Gradually, then suddenly; Microsoft Blizzard Hall of Hot Takes; Apple truthiness stories; Metaverse, monopolies and moats; StepUP to a sportsbiz jobs boom

The newsletter of the podcast

Jan 20, 2022

Did you feel it too?

‘How did you go bankrupt?’ Bill asked.
‘Two ways,’ Mike said. ‘Gradually, then suddenly’.

From The Sun Also Rises, Hemingway.

This week felt like one of those ‘gradually, then suddenly’ moments.

The conversations we’ve been having about sport and the tech platforms just suddenly feel so old.

As mentioned a couple of times on the UP pods this week, maybe the sports market will jump over Web 2.0 as its defined today.

Are they dipping their toe in? Is Amazon testing and learning? How quickly can football clubs reframe their commercial offer toward LTV and ecommerce…?

It all feels so slow, so pedestrian. So gradual.

Then suddenly…

Two stories, two days apart.

Story 1: Apple could but probably won’t buy MLB rights.

Story 2: Microsoft will - US anti-trust rules permitting - buy Activision Blizzard.

Both tell us something about the sportsbiz, and how it thinks about itself.

Story 1 was broken by the New York Post and is one of a type.

The subtext is: Rejoice! Rejoice! They’re coming, the FAANGs are actually coming! Relax, we don’t have to actually DO anything different…etc.

It’s what Stephen Colbert used to call a ‘truthiness’ story.

It’s enough that it sounds true. It has a logic that’s easy to follow.

Other truthy Apple Sport stories: Apple will buy F1. Apple will buy all Premier League rights globally, one ticket, one price, every market, and this week, Apple will buy ESPN.

On Wednesday, Macrumors wrote this sentence:

In a new investor note, seen by MacRumors, Wedbush analyst Dan Ives said he regards Apple's decision not to acquire a movie studio yet as a clear indication that it now sees live sports programming as potentially a key piece of its future success for growing the audience of its video streaming service.

Quite the jump (HT @CharlieBoss).

The analyst mentioned in the piece wrote this:

With Apple spending $7 billion annually on original content and having roughly $200 billion of cash on its balance sheet, we believe the company is gearing up to bid on a number of upcoming sports packages coming up for contract/renewals in future years. We note that upcoming sports packages potentially for bid over the next four years that Apple can be involved with (in some capacity/semi-exclusive) are: NFL (Sunday Night Ticket), Big Ten, Pac 12, Big East, Big 12, other NCAA sports packages (2024 timing), NASCAR, and the NBA/WNBA.

Correlation. Attribution error.

Truthiness.

Sport as battering ram, Tim Cook copying Rupert Murdoch’s business model from 1992 while on the other side of town, Zuckerberg tries to moat the metaverse and Microsoft spunks seventy billion on the future of gaming.

Maybe…

Story 2

And suddenly, it just feels so last century.

Like you, I’ve been devouring Microsoft Blizzard Hot Takes.

Here’s where I am with it.

The proposed deal puts the value of sport in perspective.
In fact, it puts the value of esports in perspective.

Overwatch League is Activision Blizzard’s big esports move, a gaming meets the NFL type structure that encouraged Jerry Jones (Dallas Cowboys owner) and Robert Kraft (New England Patriots) to set up Overwatch franchises at $20million a pop.

It’s always rubbed up against the No Logo end of the gamer community.

“I think that their esports idea was half-baked and has always been directionally wrong,” analyst Michael Pachter told Axios. (Activision Blizzard CEO) Bobby Kotick’s “mistake,” he says, “was that he presumed that because Call of Duty and Overwatch were popular games, there would be huge viewer interest to watch them as esports (not true).”

Is esports sport, or just marketing for the games?

An old question that Microsoft now gets to answer. Overwatch makes between $100m-$250m, ‘a rounding error’ for the new owners.

Microsoft v Monopoly police, pt2

Wall Street is making two bets on the deal, says Matt Stoller via his excellent anti-monopoly newsletter, Big.

The first is that the deal won’t go through, and more interestingly could be the test case for a new definition of monopoly.

Buying BA would make Microsoft the third biggest player in gaming, not usually something that would cause much alarm.

But this could be a test case: US government antitrust officials want to evaluate mergers in a way that fits today’s (and tomorrow’s) digital world.

This means looking at criteria beyond the usual metrics of market share and price effects.

Instead they will attack ‘the bedrock concept behind merger enforcement, the notion that there are clean categories of mergers, like ‘horizontal’ in which firms buy rivals, versus ‘vertical’ in which firms buy upstream or downstream companies….with digital markets, and stacks of products creating ecosystems that have lock-in, such a narrow lens doesn’t make sense.

This assumes the gaming industry will transform into a set of competing walled gardens. And if gaming is a big part of the metaverse it has the potential to be as significant for the next thirty years as the seismic anti-monopoly bunfights of the late 1990s.

And those featured one company in particular…Microsoft.

Metaverse moats

This all points to the strategic value of gaming publishers as the bridge in to the next generation of social media, the metaverse and web3.

So the Microsoft move is unlikely to be the last big deal.

Ralf Reichert supplied this handy cut out and keep guide to financial performance of the main players.

Side bet: Sony to buy EA, with or without FIFA attached.

The bundle’s response

If this is all about owning IP, where does that leave the big broadcasters and the streamers, who are largely playing an old game, leasing sports content on three year rental deals or like Netflix, buying in content from the film studios and desperately over-promoting their home grown series?

What’s the big, once in a generation play for them?

A Super League pt2, but this time owned and operated by the superstars, their agents and Big Media? (Sounds a bit truthy…)

See also, the Star Kabbadi League, Nic Coward’s favourite vertical model, as mentioned on the UP Billion Dollar Brainstorm - UP199. The media owning the IP and ‘making an accommodation’ directly with the talent. The team layer is cut out. See also, The Hundred.

UP Coming: Hear Yannick Ramcke, Murray Barnett and Charlie Boss on The Bundle, from tomorrow.