When ABC paid the National Football League US$4.4 billion this week for the rights to continue its Monday Night Football broadcasts, the arrangement was the familiar one of a broadcaster paying a sports league for the right to air its games - and to collect the related ad revenue.
But when tech companies like IBM, EDS, and Starwave build Web sites for big-ticket sporting events, that model gets turned on its head. In fact, the NFL will pay IBM an undisclosed sum to build and maintain this year's Super Bowl site, much as a company would pay an ad agency to construct a campaign.
As the Web becomes a more important facet of sports coverage and claims a larger audience, however, the direction in which money changes hands on such transactions may take a sharp turn. Instead of pulling in the bucks, a company that wants to put live audio, player chats, and streaming video onto the Web may soon have to ante up.
"Technology vendors will eventually pay the price to get exclusive rights," says Mark Hardie, an analyst with Forrester Research. "I think that, for better or worse, the way that TV networks vie for the rights to events is coming to the Web."
Already, touchy issues are starting to arise about why TV broadcasters pay while technology companies get paid. Traditional TV and radio broadcasters now see the Web's advantage to reach audiences that they cannot - like office-bound sports junkies who can surf the Net, but not the tube, from 9 to 5.
"We have to try very carefully to be complementary to television," says Jeff Ramminger, a business development executive with IBM Interactive Media, whose partners for the Web's celebration of Super Bowl Sunday are the NFL - and NBC. "A year or more ago, the Web and TV were totally separate and no one thought they would ever be connected. But now, people are thinking about it very aggressively," Ramminger says.
That thinking will lead to changes in Web financial deals, according to Hardie. Today, event organizers pay between $500,000 and $1.5 million to companies that design, build, and host the sites. But as the Web audience grows, and the Net is better able to replicate TV-style broadcasts, either of two things could happen:
Event organizers may decide that there's monetary value to Web rights - despite the fact that the forecast of $2 billion for Web-wide advertising in 1998 still makes the Web a very different revenue model from TV. Or technology companies like IBM, Andersen Consulting, and EDS may come to feel that the opportunity to present events like the World Series on the Web has tangible marketing value to them, and could themselves begin bidding for the rights.
The techies, obviously, are hoping the status quo will hold out as long as possible. While building Web pages for helmet-heads is not a significant revenue stream for the likes of IBM, there are plenty of freebie marketing benefits. Much like the football team's towel boy, the techies are hoping some of the glamour of being close to the winning team will rub off on them.
"These events are very valuable for any technology provider," says Wynne Willis, the marketing director at EDS Global Sports. "It's often very challenging to articulate to a customer the value that EDS technology can bring. Being associated with events like the 1998 World Cup lets us showcase our capabilities in a very high-pressure environment."
With such arguments, the techies throw lots of resources at the big events. Twelve employees of IBM's interactive media group are convening in San Diego to run the Super Bowl site; 40 people will be assigned to the Olympics in Nagano next month. The idea, says Hardie, is to demonstrate to potential customers that they can handle even the most Olympian of hardware and software challenges.
"It's about showing off their serious horsepower," he says. "They want to establish that they're the guys you call when you need the big iron. Events like the Super Bowl and the Olympics are very effective at attracting new customers - they help them sell more hardware into major multinationals."
But with high-profile events comes the potential to encounter high-profile bugs. Like when the score-reporting system IBM designed for the 1996 Summer Olympics failed to deliver results to the journalists who were covering the games, forcing them to rely on hand-written score sheets and fleet-footed runners.
Big Blue says it has learned from the problems it encountered in Atlanta. "You start to realize where your vulnerable areas are and you fix them," says Nancy Faigen, vice president of IBM's Global Web Solutions. "Anybody who says they've got bulletproof technology and nothing ever goes down is a fool."
Despite the occasional snafu, technology providers and event organizers are on the way to realizing the value of putting high-profile sporting events on the Web. As a result, next year's business page headlines could be about bidding wars between Starwave, EDS, and IBM for the right to webcast the Super Bowl - just like the networks.
"The line is getting grayer between what TV does and what the Web can do," says Willis of EDS. "I don't know how it will play out."
