One of the big questions in the content world has been: what's the right formula to make content creation profitable on the Internet? And, how do programs like YouTube's recent push to help fund original content channels on the site helping? We spoke with John Mudge, CEO of iBN Sports (www.ibnsports.com), to learn more about the Lake Forest-based company's success in making content pay on the Internet, and how his company's relationship as one of YouTube's Premium Channels is helping with that effort.
What is IBN Sports?
John Mudge: We launched IBN Sports in January of 2007, focused on creating an interactive, broadcast network for sports. Our focus was to utilize new technology for streaming over the internet, broadcasting underserved sports which normally don't end up on TV, in HD quality, for viewers across the country and world. We chose to start with high school sports, because of the passion for high school sports on the local and regional level, and the passion around anything to do with your kids. We started with a small, high school, Rancho Santa Margarita Catholic High School, and broadcast their football games, the whole season, in 2006. By the end of the season, we had over 100,000 people who had watched their games, and surprisingly, across the country--due to grandma, grandpa, college scouts, and others. Because of that, we figured out that we had a market, especially with the movement of ad dollars towards the Internet and Internet video. This last season, we did over 600 high school football games all over the country, and signed a partnership with Google/YouTube and others. This year, we'll do 2,000 high school football games and sports this year. We're now in 23 states and sixteen of the top television markets, and are spread over 600 high schools over the country.
How much of your business model is centered around YouTube?
John Mudge: YouTube is just one piece of it, but it's a significant partnership for us. We worked on that last year, and solidified it this year, but it's only one piece of the pie. The model is really distribution of our content across multiple distribution points, primarily on the Internet. We have our own site, IBNSports.com, and we also work with partners schools to create a presence on the network. We've created a channel and web page for every one of our partner schools and school districts, and we distribute the content there. In addition, all of that content, those two thousand games, all feed back to our studios in Southern California, where we continue to slice and dice and enhance that content for further distribution. In addition to those two thousand games, we do another 4,000 to 5,000 pieces of content, including a highlight show for television, short little clips, best plays, hits of the week, those types of things, which we do every week in addition to the game coverage. We've also got the partnership with Google/YouTube, the partnership with Yahoo Rivals, and we also partner with USA Today and Gannett on their digital properties. In addition, our content is used by twenty three television stations, where we provide coverage for Time Warner, Fox Sports, and others. It's a combination of sponsorship, advertising, and for some of our partners, fee for that content. It's a combination of revenue models.
Can you talk about how the YouTube/Google relationship works, as much as you can?
John Mudge: We started working with Google/YouTube last year. About two years ago, we had worked with Gannett and USA Today, which took us national, covering the top 25 ranked high schools across the country. That got us the eye of the people at YouTube, Yahoo Rivals, and others, in terms of being a major player in high school sports, with quality content. Last year, we struck the deal with Google to test us, as they were gearing up their premium content partners program, with that $100M they were going to put to work. Last year, in that partnership, we did a number of shows and games, and created a channel, tried some test marketing with them to see how the viewership could grow. An example, is they took four of our pieces, put them on the front page of YouTube for 24 hours, and -- despite being pushed off the page by breaking news -- we approached a million streams for that content. From that experience, and working through all the challenges of working with a big company like Google, we were singled out as one of their premium partners, focused on the high school sports space.
How does that work?
John Mudge: If you follow what they've done, is they've placed $100M across various partners. We're one of those partners, which means they upfront money to premium content providers like us, to create a certain amount of content. It primes the pump, and then we together drive traffic to that content. As they said in their press release, they are also spending another $200M to promote premium partners, both by advertising internally and other advertising and promotion. There's also a revenue share component to the partnership, and they are going out and, specifically with sports, looking for and working with larger sponsors who you can imagine would want to sponsor sporting events or high school and college sports. We are their partner focused on high school sports, and create the content they're selling to sponsors, and there's a revenue share between the two organizations on that content.
There's been a lot said about the costs and process involved in content creation. How have you figured out how to make it profitable? Is it solely from the YouTube distribution?
John Mudge: I don't think a single distribution point is going to be successful. When we step back, and look at the landscape of the business and say--how can we produce content as efficiently as possible, at the least cost--you have to have a very effective production model we can use across the country to produce all of that content. How we do that, is we figure out how many pieces of content we can create out of that, how many places we can distribute that content to maximize the opportunity. We take the game content, wrap it with high quality shows, distributed that with YouTube, and utilize our sales organization to drive traffic and maximize revenue on that. That's one component, a big portion, and that's why the deal with Google/YouTube is significant. That's the first time it's ever been done in high school sports. We then take that same content, repurpose it, and distribute it on television. We're doing that nationally with a national television partner, regionally with Time Warner here in SoCal or Cox in South Orange County, or Comcast in Northern California. Those partners are taking regional and specific local content, which is very important to their viewers, either to help them grow or maintain their subscribers. We distribute with them on both a for-fee or revenue share, and that's another additional revenue stream. The third component is we're now taking the content, and making that available to promote the athletes themselves, as part of the recruiting process. We're also working with colleges to give them in-depth footage of the particular athletes we cover. The revenue or distribution model for us, is how we can maximize revenue after creating one piece of content in the field.
What's the next big thing you're working on?
John Mudge: The biggest thing we're excited about, which is taking hold across the country, and which is the basis for our ability to get all of this content, is our partner school program. We work hand in hand with schools and school districts around the country, so that we can get access to sporting events and cover it. We are working hand in hand with schools, working with film programs on campus, advanced classes like math and statistics, and using those to capture data at games. They use those for school projects, and they feed data back to us, which we use in our content. We've partnered with school programs across the country, and have over six hundred schools, moving to thousands over the next couple of years. With the program funding issues all across the country, we're helping schools by allowing them to generate revenue in their local markets.
The other obvious piece for us is distribution with television. That's traditional television, cable networks, or with ne television distribution partners like Verizon and Fios, and AT&T U-Verse. We're really focused on expanding our distribution outside of Internet and digital, and working with those other distribution partners.