Why ESPN’s Developer Center Launch Is Worthless


Just a few weeks after I critiqued the CBS Sportsline launch of their “Fantasy Sports API”, ESPN has gone and announced a new API of their own via their new Developer Center. Unless this was a hastily arranged reaction to Sportsline’s move (which is unlikely), this is looking more like a significant trend for sports media companies.

So it’s probably no coincidence that most of the exact same criticisms I had of the Sportsline API are valid here. I’ll go far enough to repeat the exact same homage, which is to salute ESPN for embarking on the fundamental shift in thinking that this represents while also noting that the open API, in its current form, has almost no value.

This might be a good example of lawyers picking it apart a good idea until it becomes worthless. ESPN’s API is far more restrictive than Sportsline’s API, and I spent numerous paragraphs explaining why Sportsline’s API didn’t go far enough.

The only type of data that the API currently offers open access to is headlines. Headlines? Seriously? Every single developer in the world has had completely free access to ESPN’s headlines via RSS for probably close to 10 years. A @sportscenter Twitter feed would serve the same purpose as well. The access to game scores is restricted, yet the outcome of sporting events is legally in the public domain and developers can legally access that data all sorts of places (although not in real time).

And from there, developers must use ESPN branding and are not permitted to monetize the apps via advertising or by charging for the app. This is a non-starter for most any developer.

So developers can’t access anything new or interesting and can’t make any money doing it. Uh huh.

The sad thing is that the “restricted” data looks like it could power some pretty interesting products and pave the way for ESPN to become a platform. But for access to the good stuff, ESPN is requiring a formal partnership of sorts and that’s just not the way that hackers or startups work.

Foursquare was named as one of the startups that has a preferred partnership at launch, using ESPN’s restricted APIs to power user’s ability to “Check in” to sporting events. Foursquare is getting hosed if they are paying money for a formatted list of sporting events. And for this effort to be successful, ESPN will need bootstrapped startups and hackers playing with the data first, not just “startups” like Foursquare that have $700M valuations and functional business development teams that seek out formal partnerships.

Hopefully ESPN is just easing into this, because what was launched publicly today is much ado about nothing. Yet such potential….

note: I found the following hilarious take in a comment on Hacker News. For those of you unfamiliar with computer code (the language of developers), this is computer code that succinctly agrees with the rest of this blog post. Enjoy:

 if(ESPN_API.CommercialApplications == NOT_ALLOWED)
  {
    // Work for free to further ESPN brand
    // Can't make any money
    ESPN.GoPoundSand(TRUE);
  }
  else
  {
    // Now they are being realistic
    // We can all make some money
    ESPN.MaybeYouHaveADeal(TRUE);
  }

If any other developers have thoughts or reactions about this please leave them in the comments.

 

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CBS Sports Offers Fantasy Platform, Potentially Significant Development For Fantasy Sports

Big news yesterday in the Fantasy Sports world with CBS Sports announcing the availability of an API for a new Fantasy Sports platform. Or it’s intended to be big news, as evidenced by splashy headlines in Techcrunch (A Fantasy App Store; CBS Sports To Launch “First Open Platform” For  Fantasy Sports), the Wall Street Journal (CBS Sports Opens Site To App Makers) and Sports Business Journal (CBS Sports Eyes Bold Fantasy Stroke).

One reason I’ve blogged less here recently is that I’ve been heads down working on a startup in the Fantasy sports space, so this is no doubt exciting news that validates much about what we think about the future of the Fantasy sports space. That being said, it looks likely that the intent here will have a greater impact than the actual offering. I’ll explain further.

In September 2010, I answered a question on Quora asking “What have been the major innovations in fantasy football products over the past 5-10 years?“. Part of my (now dated) answer reads:

“The answer is there haven’t been any major innovations in fantasy football….The incumbents can’t or aren’t interested in innovating. The market is dominated by ESPN and Yahoo, with Sportsline the third player and at last check, no one else was even close. None of those companies would be confused with innovative companies (sorry, Yahoo).”

As CBSSports.com SVP and GM Jason Kint noted in the SBJ article:

“The fantasy sports experience simply hasn’t evolved as much as we’d like in the last decade…What we’re trying to do is create an ecosystem and accelerate the next wave of innovation in the industry.”

At least CBS Sports is now trying to up the ante. And that intent is a potential sea change.

But as I also noted in my Quora answer…

“Collectively, the business model for [the providers] has been to offer the game itself free and upsell premium content and services and drive high-value page views.”

