MLB Case Study (Proposal) | Use Cases Notes
Go beyond the American Reality & enter Augmented Reality (AR)
Objective:
To provide the Head of Partnerships at MLB with a comprehensive guide on how an XR project can be implemented and utilized to drive substantial revenue, aiming for at least a six-figure return.
Scope:
This study/report delves into the various aspects of integrating Extended Reality (XR) technology into the existing MLB ecosystem. It explores the potential use cases and revenue streams, partnership opportunities, and the overall impact on viewership and fan engagement. The report not only forecasts financial gains but also emphasizes the innovative ways MLB can leverage XR to enhance the fan experience.
Notable precedents on the use of new business models & emerging platforms:
Case 1: MLB addressed the impact of new media on fans’ live baseball viewing and the changes in younger fans’ viewing habits by taking advantage of its new media platforms to promote diversified ticket sale strategies, which have included reducing the price of mlb.tv;
Case 2: Regarding the use of smartphone apps as a ticket sales channel, in 2015, the Atlanta Braves, Chicago White Sox, and Oakland Athletics led the way by releasing a “Ballpark Pass” as an official MLB app, which soon took the rest of the league by storm. At present, 22 teams currently use the Ballpark Pass app, which lets spectators who pay a monthly fee view all home-field games.
Introduction to MLB and its Revenue Sources:
Major League Baseball (MLB) is a professional baseball organization and one of the oldest major professional sports leagues in the United States and Canada. Comprising 30 teams —15 in the National League (NL) and 15 in the American League (AL)—it represents the pinnacle of professional baseball talent and competition.
The MLB generates revenue from several sources, including broadcast rights, merchandise sales, ticket sales, and sponsorships. MLB remains one of the most profitable sports leagues globally, with consistent growth in revenue. In broadcasting, MLB can launch its own XR service on various headsets, changing the traditional broadcast network-sport organization relationship to a direct sport organization-headset provider relationship.
Streaming services that can be adapted to XR include MLB Network and MLB.tv.
Technical Challenges:
Live streaming of games in XR.Business Challenges:
Adapting the business model for a new XR platform.Potential Partners:
- Headset providers (Apple, Meta)
- Network providers (Verizon, AT&T)
- TV Streaming companies (ABC, NBC, Fox, ESPN, TBS, etc.)
Sponsorship Revenue Pitch:
Use Case Explanation:
- Enhanced Brand Engagement: Sponsors can create interactive and immersive advertisements within the XR environment. This could include virtual billboards in the stadium, interactive product demos, or branded virtual experiences that engage fans during game breaks.
- Targeted Marketing Opportunities: Utilizing data from the XR platform, sponsors can tailor their marketing content to specific demographics, enhancing the effectiveness of their campaigns.
- InExclusive Content and Experiences: Sponsors can collaborate with MLB to offer exclusive XR content, such as behind-the-scenes footage, player interviews, or virtual meet-and-greets, adding value to the fan experience.
Given MLB's existing relationships with sponsors, launching an XR service can allow sponsors to create AR activations within the XR service. With a current viewership of 9.95 Million and sponsorship revenue of $548 Million, a proportional estimate for 4 million XR viewers could generate an additional $220.32 million in revenue. Factoring in sponsor hesitancy for a new platform, a conservative estimate still yields $73.44 million in scalable revenue.
Ticket Sales Pitch:
Use Case Explanation:
- Virtual Stadium Experience: Fans can purchase XR tickets to experience the game in a simulated stadium environment, complete with the ambiance and crowd noise, providing a near-real experience from the comfort of their homes.
- Customized Viewing Angles: XR ticket holders can choose their viewing angle, whether it’s behind home plate, the dugouts, or even a player’s perspective, offering a unique and personalized game experience.
- Interactive Game Features: XR tickets can include interactive elements like real- time stats, player information pop-ups, and in-game quizzes or polls, enhancing fan engagement.
Information:
- $1.76 billion in ticket revenue.
- Average ticket price in 2023: ~$37.
- High demand and premium experiences drive ticket prices for major games.
Given that MLB’s product pricing has consistently tended to be consumer-friendly, and that it does so to capture a large market share through massive sales with a low-profit margin (Chen et al., 2015, 2019), this is the proposed XR ticketing model.
