The Marketing Success of March Madness On Demand

The NCAA “March Madness” basketball tournament begins this week.  For those outside the U.S., this annual tournament is a competition to determine the champion of college basketball.  There are 68 teams competing, with games spread across 3 weeks (mostly in March, with the final few games in early April).  The NCAA tournament has a 30 year history with CBS and the network’s broadcast coverage has helped make the tournament one of the biggest sporting events in the U.S.  The CBS broadcast provides the NCAA with over 500 million dollars annually.

Beginning in 2004, CBS began to offer March Madness On Demand, streaming the broadcast of games live over the internet.  Although CBS initially charged for the streaming video, since 2006 the service has been free to all online users.  This on demand service has been incredibly successful.  On the first day of the 2010 tournament, CBS streamed 3.4 million hours of game video to 3 million unique visitors, setting a record for a single day of internet traffic for a sporting event.

In my opinion, this free service (which differs markedly from the approach taken by other major sports in the U.S.) has helped fuel the continued growth of the popularity of March Madness.  Fans across the country can follow whatever game they want, switching between games easily and seamlessly.  The availability of the on demand option doesn’t seem to dissuade viewers from watching the CBS television broadcasts, whose ratings continue to be very strong.  In short, the model is working well.  CBS and the NCAA have used on demand streaming to maximize the popularity of (and revenue from) this showcase event.

The CBS / NCAA approach contrasts sharply with the approach taken by the National Football League and Major League Baseball.  Major League Baseball charges $69 per year for its Extra Innings package.  For that price, customers still are impacted by blackout restrictions that prevent Extra Innings from showing games that are broadcast on other networks.  The NFL has a special network option – NFL Network – owned and operated by the league.  NFL Network is available through many cable TV and satellite TV providers.  A number of other options are also available: NFL RedZone, DirecTV Sunday Ticket, and NFL Game Access (which allows viewing of previously played games rather than live broadcasts).  Each of these has a price; many come with a confusing array of options and restrictions.

I recognize the objective the leagues have to generate revenue.  Obviously, they are businesses whose objectives are primarily financial. However, I think the NFL and MLB could learn a lesson from CBS and the NCAA – increasing total viewership (with an accompanying increase in advertising revenue) can be more effective than squeezing every dollar out of your core fan base.

Pay attention to the NCAA tournament – not just for the games (though they’ll be exciting).  Pay attention to the way in which CBS and the NCAA are getting benefits from new media delivery options.  Watch for a new record of on demand streaming video viewership later this week. 

 For now…I’ll leave you with this thought:

My picks for the Final Four: Ohio State, Duke, Kansas, and Florida, with Ohio State defeating Kansas in the championship game.

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