Episode 37 BAMTech, Disney and the Biggest Media Company You've Never Heard Of”

In episode 37 of Acquired, hosts Ben Gilbert and David Rosenthal explore the strategic 2015 spinout of Bamtech from Major League Baseball's Advanced Media group and Disney's subsequent 2016 minority investment. They delve into Bamtech's evolution from MLB's IT department to a powerhouse in live streaming technology, enabling direct consumer relationships for sports leagues and shaping the future of television. The episode highlights Bamtech's role in pioneering sports tech deals, its impact on technology and the significance of Disney's partnership in positioning Bamtech as a potential leader in the over-the-top content distribution landscape. With a focus on core themes like business model innovation, rights acquisition, and the intersection of sports and technology, the discussion underscores Bamtech's journey from a centralized web service for MLB teams to a major player in digital media.

• David Rosenthal expresses annoyance with Forbes' quote of the day feature.
• He finds the website irritating.

"Ah, freaking Forbes. God, I hate these quotes of the day. Most annoying website ever."

This quote shows David's frustration with Forbes' website, specifically their quote of the day feature, which he finds bothersome.

• Ben Gilbert introduces the episode, focusing on technology acquisitions, IPOs, and spinouts.
• David Rosenthal is the co-host with Ben Gilbert.
• They discuss Major League Baseball's spinout of Bamtech and Disney's minority investment in the company.

"Welcome back to episode 37 of Acquired, the podcast about technology acquisitions and ipos and today, spinouts. I'm Ben Gilbert." "I'm David Rosenthal and we are your hosts."

These quotes are the hosts introducing themselves and the theme of the podcast episode, which is about Bamtech's spinout from MLB and Disney's investment.

• David Rosenthal emphasizes the significance of the Bamtech story beyond sports.
• The story is important for understanding the future of television and technology.
• The episode will cover sports tech deals and their impact on streaming services.

"Because not only is this one of the most interesting sports tech deals that's happened in the last decade plus, but this is actually, I think, really important to understand from just a pure technology standpoint when it comes to the future of television and things we've talked about on this show a lot with Twitch and Amazon and YouTube and even Snapchat."

David Rosenthal explains why the story of Bamtech is crucial for understanding broader technological trends in television and streaming, not just for sports enthusiasts.

• Ben Gilbert encourages listeners to leave iTunes reviews to help grow the podcast.
• The Acquired Slack community is active with discussions and feedback.
• They appreciate the active participation in the Slack community.

"We love iTunes reviews listeners. If you like the show, if you've been listening for a long time, or if you're brand new to the show, it's how we grow the show, it's how others find us, and it lets us do more cool things and bring on more cool guests." "Our slack has been blowing up recently, so we've got a thing called Slack, and I'm sure many of you use it at work. And there's over 600 of us that are hanging out in the acquired slack."

Ben Gilbert talks about the importance of iTunes reviews for podcast growth and the value of the Slack community for engaging with listeners and discussing content.

• Pilot is a sponsor and partner of the podcast, offering accounting services to startups and growth companies.
• They are the largest startup-focused accounting firm in the US.
• Pilot helps companies focus on their core product by handling accounting and financial tasks.

"Our next sponsor for this episode is one of our favorite companies and longtime acquired partner Pilot for startups and growth companies of all kinds. Pilot is the one team for all of your company's accounting, tax and bookkeeping needs, and in fact now is the largest startup focused accounting firm in the US."

The quote introduces Pilot as a sponsor and outlines the services they provide to startups, emphasizing their role in allowing companies to focus on their main business by outsourcing accounting tasks.

• Forbes describes Bamtech as a significant yet lesser-known media company.
• Bamtech has shaped the future of television alongside Netflix, Amazon, and Twitch.
• The company originated from MLB's efforts to centralize team websites.

"So Forbes calls Bamtech the, quote, 'biggest media company you've never heard of.' And this story, as Ben alluded to, they are probably as much as Netflix and Amazon and Twitch doing as much to shape the future of television in America and around the world than any other company."

This quote introduces Bamtech as a pivotal yet under-recognized player in the media industry, with a significant impact on the future of television.

• Major League Baseball created MLB Advanced Media (MLBAM) to manage team websites.
• MLBAM centralized the web presence of 30 teams.
• Initially, MLBAM outsourced website development, which was unsuccessful.

"So all the way back in the year 2000, Major League Baseball, the sports league, had the foresight to start a new division within the league. And they called it Major League Baseball Advanced media. And the mission that they gave this new division was to build and operate a website for each of the 30 teams in the league."

The quote explains MLB's strategic move to centralize the digital presence of its teams under MLBAM, which initially faced challenges due to outsourcing.

• MLBAM CEO Robert Bowman decided to build an in-house tech team.
• The move to in-house development improved the quality of the websites.
• MLBAM's headquarters are located in the Chelsea Market in New York.

"He quickly made the decision, which ends up being probably the best decision that Major League Baseball has ever made to build a tech team in house, bring on really good developers, and start owning and building out all the technology inside of BAM."

This quote highlights Robert Bowman's pivotal decision to switch to in-house technology development, leading to improved websites and a stronger tech team.

• MLBAM experimented with streaming audio for Japanese fans of Ichiro Suzuki.
• The audio streaming initiative was not successful due to low subscription numbers.
• MLBAM learned that viewers preferred watching games rather than just listening.

"So in 2002, the season before, Ichiro Suzuki had joined the Mariners from Japanese. And, oh, man, Ichiro is so much fun to watch. And his first season, he had won the rookie of the year and the AL MVP. And of course, he had this huge following in Japan. Pretty much the whole country was and still is obsessed with Ichiro. And they wanted to follow his games. And so Bowman decided, and Bam decided that they were going to start streaming audio of the Mariners games on the Internet so that people in Japan could follow Ichiro."

The quote describes MLBAM's initial foray into streaming, targeting Ichiro Suzuki's Japanese fanbase with audio streams, which ultimately did not meet expectations.

• MLBAM partnered with Ticketmaster to sell game tickets online.
• The deal with Ticketmaster provided MLBAM with a significant upfront payment.
• The revenue from the Ticketmaster deal allowed MLBAM to be financially independent from team contributions.

"So he makes one really good decision later in 2002, and that's that he realizes that because of, as you were saying, ben, the way the deal was struck between Bam and all the teams, that they have the rights to sell tickets to games online via the company's website. And so Bowman does a deal with Ticketmaster in mid 2002 to partner with them to power the sale of tickets on the team's websites."

This quote explains the strategic partnership between MLBAM and Ticketmaster, which provided a new revenue stream and financial stability for MLBAM.

• MLBAM launched MLB.tv to stream out-of-market games online.
• The service allowed fans to watch any game for a subscription fee.
• MLB.tv was innovative, launching years before YouTube and Netflix streaming.

"By the end of the season, they sell a nine game pennant race package. So streaming games online, people are paying for this. And then they sell a $20 postseason package, and people love it. And so then they scramble during the off season, and by the start of the 2003 season, they do a full launch of MLB tv. And for $80 for the whole season, you can stream every out of market game on the Internet."

The quote details the successful launch and rapid development of MLB.tv, which provided a new way for fans to watch baseball games and generated significant revenue for MLBAM.

• MLBAM's technology was featured by Apple in major product announcements.
• The company became a leader in delivering video content to various devices.
• MLBAM experienced iterative development and learning from early challenges.

"They really become one of the best technology teams in the business in terms of bringing video to consumers devices wherever they are."

This quote praises MLBAM's technological capabilities and their recognition by Apple as a leading developer of video streaming technology for multiple platforms.

• MLBAM's revenues grew significantly, with $620 million in annual revenue reported in 2012.
• The company's success far exceeded the initial investment by the teams.
• MLBAM's streaming expertise became a valuable asset for live events.

