Chris Whalen’s Random Life


Stadium Economics coming to the digital world?
January 15, 2008, 6:46 pm
Filed under: 1 | Tags: , , , , , , , ,

Months ago I wrote an entry that was an adjunct to a project I had done several years ago. Mainly about the economics of sports stadiums. Usually the argument made for building a stadium for a team revolves around the tax revenue generated by the stadium itself. The problem is that the revenue generated there rarely actually comes to fruition for paying for the stadium. The real win is to use such a construction project to change the spending patterns of the people in an area in order to revitalize that area. Like in Baltimore, build a stadium in a place that needs help, and people will start getting used to spending time there on non-game days. In New England the new “man” mall is the same idea. Get people coming to Foxboro for something other than a game a create something more than an event driven revenue stream for that real estate investment.

Is this model coming online? The battle online has evolved into a battle for content, not access. Whereas the Comcasts, Verizons, etc. of the world battled in the prior few years to give customers access to the internet, now that battle is over. Access to the internet is rapidly becoming commodotized and only far greater access speeds than the norm can garner a premium price. The spending pattern is changing and moving to content.

In terms of the NFL, with the rules governing content distribution (the 45 second clip rule etc.)  the battle is more about where you get your content from than how to access it online. Do you get your NFL content in this case from NFL.com or AOL or ESPN etc. All have far different models for licsensing and paying for content. The question is where will the consumer want to go to consume. I think the day is near at hand where consumers will be subscribers to the NFL, HBO, etc. as separate or bundled entities and consumer the content from those sources anywhere. So rather than being a subscriber to Comcast, and only having access to the channels they provide, soon you should be able to subscirbe to NFL Network, HBO, ESPN, BBC and have that content on a channel by channel basis pushed out to your TV, Mobile, PC over any of the companies that provide access. This is one of the drivers of the bidding war over the analog TV signal.

As many of you probably do not know, the old analog TV signals are up for bid. Comcast, Verizon, Google seem to be the front runners for these frequencies. All for different reasons. Comcast according to Federal rule can only ever have 30% market share for cable TV, the are in the high 20s, where is their growth going to come from? Google wants to create (we think) a giant free WiFi network with the frequencies which obviously helps their market share.Verizon already owns somehting like 70% of the US internet backbone and would like to keep that level of marke dominance. All have very different reasons but it still comes down to price pressure driving the cost to access the internet down and consumers looking to get the content they want how they want to get it. The new x-Box allows you to hook up to your TV and show internet based content on your TV. The convergence of access to the internet is coming. TiVo was really the first device to actively use the internet in conjunciton with your cable box, that was only the start.

So in the midst of the NFL/Comcast battle, the frequencey bidding war ( I think we  are a year or so from resolution) there is the battle for how consumers get their content. This is a fundamental change in the spending patterns from the consumer. The premium pricing will be at the level of the content creator of content distributor level, not the internet or broadcast TV level anymore. So watch for your current providers of internet access, mobile phone, and TV all start to look the same and provide the same services. Just look at where VOIP has come, now everyone offers a version of it.

The bottom line is, how the market evolves will determine how you can pick and choose what content you will subscribe to. The spending pattern is changing. Now it is a question of how else your internet access can be leveraged and therefore how YOU are monetized as opposed to just monetizing, at a premium, the connection itself.  

The battle for control has become over the rights to content. Distributors will be the dominant media companies of hte next few years, not the cable or phone companies. Despite what Comcast and Verizon want to be….now you know why the NFL is so militant about who and how it’s content gets delivered, they know if is their revenue stream of the future…….  

Advertisements

3 Comments so far
Leave a comment

[…] post by Chris Whalen’s Random Life Share and Enjoy: These icons link to social bookmarking sites where readers can share and […]

Pingback by Stadium Economics coming to the digital world? | Online Services

[…] Stadium Economics coming to the digital world? Months ago I wrote an entry that was an adjunct to a project I had done several years ago. Mainly about the economics of sports stadiums. Usually the argument made for building a stadium for a team revolves around the tax revenue generated by the stadium itself. The problem is that the revenue generated there rarely actually comes to fruition for paying for the stadium. The real win is to use such a construction project to change the spending patterns of the people in an area in order to revitalize that area. Like in Baltimore, build a stadium in a place that needs help, and people will start getting used to spending time there on non-game days. In New England the new “man” mall is the same idea. Get people coming to Foxboro for something other than a game a create something more than an event driven revenue stream for that real estate investment. Is this model coming online? The battle online has evolved into a battle for content, not access. Whereas the Comcasts, Verizons, etc. of the world battled in the prior few years to give customers access to the internet, now that battle is over. Access to the internet is rapidly […] […]

Pingback by Stadium Economics coming to the digital world?




Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s



%d bloggers like this: