CBS' Internet hoop dreams
The media company hopes to cash in on a lucrative new ad revenue stream by allowing people to watch March Madness games for free online.
(This story originally ran on March 9)
NEW YORK (CNNMoney.com) – Following your favorite men's college basketball team -- or at least the one you picked in your office pool -- in the NCAA tournament will be a lot easier and cheaper this year.
Say for example, that you are an alumnus of the University of Pennsylvania (Go Quakers!) and you want to watch Penn (the first team to clinch an NCAA bid, thank you very much) play its first-round game against Texas on Friday night. Even if it's not being aired on the CBS station in your market, you'll be able to go online and watch it for free.
CBS SportsLine has launched March Madness on Demand, which will allow hoops junkies to watch any game in the so-called Big Dance, except the one that's being shown on their local CBS-TV affiliate, for free at the NCAA Sports Web site.
Last year, CBS SportsLine charged viewers a $19.95 subscription fee for the on demand product.
The NCAA Tournament, also known as March Madness, begins Thursday and runs until April 3. But the first two days of the tournament are a true bonanza for sports fans (and hence advertisers) since a total of 32 games will be aired on Thursday and Friday.
Games begin as early as lunchtime on the East Coast and there are periods when as many as four games are occurring simultaneously. So many cubicle dwellers will have the ability to keep an eye on all the action.
For those who are worried about what their employers might think, CBS SportsLine has built in a "Boss Button" that when clicked, will replace the streaming video with a spreadsheet.
Joe Ferreira, vice president of programming for CBS SportsLine, said Ferreira that the decision was made to go from a paid service to a free offering because the company figured it could reach a wider audience by not charging viewers -- and that would make the service more attractive to advertisers.
Big advertisers on board
So for CBS (Research), this is a bold experiment to see how much additional advertising revenue the media titan can milk from an event that is already a lucrative draw. The offering is being produced in conjunction with the CBS Sports television division, the NCAA and CSTV, a college sports network that CBS bought last year.
"Our online sales force had been assessing advertiser demand, and even though last year the service was subscription-based, we still had advertisers. But the reaction we got from the advertisers going into this year was that online video was hot, so we figured let's take a shot with this for free," Ferreira said.
Ferreira would not say how much advertising revenue CBS would generate from the on-demand offering, but he did say that all the available ad slots are sold out. Online viewers will not see the identical lineup of ads as people watching games on their local CBS TV affiliate, but there will be some overlap.
CBS SportsLine has lined up a group of 19 big-name advertisers for the online service. The two main presenting sponsors are the Courtyard by Marriott (Research) hotel chain and Dell (Research). In addition, there are several other advertisers including Lowe's (Research), State Farm and General Motors' (Research) Pontiac.
"Advertisers are seeing March Madness online as a big opportunity. Clearly there is a very attentive at-work crowd because of the boom in office pools," said Jeff Lanctot, vice president and general manager with Avenue A|Razorfish, an ad agency owned by online marketing firm aQuantive (Research).
Lanctot's firm represented one of the companies that bought ad time on the March Madness on Demand but he could not say which one.
Alan Gould, co-chief executive officer of IAG Research, a firm which measures advertising performance, said that the online offering could wind up being a significant success for CBS. He argues that advertisers may find that airing spots online to a hard-core group of fans may be even more effective than TV spots.
"From an ad standpoint, what you are achieving here is wall-to-wall coverage," said Gould. "CBS is being very smart. They are choosing an event that has a built-in audience that wants to watch the programming all day long."
Brian Wieser, vice president and director of industry analysis for MAGNA Global USA, a media buying firm, added that the lack of an online video equivalent to TiVo or other digital video recorders that allow people to fast forward past ads is also a plus for marketers.
"That's the value of live content online. The viewer will have to wait through it," Wieser said. "Sure, you can always walk away but at the end of the day, especially for those who are watching at work, people will probably just keep the stream running and keep the ads on."
Will CBS be able to handle the traffic?
Still, media experts caution that CBS SportsLine will need to make sure it can handle what could be a sizable amount of online traffic.
If there is too much demand for the offering, people might have trouble signing in, which could cause a backlash from viewers and advertisers. For this reason, Ferreira stressed that fans should sign up before the tournament begins Thursday.
He said that the site's tech department is setting things up to handle between 400,000 and 1 million pre-registrations by the time the tournament begins March 16. He would not say how many people had already signed up for access to the online offering.
After the tournament starts, hoops fans will still be able to sign up but Ferreira said that if CBS SportsLine does not have server capacity to handle all the traffic, people who have pre-registered will get priority and others will be shifted to so-called waiting rooms.
"Waiting rooms might be the right thing technically since they can regulate the number of streams. But that may end up being frustrating for those that don't get in. The interest is high but there are risks for advertisers and CBS," said Lanctot.
But as long as the service works for most, particularly those that signed up in advance, Wieser said March Madness on Demand should be a big success that could be replicated in the future by other networks for sporting events like the upcoming World Cup or the Olympics.
"High- profile sporting events are certainly a great way to make quality content available when and where consumers want it," said Wieser. "I trust that the tech is developed enough that CBS can scale it up for more demand even if there are short-term hiccups."
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