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Saturday, April 9, 2005 - Page updated at 12:00 AM

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MSN, baseball opt to part ways

Seattle Times technology reporter

Microsoft's MSN Network and Major League Baseball have cut short a multimillion-dollar contract to offer live video broadcasts of games on personal computers, bringing a sudden end to one of the biggest online content deals in sports.

MSN confirmed that it had ended its partnership with the Internet arm of professional baseball at the end of February. The news was first reported yesterday on the PaidContent Web site.

MSN spokesman Adam Sohn said yesterday that both sides "did a gut check" and looked at what the arrangement was delivering. Neither side was seeing the benefits it had expected, he said.

"We decided we would all be better served to just part friends," he said.

Major League Baseball did not return a request for comment.

Microsoft was reportedly paying as much as $40 million over two years in the contract, which was announced in March 2004. MSN executives said at the time that the deal was as significant as any content partnership the division had done or would do.

The dissolution adds another turbulent chapter to Major League Baseball's stormy history with online partners.

RealNetworks ended its three-year contract with the League in 2003, and people close to that deal said it was extremely expensive for the company and had little benefit.

Executives said that less than 2 percent of RealNetworks' 2003 revenue was from Major League Baseball sales, and that getting out of the business would save the company $5 million in 2004.

MSN then took over, announcing that MSN Premium service subscribers would be able to view broadcasts and other features at no additional charge. The free MSN.com site would also have some content, including exclusive video highlights.

MSN also agreed to manage and sell all advertising on MLB.TV, the live-game video service for the league.

In some ways, the deal was a risk for Microsoft. It was betting that by offering free game broadcasts to its MSN Premium members it would drive subscriber numbers.

During that time, the number of MSN paying subscribers has gone from 8 million to 9.3 million, but that includes people paying for extra Hotmail storage, Internet access, a bill-paying service and other programs. MSN doesn't break out its specific MSN Premium customers.

The breakup is also a blow to the content momentum building for Microsoft's Portable Media Center devices, the handheld video and audio players that debuted last year. The idea was to allow users to transfer game video from a Microsoft Media Center personal computer to the handheld devices for viewing.

Last month, Microsoft launched a video-download service that would provide video for Portable Media Centers and other mobile devices. The service costs $19.95 a year for access to all videos, which will include Fox Sports' Major League Baseball coverage but no live games.

A Microsoft spokeswoman said yesterday that MSN users can go to its Fox Sports section, which featured video clips yesterday but no live game footage. MSN Premium members who had the baseball service were notified of the changes.

Kim Peterson: 206-464-2360 or kpeterson@seattletimes.com

Copyright © 2005 The Seattle Times Company

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