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MLB commissioner: Disney deal will help define baseball's future

For more than a decade, Major League Baseball has been the quiet leader among all sports leagues in digital video technology thanks to its Advanced Media (MLBAM, often nicknamed “BAM”) unit, which it launched back in 2000.

This past summer, BAM Tech became much less of a secret when MLB spun it off into a separate company, and Disney bought a 33% stake in the business for $1 billion.

Six months later, MLB Commissioner Rob Manfred says that BAM Tech and Disney’s involvement in it are crucial to the future of the sport. In fact, he listed Disney first when asked, at the Yahoo Finance All Markets Summit in New York on Wednesday, what accomplishments he’s most proud of after his first two season as baseball chief.

“In terms of accomplishments,” Manfred said, “I’m really pleased about… having completed the partnership with Disney. I think it provides baseball with an opportunity to develop products that can help define what our new distribution system looks like and maybe provides us with an opportunity to play a bigger role in that area. And I think the fact that Disney was prepared to put $1 billion into the business to buy a third of it is demonstration of the fact that there is real upside on that content play.”

MLBAM began in 2000 as the in-house video arm of the league, equally owned by the 30 MLB clubs. Its purpose was to handle the herculean task of live-streaming 2,430 baseball games a year—without hiccups.

After a few years of doing that successfully, BAM quietly took on a large list of impressive clients, from the NCAA Men’s Basketball tournament to ESPN to the PGA Tour to WWE, that paid BAM to be a “white-label” video streaming service—that is, to power their streaming video content seamlessly on the back end.

More recently, it was rumored that MLB was considering spinning off BAM Tech with an IPO, but the Disney investment put an end to that. Instead, Disney now own 33% of BAM Tech, MLB owns 58%, and NHL owns 9% thanks to a deal in which the NHL sold its digital rights to MLB. (If you need a sense of how respected pro baseball’s technology business is, just consider the fact that pro hockey gave pro baseball the keys to its digital kingdom.)

The white-label aspect of BAM’s business is still its “bedrock,” Manfred says, but he explains, “The more exciting piece, and it’s why Disney invested, is that we believe that there is an opportunity to develop products that can be delivered direct-to-consumer, over the top, that can recapture people who have left the cable model or attract people that were never in the cable model.”

Indeed, Disney already announced, in a press release at the time of its investment in BAM, that it would create “a new ESPN-branded multi-sport subscription streaming service.” That was in August. This week, when Disney reported its Q1 2017 earnings, CEO Bob Iger reiterated that Disney will roll out a direct-to-consumer sports service in 2017.

It is BAM Tech that will likely build and run that service. In other words, the reliance of ESPN on BAM Tech cannot be overstated. And that means the near-term futures of Disney, ESPN and pro baseball are all rolled up into one through their relationship with BAM Tech.

As Manfred told Yahoo Finance, MLB is trying to “change our game in a way that is consonant with the way young people live their lives.” To court young fans—which Manfred says is one of his top priorities—MLB must continue to offer best-in-class mobile technology and video distribution.

As Manfred himself said, the products resulting from Disney’s stake in BAM Tech will “help define” how MLB distributes its product to new fans.

Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology. Follow him on Twitter at @readDanwrite.

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