Geoffrey Hampson didn't know what to expect when he arrived in the conference room of the Jumeirah Carlton Tower Hotel in London last February. He and a colleague had flown in to meet India's cricket czar, Lalit Modi, the 45-year-old scion of a billionaire family who'd recently spearheaded the founding of a professional league - a kind of NHL or NBA of cricket.
Mr. Hampson, chief executive officer of Live Current Media, a Vancouver-based website developer, had an hour to persuade Mr. Modi that he should sell the Web rights to the Indian Premier League (IPL) to Mr. Hampson's 30-person firm rather than to one of the global media giants that Mr. Modi had short-listed for bids.
Mr. Hampson had one major ace: His company owned the domain cricket.com, which it intended to develop into a global portal. He and his staff had picked it as the next URL likely to develop into a "destination hub," meaning an e-commerce portal with the potential to draw a large, passionate audience.
Cricket.com had seemed like a no-brainer. With an estimated 1.2 billion fans, cricket is the world's second most popular sport. And in India, its largest market, it is undergoing a transformation. Traditional cricket matches last from one to five days - not a format conducive to TV coverage. But a new version of the sport, dubbed Twenty20, was making its way to the subcontinent: Its matches last less than three hours, giving the audience a more fast-paced, urgent experience that is closer to North American pro sports.
"[Cricket.com]got us in the door," Mr. Hampson says. But snaring the contract - worth $50-million over 10 years - would mean betting Live Current's entire market capitalization (the company trades over the counter) on a nascent league in a sport Mr. Hampson didn't know much about. "This was enormous for the company," he admits. "There was risk, no question. But people told us there are only a handful of things Indians are really passionate about: religion, Bollywood and cricket."
Live Current did have experience in squeezing money from domain names. The company owns a portfolio of more than 900 Web destinations, including such "beachfront" addresses as leisure.com and stereos.com; its perfume.com site raked in $9-million last year in advertising and product sales.
The Board of Control for Cricket in India (BCCI) had also seen an opportunity last year, when it launched a professional league comprising eight teams. With the help of sports-marketing behemoth IMG, BCCI auctioned off the global broadcast rights for $1.1-billion (U.S.). Another auction for the franchises raised $780-million from seven Indian businessmen and Bollywood stars, and one foreigner: Lachlan Murdoch, Rupert Murdoch's son. Adding official sponsorships from the likes of Honda and Pepsi brought the league's haul to more than $2-billion.
All this investment was aimed at tapping the growing spending power of the Indian consumer. The country's population is also very tech-savvy - but, as yet, neither the IPL nor BCCI had an official website. Mr. Hampson figured that his company and the two Indian organizations could have a symbiotic relationship: The features that Live Current developed for IPLT20.com and BCCI.com would seed content on Live Current's cricket.com portal, while that global gateway would in turn drive visitors to the two new proprietary sites.
An executive at Live Current knew someone at BCCI, who in turn introduced Mr. Hampson to Mr. Modi, the commissioner of the IPL. Mr. Modi was keen to have cricket cultivate some of the revenue-generating brand power of the major North American and European leagues, and saw a highly interactive website as an important tool. He especially liked Live Current's emphasis on fan involvement, with official photos, live scoreboards and ticket sales augmented by fan polls, fantasy cricket, ball-by-ball blogs, even multiplayer games. He told Mr. Hampson that the other bidders' proposals offered much less fan interactivity.
Moreover, he saw the company's small size as a plus, figuring the project would take top priority at Live Current in a way it wouldn't at a larger outfit.
"The IPL is very young, hip, a new concept, and they wanted to have that translated into their web space," Mr. Hampson says.
The discussion in London ran to three hours. Live Current insisted that it needed rights to run the BCCI website as well, to mitigate the risk involved with a startup league. Since BCCI oversees all things cricket, its site would draw fans around any major international games.
After some negotiation, they struck a deal: BCCI and the IPL would receive $5-million (Canadian) each year from Live Current, whether or not there was any revenue. The next $5-million of revenue would go to Live Current. Anything above that would be split equally. Any proceeds from cricket.com were entirely Live Current's to keep.
The meeting ended with Mr. Modi asking his visitors to exit the room so he could conduct a conference call with the league's board to firm up the handshake agreement. "This was 7 p.m. in the U.K., the middle of the night in India," Mr. Hampson recalls. "He simply told his assistant to wake up all the board members. This is a guy who doesn't waste any time."
