APM Sports Exec Explains Why Pro Sports Teams Require Custom Tracks

APM Sports

If you’ve ever watched Monday Night Football, you’re familiar with this song. Interestingly, ABC/ESPN does not own the ballad entitled “Heavy Action”; it’s a pre-composed British library track that was pulled off a shelf at ABC 30 years ago. That track is among 620,000 others in the APM Music Catalog. JohnWallStreet had a chance to connect with Matt Gutknecht, Sr. Account Director, Sports Entertainment at APM Sports to explore the intersection of sports and the music business.

JWS: Why would a pro sports franchise choose to work with APM Sports as opposed to just playing “Top 20” hits?

Matt: Teams come to use for 2 reasons. You may have seen on national signing day a bunch of Top 25 college football programs had their Twitter accounts shut down for copyright infringement (use of popular music). So, we can provide a solution to mitigate and reduce liability.

The second reason is cost. One NBA team paid $200,000 for the in-arena and social media use of a single pop song (in their scoreboard intro video), for 41 home games. We can provide a track similar in vein, something unique that no one else, without having to pay in the low-to-mid six figures.  

JWS: Is there a financial penalty for this type of copyright infringement?

Matt: No, I’ve actually had P5 conference teams tell me they’d rather pay a fine than have the content (or their account) taken down.

JWS: A team wants to use The White Stripes’ Seven Nation Army but isn’t willing to pay the publisher’s asking price. What kind of solution can you offer them?  

Matt: So, we’d look to create a great track, with big quarter note, bass drum feel. That coral, chanting kind of thing. We’re not in the business of knocking off tracks or doing something that is 2-3 notes away. (check out a sample playlist in the style of The White Stripes)

Howie Long-Short: APM Music is owned by Sony/ATV Music Publishing (a subsidiary of SNE) and Universal Group Music Publishing (a subsidiary of the French mass media conglomerate Vivendi, EPA: VIV).

Fan Marino: Speaking of Imagine Dragons, “the new White Stripes for in-arena music”, if you’re a college football fan, you’ll be hearing a lot of them this fall. Their hit “Natural” has been selected by ESPN/ABC as their 2018 college football anthem. You may recall, the ’17 anthem was “Walk on Water” by 30 Seconds to Mars.

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Microsoft’s Gaming Division Drives Record Annual Revenue

Microsoft

Microsoft reported that its gaming division generated $10 billion in annual revenue, for the first time, in fiscal ’18; the result of “Xbox Live, Game Pass subscriptions and Mixer” achieving “record levels of growth and engagement.” Xbox Live subscriptions rose 8% YoY (to 57 million subs), while the number of active monthly users on Mixer (Twitch competitor) has doubled over the last 2 quarters to 20 million; for comparison purposes, Twitch has 100 million. The success of the company’s gaming division helped Microsoft generate a record $110 billion in fiscal ‘18 revenue, a 14% YoY increase; it was the first time the company crossed the $100 billion threshold.

Howie Long-Short: Microsoft competes with Nintendo and Sony in the competitive gaming space. Nintendo’s (NTDOY) gaming division achieved comparable success to MSFT ($9.7 billion in revenue) in fiscal ’18, as their popular Switch console boosted sales 105% YoY; but both companies continue to chase Sony, the industry’s leading console maker (see: PlayStation 4). Sony (SNE) reported its Game and Network Services division generated $17.7 billion in fiscal ’18 net sales, including $1.6 billion in profit; making it the most lucrative division within the company. Imagine what Sony’s lead would look like if Sony enabled PlayStation users to play Fortnite!

Coming off a strong fiscal ’18, MSFT made several announcements at June’s E3 conference that lead investors to believe ’19 will too be a success (shares are +12% since June 1st, closing on 7.25 at $110.83). The company announced the acquisition of 4 game studios and the launch of a 5th, revealed its working on a next-gen Xbox console and teased the next chapter in the Halo franchise (Halo Infinite).

Fan Marino: Thurrott.com reported that Microsoft may have finally “cracked the code” on technology that would enable them to offer a true (i.e. instant, no download, no delay) Netflix-style streaming service. While many have tried (including Microsoft with Game Pass), MSFT’s “lightweight” solution relies on extra computing power within the console, as opposed to being dependent on the cloud. Despite the advanced technology, the console is expected to sell for “significantly less” than the standard next-gen game console the company is working on (and likely to release in ’20). One must believe that offering immediate access to a multitude of game titles (as opposed to selling standalone software) on a less expensive console (think: more potential gamers) would be a logical way to grow a subscription gaming business.

