Betting on Web sports

American Demographics, May, 1996 by Marc Spiegler

Few topics whip up American passions like spectator sports. As a nation, we spend billions of dollars a year attending sporting events, watch hours of televised athletics, and snap up millions of licensed T-shirts, caps, and jackets. So it shouldn't come as a surprise that not one, but two, high-octane sports-junkie World Wide Web sites debuted last year.

The first to hit cyberspace was ESPNet SportsZone, a joint venture between the ESPN all-sports cable TV network and Starwave Corporation of Bellevue, Washington. The Web page opened for business in March 1995. "Our users have grown 10 percent to 20 percent a month since we started, and we ended the year well ahead of plans," reports the page's publisher, Geoff Reiss, previously a six-year veteran of Spy magazine.

Among the services Sportszone offers are a constant flow of sports news generated by ESPN's expansive network of sources, pre-game analysis. and chances to interact with sports stars. "I've been stunned by the response when we have an online Q & A scheduled," Reiss says. "With [basketball star] Pat Ewing, users submitted about 2,500 questions over a 24-hour period." SportsZone plans to add online ticket-buying through Ticketmaster.

Reiss says SportsZone currently notches a phenomenal 4 to 5 million daily "hits," or accessed files. Interestingly, the number of hits dips significantly during college vacation periods. "Web-based products are a huge part of campus culture," Reiss says. Among his service's users, 48 percent are aged 18 to 24. Another 34 percent are aged 25 to 34. Ninety-five percent of SportsZone's users are men. They are also well off - average household income for employed users of the service is $55,000 a year, Reiss says.

Kenneth Dotson, vice president of marketing for SportsZone's main competitor, SportsLine, declines to release any figures on the Fort Lauderdale-based Web page's current membership. But he does claim a half-million hits per day on the system, which had a commercial release in August 1995. This is a significant rise from the service's early days in 1994, when it logged roughly 100,000 hits a day.

The turning point, Dotson says, came when SportsLine made a huge amount of information available for nonpaying browsers. "That was not in the original plans," he admits. "But we decided to do it after realizing a whole lot of people are making such information available for free. It was a market reality we had to deal with." SportsLine hopes people will get in the habit of checking out the free content, which will boost traffic on the page. Yet the ultimate goal is to lure non-payers into subscribing to get the page's extra services.

What are people paying for when they join SportsLine? Dotson cites batter-by-batter baseball updates, exclusive editorial content, and columns by celebrities such as sportscaster Bob Costas, baseball Hall-of-Famer Mike Schmidt, and football greats Joe Namath and Jack Kemp. Four in ten SportsLine subscribers trade up to the service's fantasy game premium packages, available for each major sport. The $49 "Touchdown Glory" pro football package, for example, allowed users to compete against each other for thousands of dollars in statistics-based games similar to Rotisserie league baseball.

How viable is SportsLine? It's gotten votes of confidence from some heavy-hitters in the technology and sports arenas. The online service secured financial backing from Kleiner Perkins Caulfield & Byers, whose past picks include America Online, Inc., Compaq Computer Corporation, and video-game juggernaut Electronic Arts, Inc. The service also boasts links with the 350-station Sports Byline USA radio network, and with IMG, a sports-marketing agency that represents sports celebrities from golfer Arnold Palmer to hockey great Wayne Gretzky. Just as importantly, IMG puts on more than a hundred events annually, including the Orange Bowl, where SportsLine software packages will be thrust upon attending sports fanatics.

In the ongoing cyberskirmish between SportsZone and SportsLine, ESPN holds an obvious advantage. The TV network hypes the Web page constantly on air, and its name gives the page legitimacy. On the other hand, ESPN's contracts with major sports leagues to broadcast games mean it can't really capitalize on an important potential market: gamblers. The leagues want to distance themselves as much as possible from gambling on games. "All our rights holders [sports leagues] are frantic about the gambling issue," says SportsZone's Reiss. "That puts us in a 'don't ask, don't tell' position. But other providers can be more direct." While SportsZone puts up point spreads on a daily basis, for example, SportsLine updates its Las Vegas lines every 15 minutes.

For more information on ESPN SportsZone, contact Starwave Corporation, 13810 Southeast East Gateway, Suite 400, Bellevue, WA 98005; telephone (206) 957-1128, http://espnet.sportszone.com. SportsLine USA, Inc., can be reached at 800 Corporate Drive, Fort Lauderdale, FL 33334; telephone (305) 351-2120, http:// www.sportsline.com.