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July 11, 2006 

 Q&A: Mike Jakob of Sportvision in Chicago on Creating Sports Innovation 7/11/2006
The mission of Going Global, which appears on MidwestBusiness.com on most Tuesdays, is to educate and inform Midwest technology companies on what local technology companies are doing internationally so other firms can learn from the successes of like-minded peers.

CHICAGO Ė In celebration of the World Cup, we spoke with Sportvision COO and CFO Mike Jakob in Chicago. Jakob is responsible for the company P&L, product and business unit management, media production, finance and accounting, human resources and PR and marketing. Prior to joining Sportvision, Jakob was COO for Ignite Sports.

In part three of a three-part series, Jakob sat down with international expert Michael Muth to discuss creating innovative products and the future of Sportsvision.

Michael Muth: How do you create new and innovative products?
Mike Jakob: We have a unique group of very talented individuals and great technologists who are amazing at what they do. Weíve won eight Emmy Awards. We have a strong passion for sports. Itís a unique mix of individuals in a wide variety of disciplines. We have computer vision engineers, mechanical engineers who design intricate systems, graphic artists and 3-D animators. You need a wide range of skill sets to do what we do.

We also work with great clients including Fox, ESPN, ABC, NBC and Turner. We work with people at the top of the game who are amazing story tellers and who provide a lot of vision. Itís a collaborative effect.

We donít lock ourselves into a dark room and bring out new concepts. We fine tune it in an iterative process until it becomes what you see at home when you watch the event. Weíre a content company. We generate unique and valuable content to viewers and broadcasters to create a business platform for the marketer. We enable the league to grow the fan base and get new subscribers to their Web sites.

MM commentary: Sportvision seems to be a great product development company.

MM: What is Sportvisionís future strategic direction?
MJ: There are not a lot of secrets here. Our focus is on moving in the direction of creating more unique content and helping our broadcast and league partners increase the return on their investment with us. How do we extend our competencies and skills to products that can be deployed over multiple platforms?

With NASCAR, itís not just visual content. Weíre capturing data for a digital record of the race. Instead of just watching the Daytona 500, you can add your own car and racing virtually on your Xbox. You can take content and data and create something meaningful. It could be considered iTV. Itís just real-time gaming. They have the ability to interact. The same infrastructure enables you to do that.

MM commentary: There are tremendous international opportunities here.

MM: What are Sportvisionís short- and long-term goals?
MJ: Short term, weíre looking to get additional coverage in sports in which weíre not currently involved. Weíre focused on platforms other than just broadcast like gaming and interactive TV. In baseball, do I want to see a trail on every pitch relative to the strike zone? The viewer should be able to choose that or a cleaner broadcast without any of those effects.

MM: What can we expect in the near future from iTV?
MJ: Thereís a lot of futuristic stuff like the ability to selectively add and delete yourself to an event in real-time.

MM commentary: I wonder if that counts for boxing as well.

MM: Are your products more driven by hardware or software?
MJ: Itís more software than hardware. We use PCs like other businesses with high-end, top-of-the-line graphic cards like those on the desks of people at Lucas Arts, Industrial Light & Magic and Pixar. The magic we provide is in the software.

MM: What technical prerequisites do you require to implement one of your solutions?
MJ: Something doesnít work if it doesnít provide value and if it could be easily replicable. Weíve made our business doing the hard stuff others canít do.

Some things we canít do. Some things are too hard and canít be done in the next couple years. For example, weíve been trying to do things in 3-D. How do you translate that event in real-time into a virtual event? When we get there, it will be incredibly illuminating. Itís not processing horsepower thatís a problem for us or our users. Itís typically if the data can be captured reliably.

MM: What localization issues do you run into? How do you solve them?
MJ: Generally weíre well prepared for those types of things. There are different video formats (PAL versus NTSC, etc.). Infrastructure sometimes is not at the level youíd expect. Power reliability can be a problem. You just get a generator to make some accommodation to get uninterruptible power.

MM commentary: So long as you deal with numbers rather than words, localization is easier.

MM: Who pays for your products? Advertisers? Networks? Viewers?
MJ: We have three primary streams. First thereís licensing. A network hires us to do the first and 10 line and pays a per-event fee.

The next biggest is similar technology funded by a marketer like the Reliability Zone. A marketer will sponsor an effect as a branding platform. It gets them out of just having 30-second spots and puts them in the telecast where they wonít be TiVoed out. Third, subscriptions are the third and fastest-growing revenue stream for us. TrackPass for NASCAR is the best example.

MM: What percent of your revenues come from outside the U.S. now?
MJ: It varies year by year but about 5 percent to 10 percent.

MM commentary: Given whatís spent on sports in other countries, this could be much higher.

MM: Is Sportvision profitable?
MJ: We are profitable based on our measure of profitability. We started at the height of the Internet boom, so we had some lean years in terms of profitability, but we are now profitable.