This shouldn’t be surprising, given that all the major incumbent providers are old-school media companies with walled garden business models, not to be confused with the open, data driven Internet companies that typify successful platforms. (Apple being the obvious and notable exception).

Obviously, the CBS Sports PR folks emphasized the words “open” and “data” and “platform” in getting the story to Techcrunch, WSJ and SBJ. But the reality is that the combination of “open” and “data” are not compatible with their walled garden business.

And as YouTube’s Hunter Walk noted in a recent blog post: “You don’t get to decide if you are a platform“.

“A platform doesn’t just mean that others can integrate or use your services, it means you have a compelling technical and business proposition which creates enough value for both you and developers to run sustainable and competitive businesses.”

That’s where this effort may fall short of its intended impact. The API is open only for developing with CBS Fantasy Sports data within the CBS Sports ecosystem. It’s not “open” if it’s limited to and kept within a tightly defined ecosystem.

And that has far more limited potential.

For starters, some significant majority of the users in the fantasy sports space exist outside of the CBS Sports ecosystem. And some significant majority of the data that exists in the fantasy sports world exists outside of the CBS Sports ecosystem (not to mention a significant amount of the data inside the CBS Sports ecosystem, such as an NFL player’s statistics for any given game, is legally in the public domain). And CBS wants an Apple-esque 30% revenue split.

Are there enough users, enough revenue potential as well as enough value in partial data from a closed ecosystem to create the developer mindshare and app ecosystem required for a successful platform? That remains to be seen. There are already plenty of (mostly poor quality) fantasy apps available in the Apple and Android/Chrome app stores and none have achieved any real critical mass to date (outside of some traction with free, native app versions of the fantasy game from the incumbent providers), and those app ecosystems are many orders of magnitude bigger than the CBS Sports app ecosystem.

Despite CBS’ PR claims, they are not the first or even the second company in the space to offer a “Fantasy platform”. Yahoo offers a similar restricted API with even more onerous “non commerical terms” while longtime independent provider MyFantasyLeague.com has been offering an open and free API for years. The opportunity to build 3rd party apps existed before this announcement.

I don’t want to be overly negative, because this is a big step in the right direction, but it just feels like CBS Sports’ efforts to keep the ecosystem closed is only an incremental step better than the “non commercial” API offering from Yahoo. There’s a “defensive” trend there, an acknowledgement that there’s value in the data yet an unwillingness to make it truly “open”.

But this effort does show a willingness on CBS Sports part to innovate and that will force the hands of their competitors as we’re getting closer to the tipping point where these walled gardens won’t be able to put the toothpaste back in the tube.

It should be noted that CBS has had some recent success in playing defense and holding on tightly to their existing competitive advantages(See: CBS and Hulu) and that there are an impressive set of launch partners, including Bloomberg Sports, Rotowire and MLB Advanced Media.

This will likely achieve CBS Sports’ goal of spurring innovation in the space, but whether or not they have the market positioning or necessary agility to capture all the resulting value remains to be seen.

Regardless there’s no doubt that there is ample opportunity for entrepreneurs in the Fantasy sports space.

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The NBA’s Finances Paint The Real Picture


I had written previously about the NBA player exhibitions, and how I thought the entrepreneurs who were running them were weakening the NBA owners’ bargaining position. And while that was technically true, it was never going to be enough to combat the leverage held by the powerful David Stern. The NBA owners aren’t losing money, as this blog post shows, but they have enough leverage and there is enough money at stake to make the players and fans suffer to increase their profit margins. Sad, but true.

A great summary of the NBA League finances, as compared to other professional sports franchises, by the incomparable fivethirtyeight blog at the NY Times.

The key takeaway:

Instead, independent estimates of the N.B.A. financial condition reflect a league that has grown at a somewhat tepid rate compared to other sports, and which has an uneven distribution of revenues between teams — but which is fundamentally a healthy and profitable business. In addition, it is not clear that growth in player salaries, which has been modest compared to other sports and which is strictly pegged to league revenue, is responsible for the league’s difficulties.

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Another Infographic: The Social Engine Of Sport

The infographic I posted on the Fantasy Sports Economy turned out to be pretty popular, so here’s another cool infographic from Kwarter. Helpful stats to put the penetration of social media and sports in context.

11 stats you must know about social sports. The social engine of sports by KwarterKwarter Social Sports Application

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The Fantasy Sports Economy: Infographic

How big is Fantasy Sports? Bigger than you think. I’ve been working on a Fantasy Sports startup that I’m not ready to talk about here just yet, so I’ll just let this picture do the talking for now. You’ll have to click on it to see the full image.