XR Ticketing Model:
- Basic XR Ticket: $50 (game viewing with immersive ads)
- Intermedium XR Ticket: $100 (includes gamified experiences and prize opportunities)
- Special XR Ticket: $300 (adds behind-the-scenes footage)
- Premium XR Ticket: $550 (exclusive content)
Using these categories, MLB could generate an additional $510 million with a 4 million XR viewership pool.
Ticket Sales Pitch:
Use Case Explanation:
- Virtual Stadium Experience: Fans can purchase XR tickets to experience the game in a simulated stadium environment, complete with the ambiance and crowd noise, providing a near-real experience from the comfort of their homes.
- Customized Viewing Angles: XR ticket holders can choose their viewing angle, whether it’s behind home plate, the dugouts, or even a player’s perspective, offering a unique and personalized game experience.
- Interactive Game Features: XR tickets can include interactive elements like real- time stats, player information pop-ups, and in-game quizzes or polls, enhancing fan engagement.
Painpoint:
While the most conventional distribution channel connected with sporting events is the sale of products to spectators watching games, this conventional, uniform distribution channel has long been unable to satisfy consumer demand, and MLB has found that media distribution approaches provide an excellent supplement to its conventional distribution channels. XR could be a new distribution channel.
Information:
MLB's merchandise sales have consistently been around $3 billion annually.
AR Merchandising Strategy:
Sell merchandise in an immersive way without price modifications. Integrate sales during breaks or gamified experiences, offering incentives like team merchandise for premium ticket purchasers.
Extras:
Baseball cards could be sold as NFTs. Regardless of how they’re sold, MLB can always find a way to integrate its AR/VR strategy into any existing Web3 strategy
Mike Bolland take on Sports use cases (Chief Editor & President - AR Insider) | Exclusively for Omnia
“Apple – as it often does – has been waiting and watching the AR sector for the past several years and observing its mistakes. And one of the biggest mistakes has been AR’s tendency to get stuck in techy territory, including esoteric messaging and acronyms.
So when looking for killer apps to drive Vision Pro’s demand – besides sex appeal around its sheer gadgetry – an elite entertainment experience was a natural choice. This is why we saw Apple focus so heavily on demonstrations of massive-screen viewing experiences for cinematic content.
For similar reasons, Apple will pursue a key subset of entertainment: Sports. Immersive technology taps into the visceral and participatory nature of spectator sports -– which is s amplified wherever front-row seats carry a premium. It’s all about the squeaking hardwood in basketball or the sound of slapshots and bodies smashing into boards in hockey.
These fan experiences were the promise of NextVR and its early work with teams like the Golden State Warriors. And guess what... Apple acquired NextVR in 2020 to seed this evolutionary path. Other moves in that master plan include securing broadcast rights such as MLS and MLB.
The unit economics also work. If Apple can sell live virtual front-row seats for $9 – or bundled season passes for superfans – it could reach a sizable market. That market also scales beyond the geographic constraints of a given team. There’s a massive NBA following in China for example.
For fans, this doesn’t beat attending live but immerses them in the action for a fraction of the price, time, and effort. Both modalities will coexist as Vision Pro augments the fan experience. It will take a while for Apple to get there, such as lowering AVP’s price, but consider it early innings.
In the meantime, Apple and its classic 'halo effect' will lift all boats by seeding demand for immersive spectator sports, thus opening doors throughout the XR stack to meet this opportunity.”
Proportional adjustment for 4 million viewers:
- $301.51 revenue per viewer.
- Estimated sales: $1.206 billion.
Financial Overview
Current vs. XR Projected Financials
| Revenue Category | Current Amount | XR Amount |
|---|---|---|
| Additional Revenue (ticket sales) | $1.76 Billion | $510 million |
| Additional Revenue (sponsorship sales) | $548 Million | $73 million |
| Additional Revenue (merchandise sales) | $3 Billion | $1.206 billion |
| Total | $5.308 billion | $1.789 billion |
Viewership Comparison
| Viewership Base | Current | XR Forecasted |
|---|---|---|
| Viewership Numbers | 9.95 Million | 4 Million |
Expanding the Market:
MLB can sell yearly subscriptions for its streaming services and add XR-exclusive content, tapping into the global fanbase of over 500 million. Moreover, it can include traning services for its younger audience (train in XR) and mix and match its offerings over time.
Sources:
Sports projects on Omnia:
- Stadium AR Experience for the NFL (view in AR on Omnia)
- Chicago Bulls Fan Experience for the Vision Pro
