mo. and still have access to “must see” sporting events, subscription numbers should spike. I would provide free access to YouTube TV during games, so that prospects can simultaneously compare video quality.
Fan Marino: The 2016 World Series was the most watched series in 25 years, so YouTube probably shouldn’t expect a repeat viewership numbers. As for YouTube TV, they have programming deals with ABC, CBS, and NBC (in addition to ESPN & FOX). In fact, you’ll get 80% of live sports programming with the bundle. Fans won’t get is the NCAA tournament though, as TNT and TBS aren’t included. No big deal, March Madness on Demand is free and carries all of the games.
YouTube Seeks Web-TV Boost Via World Series Sponsorship
The rise of Esports, higher quality laptops (features include: smaller chips, better cooling systems and battery technology) and hit game titles (i.e. PlayerUnknown’s Battlegrounds) are driving a PC gaming rig resurgence. Gaming consoles currently dominate the market; with Sony (SNE) and Nintendo (NTDOY) expected to ship a combined 28 million consoles this year, compared to just 7 million PC gaming units. That gap is expected to close though, as PC gaming rig sales are on pace to grow 6.6% YOY through 2020; despite the gaming industry as a whole expecting a 3.8% annual decline. Console manufactures Sony & Microsoft (MSFT) have begun releasing upgraded versions of their machines to prevent further gamer deflection.
Howie Long-Short: When NTDOY reported their fiscal Q1 (period ending June 30) profits and earnings in July, the company reported profits of $145 million with revenues that had increased 150% YOY (to $1.37 billion). The success of the Switch console (sold 1.97 million in quarter) and mobile games (up 450% YOY to $80 million in revenue), Pokeman Go and Super Mario Run, have driven the stock price up 60% over the last 12 months.
Fan Marino: PlayerUnknown’s Battlegrounds, an online multiplayer survival game, has been downloaded more than 10 million times since March and holds the record for most concurrent players on Steam (multi-player gaming platform). The game consists of 100 players that parachute onto an island, scavenge for weapons and equipment, and kill others while avoiding death themselves. The last player standing is the winner.
PC Gaming Is Back in Focus at Tokyo Game Show
Florida State University’s athletic department has been able to accelerate its ticketing sales cycle by adding text messaging to the process. Using ZipWhip to give its box office phone number text messaging functionality; FSU has seen an increase in the percentage of responders to their outreach, faster response times and increased conversation rates. ZipWhip technology enables two-way texting between businesses and their customers, while the underlying platform facilitates the conversation much in the same way that Outlook or Gmail does for email communication. The company has increased reoccurring monthly revenues by 60% over the last 10 months, picking up clients in a variety of phone intensive industries (i.e. insurance, medical, auto sales).
Howie Long-Short: You can’t invest directly in ZipWhip; as it remains privately held, but Microsoft Ventures participated in both their $9 million Series B funding round as well as the $22.5 million Series C round that was just announced. Microsoft Ventures is the corporate venture capital arm of Microsoft (MSFT).
Fan Marino: Mobile Marketing Watch has indicated that while only 20% of emails are opened, 98% of texts are. I need to meet the 2% of people who have the discipline to avoid checking their text messages when that little number icon appears, because I don’t believe they exist. Of course, if I start getting text messages offering me erectile dysfunction medications, I’ll stop checking my texts too.
Texting is Helping Florida State Win Off the Field
Houston Billionaire, Tilman Fertitta is the new owner of the Houston Rockets. Les Alexander agreed to sell the franchise for $2.2 billion, the most ever paid for an NBA team. Alexander decided to sell the Houston basketball team to focus on his philanthropic efforts. He recently donated $10 billion to Hurricane Harvey relief. Ferttita, the Landry’s Inc. and Golden Nuggets Casinos owner, was an original investor in the Houston Texans franchise.
Howie Long-Short: Feritta attempted to buy the Rockets in 1993. He offered $81 million, Alexander submitted the winning bid of $85 million. It might be a day late for Fertitta, but it is certainly not a dollar short.
Fan Marino: Fertitta, an extremely wealthy man, spent 71% of his net worth on the franchise. When Steve Ballmer bought the Clippers for $2 billion, he spent just 6% of his. Ballmer was the 30th employee at Microsoft (MSFT) and owned 8% of the company when incorporated in 1981. It’s good to have Microsoft money!
Tilman Fertitta to buy Rockets for record $2.2 billion
Jawbone, the liquidated consumer technology turned fitness wearables company, is now rebranding itself as Jawbone Health Club and planning to enter the medical device market. While the new business plan and product line are yet to be released, according to the company’s investor presentation products under consideration include; sensors that track body metrics (hydration, respiration, blood pressure, alcohol level), a bracelet that can detect a heart attack or failure and applications to assist with diabetes, hypertension, heart rhythms and stress management. The company plans on pursuing a partnership with Microsoft (MSFT), where the tech giant would distribute the Jawbone Health Club’s devices and wellness software, and data collected would sync with MSFT email & calendar products.
Inside Jawbone’s High-Risk Plan to Become a Medical Device Maker
Howie Long-Short: Medical grade devices are certainly the next generation of wearables, so from a conceptual POV, I like the pivot. However, to get insurance reimbursement, they will need FDA approval on products. R&D is expensive and they blew through $590 million the first time around. Are they going to be able to raise enough money to flush this business out?
Fan Marino: I always thought the idea of a “fitness tracker” to count steps was nonsense. Just a matter of time until we toss it in the same bucket with our shake weights, thigh masters and ab vibration belts.