Major League Baseball launched a new era in analytics earlier this week. Using a tracking technology called Statcast, MLB can now gather game data and statistics in ways it never has before.
Consider a pitcher throwing to a batter. Basic data about pitches--velocity, location, type of pitch (fastball, curveball, sinker, etc.)--is already out there. Statcast takes it one step further. MLB.com's Paul Casella explains:
Statcast digs a whole lot deeper, also providing the perceived velocity--a number derived from the velocity of a pitch at the exact release point. After all, a 90 mph pitch delivered from a 54-inch release point will seem faster to a hitter than a pitch of the same velocity released from two inches closer to the mound.
That's just one example. Statcast will also "calculate the time it takes for a pitcher from his first movement to delivering the pitch toward home plate, as well as the ultimate spin rate of that eventual pitch."
In addition, Statcast measures and records in-depth data about hitters, baserunners, and players in the field. It uses high-resolution optical cameras and radar equipment (installed in every MLB stadium) to precisely track locations and movements of the ball and each player.
Now that you know what Statcast can do, let's get to the business questions: Why did MLB deem technology like this worthy of an investment of "tens of millions of dollars," as the AP's Ronald Blum reported? And how should MLB use Statcast to both create and sustain a competitive advantage?
The Content Kings
In an era of content marketing, when massive technology companies of all stripes (Apple, Google, Amazon, Microsoft) are angling for your television sets, businesses like MLB--which generate unique, original, mobile-friendly content avidly watched and followed worldwide--boast a strong competitive advantage.
Whereas most businesses strain to find or produce large quantities of differentiated content that can lure potential customers to their inbound sales channels, entities such as MLB--not to mention other sports leagues and TV networks--are practically factories of can't-miss-it material.
Think about it: MLB has enough content not only for its own TV network and web site, but also to generate $12.4 billion in long-term television contracts with ESPN, Fox, and TBS. And that's just for MLB as a whole. It doesn't include all the billions generated by the 30 individual teams in North America's biggest markets. Nor does it include radio rights.
MLB data is an enormous part of this. Fantasy sports are a $4-billion industry with more than 30 million worldwide participants. In fantasy baseball, those participants are all trying to forecast players' statistics in some form or fashion.
If you play fantasy baseball, you consume the content of the sport in a different way than an ordinary fan does. You watch players like an investor watches stocks. You look for hidden gems and try to find trends your competitors are unlikely to spot. You're more likely to spend time online, on your phone, and on your couch actively "researching" players to add to your fantasy rosters.
You don't just watch the games. You watch the stats. Daily. Hourly. In real time.
Here's where Statcast's data has the potential to pay off, big time. The more Statcast data MLB disseminates to fans--through TV broadcasts or sortable stats on MLB.com and elsewhere--the more fans and fantasy baseball players will have access to analytics tools used by actual teams in their player evaluations.
As an example, MLB.com's Casella uses the case of Houston Astros pitcher Collin McHugh. Despite some dismal stats prior to 2014, the Astros plucked the right-hander from the Colorado Rockies because the spin rate of his curveball showed promise. It paid off: 2014 was a breakout season for the 27-year-old McHugh. He posted a 2.73 earned run average (ERA) in 25 starts, a drastic improvement over the 8.94 ERA he'd logged in his first 15 major league appearances.
If the Astros could use Statcast to unearth a hidden talent by assessing the spin rate of his curveball, there's nothing stopping any fan at home from doing the same, once they have access to the spin rate data of every pitcher in MLB. Or the minor leagues, for that matter.
Stats like spin rate--especially if MLB keeps them proprietary--are bound to drive traffic to MLB's sites and platforms. In addition, MLB can potentially use spin rate and other Statcast morsels as a source of recurring subscription revenue, charging fans--and fantasy baseball businesses and sports-content businesses--for the access.
Maintaining an Analytics Advantage
It's clear that the smart use of analytics can give a business an immediate boost, but it's not necessarily a given that it always creates a long-term competitive advantage. Just look at the airline industry.
"There is strong evidence that American Airlines maintained a revenue advantage through its pricing analytics from 1985 to about 1995," observes Peter C. Bell, a professor of management science at Ivey Business School, in the MIT Sloan Management Review. But today "almost every airline employs the same basic methodology to maximize revenue per seat mile flown."
Here's the good news, for organizations like MLB: Bell identifies several companies that have maintained their analytics advantages through the years--and the strategies they've used to do it.
One popular analytics tip is to start with easily identifiable problems whose solutions can produce quick savings or gains.
But "the downside of this 'low-hanging fruit' strategy," notes Bell, "is that the analytics for these small problems are easily replicated. Consequently, if competitors notice any impact, your advantage will erode once they replicate your methods. Companies that have sustained an advantage from analytics have often taken a different approach, focusing on a large, critical problem rather than a low-hanging one."
Applying this framework to MLB, you can very quickly connect the dots from Statcast to the sport's large, critical problems.
To cite but one example, MLB has made a conscious effort to speed up games this season. MLB grasps that fewer and fewer young viewers are sitting through all nine innings of a game anymore--especially when stats and highlights are widely available.
In 1984, the average time of a game was 2 hours and 35 minutes; by 2014, it had risen to 3 hours and 2 minutes. So far in 2015, the average game length has dropped to 2 hours and 55 minutes, according to ESPN. New pace-of-play rules preventing batters from stepping fully out of the batters box are one reason; clocks monitoring the time elapsed between innings are another.
So MLB has already taken steps to address the issue. Statcast can help to further close the gap by giving MLB hard data about any number of hypothetical rule changes designed to increase the pace of play. For instance: If umpires called more high strikes, how many fewer foul balls and hits would there be in the course of a season? And to what extent could that reduction in batted balls further reduce the average time of a game?
If MLB is smart, it will use the data generated by Statcast not only to cement its status as a content king, but also to analyze the on-field patterns and progressions that can needlessly elongate the nine-inning game.
That's the big-picture problem MLB needs to solve; otherwise even its long-held status as a content king will one day be in jeopardy.