"But the business keeps growing year over year. They eventually do raise prices from $80 a year for MLB tv. They raise that over time, but the subscriber base keeps growing to the point where in an interview in 2012, Bowman is quoted as saying that BAm makes about 620,000,000 in annual revenue, which is really meaningful for the league."

The quote summarizes the financial success and growth of MLBAM, highlighting its substantial annual revenue and the value it provides to Major League Baseball.

• MLB's streaming expertise led to significant revenue from subscriptions and a partnership with Ticketmaster.
• Early success in streaming positioned MLB as a technology leader, especially in live video streaming.
• MLB's partnership with ESPN in 2010 to power ESPN3 was a pivotal move into broader sports streaming.
• The MLB's streaming technology backend became a foundation for other sports leagues to distribute content online.

up taking 77 million from the teams after the Ticketmaster deal and then that $8 million in revenue from that 100,000 subscribers in that first season.

This quote indicates the financial success MLB experienced from their Ticketmaster partnership and subscriber-based revenue.

• MLB Advanced Media (BAM) partnered with WWE, marking the expansion into streaming for multiple sports leagues.
• This expansion signaled the beginning of a shift in the sports broadcasting landscape and the potential for cord-cutting.
• Deals with the PGA Tour and WWE in 2015 further showcased BAM's growing influence.
• The partnership with HBO in 2015 for HBO Now was a significant move into entertainment streaming.

So they announced a partnership with WWE, the worldwide wrestling, I forget what it stands for now.

The quote refers to MLB's partnership with WWE, highlighting BAM's expansion beyond baseball into other sports and entertainment streaming.

• Live sports were the main factor keeping cable bundles together, but BAM's partnerships indicated a shift toward online streaming.
• The NHL deal with BAM included an equity stake and a rights deal, signifying a new era where leagues monetize content directly.
• This represented a disruption of traditional cable and a move towards direct-to-consumer models.

And this is the first crack you can start to see in the seam of the live sports cable bundle package, that it could actually be coming online.

This quote emphasizes the significance of BAM's moves in breaking the traditional cable model by bringing live sports online.

• BAM's strategy included not only providing streaming technology but also becoming a rights holder.
• The partnership with the NHL was a watershed moment, with BAM starting to resemble a cable provider itself.
• BAM's vision was to become the "ESPN of the Internet age," competing with streaming giants like Netflix and Hulu.

The new approach moves Bam beyond just being a white label service provider, putting them in position to become an ESPN of the Internet age.

This quote from The Verge encapsulates BAM's evolution from a service provider to a potential major player in the internet streaming space.

• MLB envisioned BAM as a hedge against changes in content distribution, a technology service organization, and a rights holder.
• BAM's success could potentially offset any decline in baseball's popularity by owning rights to various forms of entertainment.
• The spin-off of BAM into BAMtech allowed it to operate independently and compete for talent with stock compensation.

That is kind of a crazy future, but it's also one that, and this is the next thing that kind of happens in the history and facts here, one that doesn't make a lot of sense.

The quote reflects the realization that MLB's ownership of a tech company like BAMtech did not align with the league's broader goals.

• Disney acquired a one-third stake in BAMtech, valuing it at $3 billion, with the option to acquire a majority stake in the future.
• Disney's history of partnering while allowing equity retention was appealing to MLB.
• The partnership included plans for a direct-to-consumer ESPN subscription service, marking a shift from traditional cable.

Disney announces this is August of 2016, that they're going to acquire a one third stake in the company for a billion dollars.

This quote highlights Disney's significant investment in BAMtech, reflecting the value and potential of the streaming technology company.

• BAMtech expanded to Europe through a partnership with Discovery Communications to stream the Olympic Games.
• A rights deal with Riot Games for League of Legends streaming was indicative of BAMtech's foresight and investment in esports.
• Michael Paull, an experienced executive from Amazon, was appointed as the new CEO of BAMtech, signaling a strong future direction.

They're partnering with Discovery Communications, the media company that owns the Discovery Channel and many other forms of content to buy the rights to stream the Olympic games in Europe.