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Conference Realignment Driven By The Web And A Changing Media Business

(photo courtesy: The Football God)

When Pac 10/12 Commissioner Larry Scott announced that there were not expanding, effectively ending momentum for Texas and Oklahoma to join the conference, he stopped the second major domino in conference realignment from falling (Texas A&M to the SEC was the first). Had that domino gone down, all hell would have broken loose.

It’s a good thing the train slowed down before things got out of hand, because no one involved seems to understand what they are doing. Not surprisingly, talks broke down over the existence of the Longhorn Network, the Texas’ cable channel partnership with ESPN. It’s an obvious dealbreaker if one member of the conference has a supplemental $15M per year media rights deal.

Except no one has followed this train of thought through to its logical conclusion. Doesn’t that suggest that the entire business model of “a conference” is broken? There are sure to be many more college-specific networks coming and in each case, the most valuable members of a given conference are going to have to turn down something like $10M-$15M per year to remain a conference member.

Tradition is important to college football, but not $10M-$15M-per-year-important. (We’ll leave the likely broken economics of the Longhorn Network for another post, because the concept is not wrong)

With almost every college football game available via a high quality HD stream at a minimum, the regional reach of television rights become a limitation. As a Tulane alum, I wasn’t able to view the stream of the UAB away game because of “local” rights (as in “local” to New Orleans), despite the fact that I’m on the west coast. And with the Longhorn Network’s flawed premise, only a few hundred thousand subscribers have access so far and football season is here (yes, I know that’s not the end game).

You also have all of the “mid major” conferences with broken business models. CUSA members, for example, get about $1M per year in television revenue. But being a member means you have to schedule a number of unattractive football opponents in meaningless games. When you can broadcast your own feed via the Web, it doesn’t take that many streams at $50 per season (or $15 for an individual game) to reach that same $1M you’d get from being tied to a conference like CUSA.

It won’t be long before universities at the top and bottom of the current power structure find their existing conference affiliations good for anything more than ease of scheduling.

These are all questions that do not yet have clear answers, but you can be sure that the media landscape will be dramatically different in five years. Heck, the media landscape will be dramatically different in two years given the pace that changes are occurring, not to mention any fallout from the heat being turned up on the obviously-crooked folks behind the BCS and existing bowl structure. That will give a reprieve to a bunch of lucky college administrators who will have a chance to look before they leap.

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How “Capital Punishment” Weakened Owner Leverage In NBA Labor Negotiations


NBA Labor negotiations were always going to be significantly more complicated than then NFL Labor negotiations because the NBA doesn’t have nearly the revenue nor profitability of the NFL. This isn’t a case of figuring out how to ideally split up healthy profit margins so NBA owners have had a real incentive to take a hardline approach to negotiations.

The NBA Players Association leadership was already playing hardball by encouraging players to seek contracts from other professional leagues in other countries (or if that was a coincidence, then it has certainly worked in the players’ favor). The thought process being, if NBA players start showing up in highlights for other leagues, the public won’t sympathize with NBA owners while seeing that highlights can happen outside of NBA games.

But Saturday’s summer league showcase between Washington D.C.’s Goodman League and Los Angeles’ Drew League turned out to be a significant event that should give significant additional leverage to NBAPA Director Billy Hunter and his negotiating team. Hunter’s strategy could quickly move from players actively signing in other countries, to actively having NBA players play games right here in the US market.

As it turns out, a summer league basketball game played at a women’s liberal arts college that did very little advertising between two summer leagues that 90% of basketball fans have never heard of actually garnered significant interest both live and online. The game, dubbed “Capital Punishment” was so loosely set up that it was postponed twice, yet still reportedly turned away “thousands of ticketed customers” who had paid between $25-$60 per ticket and the streaming video feed (offered at $4.99 in advance/$9.99 game day for the game at TheBasketballChannel.net) crashed due to overwhelming interest.

A rematch, potentially including Koke Bryant playing for the team from LA, has already been discussed and will surely be bigger than the first go-round. Similar summer league showcases are in the works and the success of “Capital Punishment” will only add fuel to the fire.

In the age of Twitter, everyone that follows Kevin Durant or John Wall on Twitter (which includes most NBA basketball fans) knew about the Goodman vs Drew showdown well in advance. Because players like Kevin Durant and John Wall were interested in talking about it on Twitter, fans found themselves quickly interested in the game.