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YouTube TV, Hulu Engaged in Sports Sponsorship Arms Race

hulu-youtube-tv-logosjpg

A brand awareness campaign is among the ways (exclusive content and user experience are others) that an MVPD, OTT live-streaming service or VOD platform can distinguish itself from the competition and drive growth. Over the last month, rivals YouTube TV and Hulu have announced noteworthy sponsorship transactions (without disclosing financial details) surrounding marquee sporting events. Below is a brief each deal:

  • YouTube TV will remain (was in ’17) the presenting sponsor of the World Series, (“World Series Presented by YouTube TV”) through the 2019 season. As part of an expanded partnership, the subscription streaming service will also add MLB Network to its base package. For an additional fee, YouTube TV subscribers will eventually have the option to add MLB.tv (provides regional broadcasts of games) to their package. “On-air callouts”, a national advertising campaign and in stadium signage are also included within the deal.
  • YouTube TV will become the first-ever presenting sponsor for the NBA Finals. The deal, which runs through at least ’19, will also make the company the presenting sponsor of the WNBA and G-League Finals. On-court and in-arena signage, ABC ad spots, “in-game callouts” and branding across the league’s digital and social channels, are also included within the pact.

It must also be noted that YouTube TV has also landed exclusive streaming rights to Los Angeles FC and Seattle Sounders games.

  • Hulu has signed on as an official partner of the NHL & NHLPA for the 2018 Stanley Cup Playoffs and Stanley Cup Finals; a “comprehensive partnership” that will “cross all league touch points including NBC Sports, the NHL’s digital and social channels, as well as camera-visible, in-stadium inventory within all U.S. venues.”
  • Hulu also signed a deal with Turner Sports, to sponsor NBA playoff games on TNT. A “Presented by Hulu” graphic will be prominently displayed on “opening graphic cards, custom billboards and scorecards” throughout all first-round coverage, Conference Semifinals action and Western Conference Finals broadcasts. NBA on TNT talent will appear in ad spots promoting the streaming service.

Howie Long-Short: The success YouTube TV had using live telecasts of the 2017 World Series to drive subscriptions initiated this competition between rivals; but, YouTube TV isn’t the leader in this space. In fact, the size of its subscriber base (300,000+) has the company competing with Hulu (450,000) for a distant 4th place. The oldest service, Sling TV, leads with 2.22 million subscribers; while AT&T’s (T) DirectTV Now comes in second with 1.2 million. Sony’s (SNE) PlayStation Vue is 3rd with +/- 500,000 monthly subscribers.

Fan Marino:  For reference purposes, Sling TV is a subsidiary of DISH Network (DISH). Google (GOOGL) owns YouTube TV and The Walt Disney Co. (DIS), pending final approval of its 21st Century Fox acquisition, controls 60% of Hulu; Comcast (30%) and Time Warner (10%) own the balance.

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DIS’ Acquisition of Star Sports Draws International Attention

Disney’s (DIS) acquisition of Twenty-First Century Fox (FOXA) assets received attention within the domestic sports world for the 22 regional sports networks included in the deal, but on a global scale, it was the purchase of Star Sports that generated the most noise. Star recently acquired the rights to the Indian Premier League (IPL) through ’22, for $2.55 billion; a rapidly growing league with a television audience that grew 22% YOY. The network also owns the rights to 76% of national team matches, ICC events and a host of other fast growing sports within the country (hockey, badminton, F1); giving DIS a significant share of India’s sports television market. Star’s digital/mobile platform Hotstar, owns the valuable streaming rights to the IPL.

Howie Long-Short: The massive draw of the IPL made Sony Max (the previous rights holder) the most watched television channel in India during the tournament; so expect the annual 2 month competition to be an advertising and sponsorship boon for both Star and Hotstar, and ultimately DIS’ bottom line. The rights aren’t coming cheap though; Star Sports will pay nearly 3x the amount Sony (SNE) paid, for half the term period.

Fan Marino: F1 held the Indian Grand Prix from 2011-2014, before Bernie Ecclestone halted the race due to issues with government taxation; despite the track holding a contract that assures them rights to 2 more races. It appears as if the race could be coming back though under Liberty Media (FWONK) management. New F1 CEO Chase Carey said in September, “there are places around the world that present us with great opportunities to grow the sport over time and certainly a country like India with the success and the growth it has had in recent years, makes it an exciting opportunity down the road.”

Why IPL could be the golden goose of Disney-Fox’s massive $52.4 billion deal

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A Streaming Service for the Sports Fan

Sports fans that are considering cutting the cord may want to look at the channel lineup for FuboTV; a sports-centric, OTT, live TV streaming service that offers fans the “most sports for the least money”. Originally introduced as a skinny bundle for soccer fans, the service now carries a variety of sports on 37 (of 65) channels (both regional and national) including; FS1, FS2 and NBCSN. The $40/mo. niche bundle is looking to stand out in a crowded streaming TV market that includes; Hulu (TWX), YouTube TV (GOOGL), DirecTV Now (T), Playstation Vue (SNE) and Sling TV (DISH). Amazon (AMZN) and Verizon (VZ) will also be introducing streaming bundles soon.

Howie Long-Short: FuboTV has raised $75.6 million to date, with several publicly traded companies investing in the streaming provider. 21st Century Fox (FOXA), Sky (SKYAY) and Scripps Networks Interactive (SSP) all participated the $55 million Series C round that closed in June; so there are no shortage of ways to play the OTT streaming service.