This quote shows BAMtech's ambition to expand globally and its strategic move into the European market with a high-profile event like the Olympics.

• Disney's partnership with BAM (MLB Advanced Media's tech company, BAMTech) positions them as a powerful full-service video provider.
• BAMTech's history with major content providers like Netflix and Apple, along with Disney's rich content catalog from Pixar, Lucasfilm, and Marvel, creates a compelling OTT (over-the-top) service.
• The arrival of a former Amazon executive to Disney hints at strategic moves to enhance their streaming capabilities.

"But Pixar, Lucasfilm, Marvel, all the Disney videos, and now you have the guy coming from Amazon who built their Netflix competitor. You can start to see how Bam and Disney together could really be the full know."

The quote indicates that with the inclusion of a former Amazon executive and Disney's content, BAM and Disney are poised to create a comprehensive OTT service. It highlights the strategic alignment and potential for a competitive offering in the video streaming market.

• Statsig is introduced as a new sponsor for the episode, having gained attention from the audience after CEO Vijay's appearance on ACQ two.
• Vijay's background at Facebook, where he led the development of the mobile app ad product, is highlighted.
• Statsig is described as a feature management and experimentation platform for product teams, enabling faster shipping of features, A/B testing, and impact analysis on business metrics.
• The platform is used by companies like Notion, Brex, OpenAI, and Microsoft, among others.
• Statsig's capabilities in AI feature management and integration with data warehouses are emphasized.

"Statsig is a feature management and experimentation platform that helps product teams ship faster, automate a b testing and see the impact every feature is having on the core business metrics."

The quote summarizes Statsig's role as a tool for product teams to enhance their development process and measure the impact of new features on their business.

• Disney's investment in BAM is seen as a transition from a technology investment to owning a significant business line.
• The partnership is likened to Disney's ESPN business model, serving as a hedge against the decline of traditional cable and positioning Disney as the "ESPN of the Internet age."
• The conversation touches on the disruption potential in Disney's relationship with consumers, allowing for direct engagement rather than through intermediaries like movie theaters or cable companies.
• The Internet's role in shortening value chains and the potential obsolescence of traditional cable companies by Internet-based services is discussed.

"This is really a way for Disney for the first time, for their content to start to have a direct relationship with customers."

This quote explains the strategic shift Disney is making by using BAM to establish a direct-to-consumer relationship, bypassing traditional distribution channels.

• Speculation arises about who could have been an alternative investor for BAM's spinoff, with companies like Netflix, Amazon, and Verizon mentioned as possibilities.
• The discussion includes the role of content distribution rights and the strategic importance of owning the technology that enables streaming services.
• Amazon's absence in the acquisition of BAM is noted as surprising, given their investment in video and the potential threat Disney poses as a direct competitor.

"I'm very surprised that Amazon didn't try and make a harder run at buying Bam here."

The quote expresses surprise at Amazon's lack of aggressive pursuit in acquiring BAMTech, considering the strategic importance of streaming technology and content distribution.

• The MLB's consideration of spinning off BAM as early as 2005 is mentioned, with its revenue growth from $250 million to $900 million highlighted.
• The conversation questions whether MLB should have retained a larger stake in BAMTech given its growth potential.
• The structure of MLB ownership and its impact on decision-making is discussed, suggesting that the owners' priorities may not align with maximizing tech company growth.

"And maybe this is all sort of an artifact of the fact that Major League Baseball is not a publicly traded company."

The quote suggests that MLB's private ownership structure may influence its strategic decisions regarding BAMTech, as team owners may have different investment objectives.

• The discussion pivots to the future of television, with Disney's potential to replace traditional cable bundles with its live content through BAMTech.
• The potential for Disney to build a direct-to-consumer offering for both live and pre-recorded content is considered.
• The conversation speculates on whether Disney will renew distribution agreements with other content aggregators or move towards a bundled offering through BAMTech.

"What we're talking about here is the future of television. We're not talking about just sports."

This quote captures the broader implications of Disney's investment in BAMTech, emphasizing that the partnership represents a significant shift in the television industry, beyond just sports content.