As a basketball fan myself, I can remember a time not long ago when reports from NBA summer league play were hard to come by in any format. Heck, I remember not long ago when my local NBA team regular season home games were blacked out. Now any summer league game with Kevin Durant and John Wall is easily available in HD, and it’s clear that there is plenty of demand to see Kevin Durant and John Wall play basketball even if it’s a meaningless game between teams no one has ever heard of. Before Twitter and the widespread availability of broadband video and a cheap, self-service video streaming platform (provided by DaCast), it’s unlikely that I would have heard about such a game and impossible that I would have been able to watch it.

This is a significant blow to the NBA owners’ stance that the franchise is the product, not the players, or that players need the franchise more than vice versa. Miles Rawls, head of the Goodman League, and Dino Smiley, head of the Drew League, look like they are going to make a relative killing betting that the players are, in fact, the product. Trinity University’s gym seats 1500 and if the average ticket price is $30, that’s $45,000 in revenue for a summer league game. If 1000 people paid $4.99 for the streaming video feed, that’s another $5,000, although I’ll be curiously looking out for the actual numbers. Those are intentionally conservative revenue estimates.

As Kevin Durant said before the game, “I really just want to do it for the people, man.” And the players backed up that sentiment since none of the players were paid and all travelled on their own dime. And NBA owners were shown, definitively, that it’s easy to turn a healthy profit when Kevin Durant and John Wall are the product, even if profits from “Capital Punishment” are going to charity.

Unlike startup football leagues, which have all floundered competing with the NFL, it looks like the NBA has a less defensible advantage. No one is going to suggest that Drew or Goodman can become legitimate threats to the NBA, but this exercise should show owners that are more vulnerable than they might have originally thought. Expect to see more of these type of summer showcases and Billy Hunter would be wise to further exploit this vulnerability.

 

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Shaq’s Social Media Retirement A Potential Landmark Deal In Sports Marketing

Lots of good coverage so far of Shaq’s retirement-via-social-media and the boost it’s given to social media startup Tout. Good takes from Forbes, GigaOm and the Digital Royalty blog. But I want to dig a little deeper and connect the dots here for how this could, or should, be a game changer in the sports marketing business. This is a great deal for Shaq, for Tout (disclosure: Tout CEO Michael Downing is a friend) but also for Amy Jo Martin and Digital Royalty, which has been managing Shaq’s social media strategy.

A big theme here at Sportology is how the sports business world, as a whole, doesn’t seem to understand just how significantly the Web is disrupting the industry and how unprepared most are for what’s about to smack them upside the head. So to put the Tout/Shaq partnership into perspective, note that megastars like Tiger Woods and Alex Rodriguez have both reaffirmed or changed marketing or agent relationships to continue having their marketing interests managed by people and firms with little to no credibility on or understanding of social media marketing.

This is not to knock Steve Loy of Gaylord Sports Management (ARod) or Mark Steinberg formerly of IMG (Tiger) personally at all. I’m sure both have been great at what they do but the fact remains that “what they do” has changed and they will need to start adapting, like, yesterday. The Sports agent and marketing incumbents are as vulnerable to social media as traditional media companies, which at least acknowledge that they are feeling the heat from these emerging threats.

On the Gaylord Sports Management website, it lists three bullet points under “what makes Gaylord unique”:

  • Gaylord staff seeks out appropriate corporate partnerships and media opportunities
  • Expertly negotiates industry setting contracts
  • Advises clients with an eye towards their future on steps necessary to enhance their careers

With that stated value proposition, how is it possible for sports agents and sports marketers to be competitive without real social media expertise in today’s world? (And no, having a Facebook and Twitter account does not qualify as expertise). Athletes like Shaq and Lance Armstrong have made the full transition to social media and an athlete like Chad Ochocinco has his own mobile app. How many sports agents and sports marketers can advise their clients on the benefits of developing their own iOS app versus an Android app versus an HTML5 app? Or how to use that app to increase fan engagement and marketing opportunities? My guess would be very few.

As an example of an Agency out front on this, see Goodwin Sports Management’s hiring of Nate Jones (@JonesOnTheNBA) with the title of Digital Media and Professional Athlete Marketing. Nate manages the social media strategy for Kevin Durant and Candace Parker and maintains a high profile on Twitter with more than 8500 followers and a Klout score of 69, proving that he’s got real influence. It won’t end there either. Just as Barack Obama hired a CTO for a re-election campaign, any agent or firm in the marketing profession will need to be able to establish a coherent digital and social media strategy not only as a service to clients, but as a core competency needed to succeed in a data-driven world.