Fan Marino: FuboTV has 100,000 soccer-loving subscribers, but is counting on their next 100,000 subscribers to be fans of traditional American sports. The carriage deals they’ve signed to date have given them some valuable programming (like the World Series), but you can’t convince the American sports fan to cut the cord without ESPN’s network of channels. ESPN (DIS) holds the rights to the College Football Playoffs (and NBA) through 2025 and MNF through 2021. If your key differentiator as an OTT streaming service is your sports programming, you must carry those games. The success of the service, at least as it is currently marketed, depends on it.

The next 100,000 subscribers: FuboTV’s skinny bundle moves beyond live soccer

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EA Sports Reports “Strong Quarter”, Kicks Off Qualifying for FIFA eWorld Cup 2018

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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PC GAMING RIGS MAKING A COMEBACK; ESPORTS AND HIT GAME TITLES DRIVING RESURGENCE

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

ATP TOURNAMENT TO USE ELECTRONIC LINE CALLING FOR ALL SHOTS, NO LINE JUDGES

The Men’s ATP (Tennis) tour has announced that the Finals of Next Gen ATP Tournament (Nov. 7-12) will feature electronic line calling for all shots, for the first time at an ATP sanctioned event. The Hawk-Eye Live system shows replays of close shots on stadium screens, so that both the competitors and the fans in the stadium can determine where a ball landed. The technology is currently utilized on contested replay reviews at other tour stops. The season ending tournament will showcase the top players under the age of 21, and include several other experimental rule changes including; 4 game sets, no lets and a serve clock.

Howie Long-Short: Hawk-Eye is a subsidiary of Sony (SNE). While terms of the 2011 acquisition were never released, it was estimated SNE paid upwards of $32 million for the ball-tracking technology.

Fan Marino: The Hawk-Eye Live system uses 10 cameras, set at the center and base lines, to calculate the path of the ball. The system reportedly has a 2.6mm error rate. While that is impressive from a technological standpoint, fans should be concerned about the false transparency it creates. Hawk-Eye makes its decisions based on modelled reconstructions, not the actual video; yet encourages its viewers to believe the reconstructed image without acknowledging room for error. In other words, don’t believe everything you see!

HAWK-EYE SET TO REPLACE OFFICIALS AT NEXT GEN ATP FINALS IN ITALY

SONY ANNOUNCES UPCOMING RELEASE OF ACTION CAMERA TO COMPETE WITH GO PRO MODELS

Sony (SNE) has announced it will be releasing a new shock proof, crush proof, action camera to compete with GoPro (GPRO). The 1.0 inch 15.3 MP RX0 should deliver superior image quality, as its sensor is bigger than any of GoPro models currently available. The camera shoots video in 4K, is waterproof up to 10 meters and captures slow motion at up to 960 frames/second with a resolution of 1920x1080p, a feature not typically found in a camera priced under $1,000. The RX0 will cost $700 and is expected to ship in October.

Howie Long-Short: GPRO is facing strong competition from Sony, Canon (CAJ), Apple (AAPL) and Samsung (KRX: 005930) in the action camera space and still managed to grow revenues 34% YOY in Q2 ’17. They have the #2 selling drone brand in the U.S., a pilot going for a device designed to capture fully immersive VR content and a mobile editing app that has seen usage increase 112% YOY. I don’t see the RX0 putting a damper on GPRO’s recent momentum.

Fan Marino: The GoPro Hero5 Black is $399. It is roughly the same size as the RX0. For $50 (case) it’s nearly as durable. The control options are slightly different, but each has their benefits. The big difference is the slow-motion capability on the RX0. Is that worth $300? Not for me.

Sony’s latest competitor to the GoPro is a cute black box

NEULION SERVERS OVERWHELMED BY TRAFFIC; FANS WHO PAID $100 MISSED MEGA FIGHT

NeuLion (TSE: NLN), the digital streaming service who streamed Saturday night’s Showtime (CBS) PPV event on behalf of the UFC, SKY Sports (LON: SKY) and Eleven Sports Network to over 180 countries around the world; experienced significant technical difficulties during its most watched event ever. Transaction volume overwhelmed servers in Florida and California causing widespread outages, a 20-minute delay to the main event and some very disappointed fans to miss the fight. Fans who ordered the PPV event through UFC.tv powered by NLN software, paid $100 for the Mayweather McGregor headliner, but were unable to log-in. Those individuals have since been directed by UFC.tv to email NeuLion for a refund.

Struggled to stream ‘The Money Fight’? UFC.tv customers directed to contact NeuLion

Howie Long-Short: Not sure NLN is long for the streaming business with BAMTech coming on strong, but the company has a growing business licensing technology to consumer electronics companies. Samsung (KRX: 005930), Sony (SNE), LG (KRX: 066570), Panasonic (TYO: 6752), Sharp (TYO: 6753), Philips (PHG) and Toshiba (TYO: 6502) all use NLN video players within their TVs to ensure up to 4K clarity.

Fan Marino: Amateur move to wait until right before the main event to test the stream. You need to leave yourself time to get to the bar, in the event you encounter any issues.