From a Microsoft press release:

The National Basketball Association (NBA) and Microsoft today announced a new multi-year collaboration, which will transform the way in which fans experience the NBA. As part of the collaboration, Microsoft will become the Official Artificial Intelligence Partner and an Official Cloud and Laptop Partner for the NBA, Women’s National Basketball Association (WNBA), NBA G League, and USA Basketball, beginning with the 2020-21 NBA season. Microsoft and NBA Digital — co-managed by the NBA and Turner Sports — will create a new, innovative direct-to-consumer platform on Microsoft Azure that will use machine learning and artificial intelligence to deliver next generation, personalized game broadcasts and other content offerings as well as integrate the NBA’s various products and services from across its business. The platform will re-imagine how fans engage with the NBA from their devices by customizing and localizing experiences for the NBA’s global fanbase, which includes the 1.8 billion social media followers across all league, team and player accounts. Beyond delivering live and on-demand game broadcasts through Microsoft Azure, the NBA’s vast array of data sources and extensive historical video archive will be surfaced to fans through state-of-the-art machine learning, cognitive search and advanced data analytics solutions. This will create a more personalized fan experience that tailors the content to the preferences of the fan, rewards participation, and provides more insights and analysis than ever before. Additionally, this platform will enable the NBA to uncover unique insights and add new dimensions to the game for fans, coaches and broadcasters. The companies will also explore additional ways technology can be used to enhance the NBA’s business and game operations. As part of the collaboration, Microsoft will become the entitlement partner of the NBA Draft Combine beginning next season and an associate partner of future marquee events, including NBA All-Star, MGM Resorts NBA Summer League and WNBA All-Star.

The logic for the NBA in this deal is clear:

First, in my experience Turner has dropped the ball in terms of the NBA’s digital experience, particularly League Pass. Microsoft should dramatically improve the experience for the NBA’s digital customers. [UPDATE: I mostly watch International League Pass, which I now understand was not managed by Turner; my apologies for Turner for the mistake]

Second, the NBA is, in some respects, no different from a movie or television studio: it produces content and then sells it to the highest bidder, usually delineated by geography. Digital, though, makes it possible to own the customer relationship directly, a la Netflix. Or perhaps Disney+ is the better example, given how differentiated the NBA’s content is; this deal is clearly working towards that goal.

Third, that last paragraph from the press release is an important one: it seems likely that the NBA is going to make out well in this deal from a marketing perspective, even if this partnership is underwhelming.

The Microsoft angle is equally interesting, and like many tech deals, has much higher risk/reward:

There are significant technical barriers to achieving what this deal entails. Microsoft is going to spend a lot of time and money on a relatively small business.

Microsoft, at the same time, is uniquely suited to solving these challenges: what stands out to me in the conversation below is the talk of Xbox, a division that failed to achieve Steve Ballmer’s goal of a universal “three-screens-and-a-cloud”, and has instead become a fine enough gaming option; its technologies, though, could really make this effort sing.

If Microsoft pulls this off, the potential to re-use the technology developed for the NBA, not only for other sports leagues, but for media entities of all types, could potentially be massive.

There are other angles to this as well: one thing that intrigues me is the potential for channel conflict on the NBA side. It seems a bit far-fetched to think that the NBA seeking to own the customer relationship is good for TNT or ESPN, or that the latter will help the former achieve this goal. And yet TNT and ESPN pay the NBA’s bills. This will be a project worth watching for many months to come.

An Interview with Adam Silver and Satya Nadella

In the run-up to this announcement I was able to spend a few minutes with NBA Commissioner Adam Silver and Microsoft CEO Satya Nadella. A lightly edited transcript is available to Daily Update subscribers.

A podcast of the interview, though, is available for free via the Stratechery Podcast service. Here is how to listen:

Create a Stratechery Account.

Visit the Stratechery Podcasts page to add your feed to your favorite podcast player.

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