• Disney's strategy may lead to a recreation of the disliked cable bundle, but online.
• Consumers currently prefer unbundling, choosing specific subscriptions like Netflix or sports packages.
• There’s a possibility that consumer fatigue from too many subscriptions could lead to a desire for re-bundling.

"But what consumers hate about cable, right, is you have to pay for all the stuff you don't want."

This quote highlights the consumer frustration with traditional cable bundles, where payment is required for undesired content.

"Maybe right now what we want is unbundling and to be able to nicely get content directly from the source. But at some point we're going to have fatigue of that and there's going to need to be a rebundling."

The quote suggests that while consumers currently prefer unbundling, there might be a shift back to bundling due to subscription fatigue.

• The Jim Barksdale quote about making money by unbundling or bundling is referenced.
• Businesses must read consumer desires and adjust their strategies between unbundling and bundling.
• Disney's potential bundled package could be compelling to consumers.

"There are two ways to make money in business. You can unbundle or you can bundle."

This quote underscores the two primary strategies for revenue generation in business, which are relevant to the discussion on consumer preferences.

• BAMTech began by addressing specific problems and evolved by solving new problems incrementally.
• The company's growth serves as a lesson in building companies by addressing real needs.
• BAMTech's relationship with MLB and other content providers has evolved into a potential direct-to-consumer model for Disney.

"Bam started by solving a real problem... And I think it's just a great example of stairstepping your way up into an enormous company by solving real problems kind of one at a time."

This quote illustrates the incremental approach BAMTech took to grow into a large company, starting with simple solutions and building upon them.

• The conversation addresses the challenges of balancing vertical and horizontal business strategies.
• BAMTech's spinout is seen as a solution to potential conflicts of interest within MLB.
• The alignment of incentives post-spinout is crucial for avoiding issues between service provision and core business interests.

"Do you have to make sure you don't get into a vertical versus horizontal mess there and then be both a services provider and care about your own core business that utilizes the services provider."

The quote discusses the importance of maintaining clarity between providing services and focusing on the core business, which is a theme that has emerged in the podcast.

• Disney's acquisition of BAMTech is debated in terms of its value and potential.
• The acquisition is seen as a low multiple investment with a significant opportunity for Disney.
• Disney's history of successful acquisitions and the potential for BAMTech to integrate into Disney's direct-to-consumer strategy are highlighted.

"I predict, will go down as one of the most important, most transformative acquisitions in Disney history..."

The quote predicts the significance of Disney's acquisition of BAMTech, considering Disney's track record and strategic positioning.

• BAMTech's history within a conglomerate is seen as beneficial for integrating into Disney.
• The potential for a more innovative culture and better equity compensation at Disney compared to MLB is discussed.
• The acquisition's impact on BAMTech's employees and culture is considered a key factor in its success.

"I wonder if from a people standpoint, the company is also well positioned to succeed here."

This quote reflects on whether BAMTech's experience as part of a larger organization will contribute to a successful integration with Disney's culture and business model.

• The discussion includes updates on Facebook Instant Articles, the end of Wunderlist, Instagram's growth, Amazon's Echo Look, Cloudera's IPO, and Didi's fundraising.
• These updates provide a snapshot of recent developments across different technology and business sectors.
• The hosts encourage engagement in their Slack community for further discussion on these topics.

"A whole lot has happened in the last couple of weeks. We won't analyze any of these, but just to list out and would love to jump in the slack and chat about them with folks."

The quote invites listeners to engage in discussions about recent industry events and developments, highlighting the hosts' interest in community interaction.

• The hosts share their personal recommendations, including a Twitter account analyzing NFL decisions and a Wait But Why article on Neuralink.
• These recommendations reflect the hosts' interests in sports analytics and emerging technology.
• The sharing of these personal picks provides listeners with additional content to explore.

"The latest wait, but why was months in the making and is just fascinating."

This quote expresses enthusiasm for a detailed article on Neuralink, suggesting its relevance and potential interest to the audience.