Net sites favored by sports nuts point way to future of the Web

April 12, 1999

BY MICHAEL KRAUSS

Do you know anyone who's a "sports nut?"

I have a neighbor who's a sports nut. He's a great guy. During his annual New Year's Day celebration, he has six television sets running in different rooms of his house so he won't miss any of the football play-by-play.

In the old days, it was easy to spot the sports nuts. They were the people who read the newspaper from back to front. They started with the sports section and memorized the baseball box scores and team standings, often discarding the rest of the paper unread.

The Internet has been a tremendous boon to the institution of the sports nut. At
8 a.m. on Monday morning, the sports nut can walk into his or her office, boot up the computer and hit the Web. Seconds later they have up-to-the-minute facts and figures on everything from last night's NBA scores to the status of their fantasy baseball team as well as the standings of their son's or daughter's local soccer league.

Despite the best firewalls corporations can muster, sports nuts are logging on in increasing numbers. They're visiting ESPN.com, CBS SportLine.com, Sportingnews.com and CNNSI.com-some of the hottest and most interesting sites on the Internet.

There's a lot to be learned from these sports Web sites and the enthusiasts they serve.

On the plus side, these sites do much of what the Internet does best: supply timely, up-to-the-minute content to a highly targeted audience. They provide the user with a unique and engaging experience, delivering detailed multimedia content impossible to access before the arrival of the Internet. The sites augment, enrich and enhance the entire sports-enthusiast experience-at little or no cost to the customer.

On the downside, these sites face many of the challenges that content, commerce and community sites grapple with daily on the Internet.

Take CNNSI.com for example. Launched in July 1997, the site weds the journalism of the venerable Sports Illustrated magazine with CNN's 24-hour television news coverage competence. In conversations with Michael Klingensmith, president of Sports Illustrated, and Hart Hooton, general manager of CNNSI.com, they raise these six issues common to most Web sites:

1. Revenue generation

The CNNSI site sells ads and charges fees for its fantasy sports leagues, but the scale of the revenues is dwarfed by the core magazine publishing enterprise.

"I can't imagine the Web site ever having the profit potential of our magazine," Klingensmith says. "The economics of the Web today are not as strong as the economics of magazine-based communication-not even close. What's missing is a consumer revenue stream.

"Since the Web grew up as a free medium, you can't get anybody to pay you for content. Even if you try, there are 10 guys who will give away the content for free," he adds. One sweetener here is that the CNNSI Web site plays a significant role as a subscription generator for the core magazine.

2. Attracting and retaining eyeballs

Klingensmith says the site already aggregates plenty of eyeballs, averaging 25 million to 35 million page views per week, recently spiking as high as 70 million page views in February. Still, that's far short of the Internet's monster site, Yahoo!, which delivered 167 million daily page views in January.

Hooton points out that the site attracts eyeballs through its strong connection to CNN, and Klingensmith adds that the three biggest sports Web sites now all have "broadcast television relationships." The implication: Future sites will thrive only if they have powerful links and meaningful relationships.

3. Deal-making and partnerships

This is perhaps the most important art form being practiced today in interactive marketing. Certainly Yahoo! has perfected it, and Klingensmith and Hooton are borrowing from Yahoo!'s playbook.

"Business development deals are the key to success on the Internet," Klingensmith says. "To win you need traffic. People are aligning with the portals to build traffic. Deal-making is everything."

4. Product cannibalization

Klingensmith and Hooton have done a nice job of building a Web site that complements the core magazine product. "The Web site serves to promote Sports Illustrated, and it sells subscriptions to the magazine," Klingensmith says. "It's also used to highlight a major article in the newsstand version, while enabling us to break sports news that won't hold for a week."

Market research demonstrated that sports enthusiasts come to the Web for immediate scores, fantasy sports leagues and merchandise, and to the magazine to absorb in-depth content.

5. Retaining talented people

Recently I heard a top executive of Yahoo! say retaining talented technical people is one of their two biggest challenges (the other being deal-making). That's at Yahoo!.

Klingensmith and Hooton agree this is critical but say they haven't had much trouble here: "People like working at Sports Illustrated," Klingensmith says. Technical support from the established parent organizations (CNN and SI) also has mitigated this problem.

6. Reinventing the business

This is apparently the most challenging issue. "The Internet isn't going to be about reading," Klingensmith says. "The Internet is going to be about watching. People are going to be less interested in sitting and pouring though a magazine article (on the Web). It's going to jump over magazines to compete with television."

While Klingensmith has great enthusiasm and energy for the Internet, he shares the concerns of many executives who run portfolios of Web-based and non-Web businesses. "I think the CNNSI site is an essential to have, but from an economic standpoint it's not yet significant. Will it be a major profit stream in three to five years? We have no indication it's going to drive our business, unless we can get people to pay for the content," he says.

While stock market capitalizations soar for ".com" companies, many Web site operators are faced with the same dilemma as Klingensmith. "Sports on the Web is a big deal but it's not a big-profit deal," he says. "At least not yet."

The solution for Sports Illustrated and other Web marketers involves totally rethinking their business and identifying whole new ways to meet the sports enthusiast's needs. They ought to reconsider the entire sports-nut experience and reflect on ways their core capabilities and tomorrow's new technology can be brought together to deliver entirely new products, services and experiences. FACE="Wingdings">n

Michael Krauss is a partner with Diamond Technology Partners in Chicago. He can be reached at news@ama.org.

 

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