The board's immediate approval worked like a starter's pistol going off, because the Live Current team had only six weeks before the IPL's opening game. The company teamed up with Netlinkblue, a Web developer based in the United Arab Emirates that had the video-streaming rights to the IPL games, and the two firms set up a joint venture, Global Cricket Ventures, based in Mumbai. "The execution side has been a challenge for us," Mr. Hampson admits, "because Netlinkblue is based in Dubai, the client and developers are in India and we're in Vancouver. Three geographies is a tough task."
They've managed it so far. The IPLT20.com site launched in April, outdrawing ESPN.com on cellphones the following month and generating more than 50 million page views during the first season. The BCCI site was up in late September. Once cricket.com goes live before year-end, the company expects a steady stream of advertising and e-commerce revenues to support what will essentially be a stand-alone business. Mr. Hampson still knows little about the sport of cricket, but he knows this: "As a business, it's pretty much recession-proof, and there isn't much competition."
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WEB EXCLUSIVE
Sports do well in economic downturns. Anything that's a diversion to the population from the troubles at hand usually does fairly well.
Paul Kedrosky is a senior fellow at the Kansas City-based Ewing Marion Kaufman Foundation and runs the popular blog Paul Kedrosky's Infectious Greed, which covers technology, finance, venture capital and the "money culture." He'll offer his take on Live Current's big investment in a foray overseas and what other entrepreneurs can learn from it.
globeandmail.com/
breakthrough
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SNAPSHOT
THE VITALS
Based in Vancouver and with an office in Seattle, Live Current has 30 employees, six of whom are exclusively focused on the cricket sites. In 2007, the public company lost $2-million on $9-million in revenues, all of which came from advertising and e-commerce sales on its perfume.com site. Until March of this year, Live Current was known as communicate.com.
THE OVERSIGHT
Mr. Hampson wishes he'd moved faster to ramp up staffing in the Indian joint venture. He figured he could get the new business to a certain stage using Live Current managers in Vancouver, then hire people in India later. "What we should have done is found really strong, Indian-based top management on day one rather than doing it from here, with all the time zone, cultural and communication problems."
THE KEY DECISION
When Live Current executives learned that live-streaming and mobile-phone rights had already been awarded to Netlinkblue, they worried that the audience experience would be splintered and diminished. Rather than competing, they decided to partner with the Dubai-based company, which already had a large Indian tech-consulting operation, with some 2,000 developers. The two firms agreed their respective rights were roughly equal in value, and formed a joint venture to execute the IPLT20.com and BCCI.com websites.
THE NEXT STEPS
Live Current is searching for a CEO with sports-marketing experience to run the Indian joint venture as a stand-alone company. It is expected to grow to 50 people over the next two to three years, and generate revenue between $50-million and $60-million annually. Meanwhile, Live Current is getting ready to launch its cricket.com portal later this year, and intends to partner with other cricket organizations to expand that site's content.
THE MARKET
It's hard for North Americans to grasp cricket's popularity in Southeast Asia. "In India, it's really the only sport," Mr. Hampson says. "The second most popular sport is field hockey." Meanwhile, India's middle class is rapidly expanding, with the country pegged to become the fifth-largest consumer market within two decades. Live Current expects most revenue to come from advertising and sponsorships on the sites, but mobile advertising will be important, as India has high cellphone penetration.
THE INTRIGUING IDEA
While cricket's audience is concentrated in the subcontinent, it is a truly global sport, with fans - any of them Southeast Asian immigrants - living around the world. About 45 per cent of the visitors who logged into IPLTP20.com during its first season came from the United States, Australia, Britain, Canada and other countries - a largely Western audience likely to have higher disposable income than their Indian counterparts.
STATS
22
Number of countries in which cricket is the national sport
70
Estimated percentage of world cricket revenues represented by India
13
Annual percentage rate of growth in Indian consumer spending on communications, the fastest-growing category
4
Ranking of "Cricket World Cup" among Google's most-searched terms in 2007
Source: Quantcast
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India's consumer market
Total household consumption, billions, Indian rupees
2005E: 16,896
2010F: 23,840
2015F: 34,089
2020F: 48,677
2025F: 69,503
E=estimate
F=forecast
DOUGLAS COULL/THE GLOBE AND MAIL
SOURCE: McKINSEY GLOBAL INSTITUTE
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