As a marketing agent, Digital Royalty just helped to deliver a home run deal for Shaq as a client. Not that Shaq, or Tiger Woods or Alex Rodriguez for that matter, need any additional income or career assistance, but the Shaq/Tout deal accomplishes the following:

  • Shaq gets an Advisory Board role and stock options in a promising Internet startup company. Michael Downing is an experienced and accomplished digital media startup entrepreneur and will offer Shaq exposure to that business in an opportunity to diversify his post-basketball career
  • Shaq’s presence and promotion of the Tout social media application has a chance to drive significant growth and value for Tout. Twitter’s current place as a bellwether of the social media world can be traced directly to the adoption by famous athletes in the early days, including Shaq himself.

Obviously a great deal for both Shaq and the company. There are tons of athletes without the wealth and cache of Shaq who would benefit from an agent that could deliver that kind of value.

The reality is that there is tremendous synergy between professional athletes and social media, moreso than just about any other type of celebrity. Established sports agents and marketers should start learning about a new kind of sports business professional, like Nate Jones and Amy Jo Kim of Digital Royalty, which just solidified it’s place as the leading social media marketing agency for athletes. Certainly personality is relevant, but the fact that Shaq has such a large and engaged social media following can be directly traced to the Digital Royalty’s influence. It’s not a coincidence that Digital Royalty client UFC has become the most engaged social media ecosystem in sports.

Shaq’s deal with Tout could and should be a landmark deal because it’s a blueprint for what is possible in bringing the sports and social media marketing spaces together. There are lots of opportunities for athletes and social media companies to partner, but identifying them requires both an understanding of how to use social media effectively as well as understanding opportunities in the social media market. Very few, if any, in the sports marketing business have that skill set. Sports marketers will need to bring that expertise in house or be passed up by new firms like Digital Royalty.

 

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New Data: Sports Fans Adopting Live Online Video Rapidly

This is a doozy of a study, called the Global Sports Media Consumption Report 2011 by PERFORM, KantarSport and TV Sports Markets.

The headline sums it up well:

Half of all sports fans watching online have started doing so in the last two years, and a quarter now regularly turn to the internet for highlights or live coverage and not just for news

But the most interesting piece of data, in my opinion, is the revelation that there is an unwillingness among sports fans to pay for live online sports content.

Again, this suggests a huge problem lurking around the corner in sports media. It seems the entire business model of the sports media industry is based on the lack of a technology to easily repurpose, for lack of a better word, live sports content. And based on history, that doesn’t seem like a very good bet.

In fact, I’m eagerly anticipating the launch of Bamboom, which might just have the potential to bring down the whole system. If Bamboom isn’t the one that becomes the Napster of video, the startup that does bring everything down is probably lurking around the corner. Stay tuned.

Other key findings include:
- Online and print media are neck and neck but sports fans spend more time consuming sport online
- Broadcast and publisher/newspaper websites remain the dominant sites for fans to consume sport online
- Consuming sport via mobile is growing, especially in markets such as Italy, Brazil and China
- IPTV growing in importance for sports fans to consume sport in markets such as China and Italy
- Profile of a sports fan online and on mobile is young and affluent and therefore a great opportunity for marketers

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Ted Leonsis Drops Interesting Sports Media Stats: Wither ESPN and Yahoo?

In his recent blog post, titled Missing Some of the Point, Ted Leonsis mentioned some overlooked but very interesting data on sports media.

In further discussing the point that all sports franchises are becoming their own media companies, Ted went through the top five list of sources where fans got their Washington Capitals content as seen via “internal research”.

“We asked each category of fan how do they get their news and info and if we were to promote or try to communicate what was best source and most frequented source. As I noted, the ranking was as follows: our web site; Comcast SportsNet; The Washington Post and its network of online sites and blogs; and my personal blog. And then franchise generated mailings; ads; emails and related outreach at events and in arena.”

Even though, as Ted notes, those results make complete sense, (the team itself, followed by the team’s media partner, the biggest local media company and then Ted’s blog and internal marketing efforts) they still defy conventional wisdom.

It was just a few days ago when the news broke that ESPN.com was closing in on Yahoo as the top sports Web site by traffic. Yet none of the top five sources for Washington Capitals fans were anything resembling large, horizontal, “all my sports news in one place” type of Web sites. I also found it interesting that none of the sites mentioned by Leonsis had any notable community aspect. Simply, highly targeted, local content.

We don’t know exactly what the research methods were, so it’s premature to suggest anything concrete, but it’s another data point that says the world of sports media is undergoing an seismic shift.

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