MM: What do you see as the world sport rivaling soccer?
MJ: Other than the Olympics, I donít see global viewership overtaking soccer. It is played in so many different countries. The World Cup had a lot of foresight in setting up that tournament with all the stories, national pride and rivalries. It may finally start breaking out here in the U.S.

MM commentary: Futboll attracts the best athletes in most other countries and our second-tier athletes are competing with the best from the rest of the world. Until we value futboll and all that sport entails, we wonít be able to compete.

MM: Have you seen any technologies from other countries weíd like here?
MJ: The U.S. is doing the most interesting stuff out there. That is a typical American response, but in this case, I think itís applicable.

MM: How do you compare sports coverage by Eurosport and Skysport with ESPN?
MJ: As we work very closely with ESPN, we have a bias. Skysport does some interesting things with cricket with virtual tracking, player tracking and analysis in soccer. ESPN is at the top in the ability to produce high-quality events. ESPN Desportes gets the same feed as the U.S. audience. Anything we do for the U.S. theyíll see on ESPN Desportes.

We do some interesting things with the baseball broadcasts. For the advertisements behind home plate where we virtually insert ads, we can provide two sets of ads Ė in English and in Spanish Ė for ESPN Desportes. Itís the same broadcast and cameras for two different sets of viewers.

MM commentary: To me, Eurosport does seem boring by comparison to ESPN.

MM: How much of what you do revolves around sports and how much around entertainment?
MJ: We donít make that distinction. Sports is an entertainment business. They all have the same key elements. Itís all about telling a story and doing it in an insightful way. That is entertainment. Itís all the same to us.

MM: How did winning an Illinois high-tech award in 2003 help your business?
MJ: I donít know if it got us any new business. It does help from a recruiting standpoint and it did help from an investor standpoint.

MM: Why are you based in Chicago? Why doesnít Sportvision have an international office?
MJ: Chicago is a good location for our headquarters. Our clients are the leagues based in New York. The marketers are all over. Our main development center is in Mountain View, Calif. (Silicon Valley) where itís advantageous for access to talent. Motorola is one of our bigger investors. Weíre constantly thinking about what we can do together with their different businesses.

Our head salesperson is in Milwaukee. He spends a fair amount of time traveling. We based our creative group in New York for a number of years because of the proximity to networks, leagues and agencies. Though we found it was beneficial, we need to have our technology and creative people together and have seen benefits from combining those locations.

MM commentary: To develop some of this international business, Sportvision will probably have to establish some kind of presence perhaps like their man in Brewtown.

MM: What similarities do you see in Sears and Sportvision?
MJ: My focus there in the middle to the end of the 1990s was to help solidify a strategy around launching Sears.com when the company wasnít sure how that would transfer into a commerce platform.

I launched some of the larger categories such as major appliances. At the time, it was an iconic company with tremendous brands and market share and all of that transferred well to the Web. It was applicable to launching products and building a profitable Web presence. However, working for a Fortune 50 company versus a 50-person company is quite different.

MM commentary: So dishwashers are like sports effects or are Web companies the same regardless of size?

MM: How well did your education prepare your for your international business experiences?
MJ: The biggest learning experience was when I did a foreign study program for a year in Innsbruck, Austria. I didnít speak any German. Six months later, I took half of my classes in German. I grew accustomed to the European school calendar (every Friday off, February off, Fall break, Spring break, etc.). Itís not a bad gig. That experience was important in shaping my view of doing business internationally and it provides perspective.

MM commentary: I tooled from Munich to Innsbruck and didnít even see him on the slopes as I shushed by. Maybe all Americans donít magnetically attract after all.

Michael Muth is managing director of GATA, an international business development consultancy that helps technology companies build international partnerships. He can be reached at mike@intlalliances.com.
Click here for Muthís full biography.

Previous Columns in 2006:
Q&A: Mike Jakob of Chicago-Based Sportvision on Whatís Coming Next (6/27/2006)
Q&A: Mike Jakob of Sportvision in Chicago on Enhancement Technologies (6/20/2006)
Q&A: Christos Fotiadis of ProtoGroup in Chicago on Japanese Culture (6/6/2006)
Q&A: Christos Fotiadis of ProtoGroup in Chicago on Japanese Expansion (5/30/2006)
Q&A: Christos Fotiadis of ProtoGroup in Chicago on Compliance, Partners (5/16/2006)
Q&A: Lakeview Technology Founder Bill Merchantz on Trade Shows (4/4/2006)
Q&A: Lakeview Technology Founder Bill Merchantz on International Partners (3/28/2006)
Q&A: Lakeview Technology Founder Bill Merchantz on Overseas Expansion (3/7/2006)
Q&A: Steven Ganster of Technomic Asia on Chinese Readiness (2/7/2006)
Q&A: Steven Ganster of Technomic Asia on Chinese, U.S. Differences (1/24/2006)
Q&A: Steven Ganster of Technomic Asia on Approaching Chinese Expansion (1/17/2006)
Click for 2005 column archive.
Click for 2004 column archive.

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