Professor Sam Craig
NBA – A New Digital Entertainment Model in China
Name : Ted Mui
Executive Summary The National Basketball Association’s expansion into the Chinese market has been met with great success. The company’s China operation currently generates over UDS$150 million in annual sales, and is one of the most recognized international brands in the country. To further focus on the growth of this unique market, a subsidiary was established in 2008, with former head of Microsoft China Tim Chen serving as the first CEO.
The NBA has had great success in developing strategic partnerships in China. Over 290 games are broadcasted on Chinese TV per year, and NBA-related content can be readily found online on Chinese websites. However, NBA China has thus far generated little revenue directly from its end consumers, especially with its digital offerings. In reviewing its target market, we find that the NBA is in direct competition with other online entertainment products for the time and money spent by this market.
Popular online entertainment options for China youths share the following traits: simple to learn and use, ability to interact with other users, a high (and almost addicting) replay value, and contain many customizable features for its users. Based on these ideas, it is suggested that NBA China pursue the development of a brand new web portal combining the components of gaming, social networking, and video streaming, which currently all exist as separate components. Using a concept based on an old video game idea, the web portal will aim to move consumers down the marketing funnel, eventually expanding the fan base and leading to end-user generated revenue.
The cliché of the China market is well known to everyone by now. With its population of 1.3 billion steadily increasing its purchasing power, China has become the focal point of just about every multinational company. Despite its potential, many multinational
corporations’ attempt in entering the China market ends in failure, with millions of dollars of investment vanishing without producing any returns. The National Basketball
Association is one of the rare success stories in China. Since opening its first office in Hong Kong in 1992, the NBA’s Greater China operation has grown to four offices with over 100 employees, generating over USD$150 million in annual sales. According to a survey, nearly 90% of Chinese people aged 15-54 in 11 urban markets had some awareness of the brand.1 Despite this initial success, there remain many opportunities for growth in this market, especially in the digital sector. Facing increasing pressure from competition wishing to emulate its success and from shareholders seeking greater returns from the market, the NBA must look for new ways to build on its success in China.
Company Background The National Basketball Association, founded in 1946, is a global sports and entertainment brand that features 30 teams in the United States and Canada. It is currently the third largest sports league in North America, with an estimated league revenue of $3.2 billion for the 2008-09 season.2 Looking to expand the association’s presence outside of North America, the NBA occasionally hosts exhibition games around the world. 1
The NBA first made its presence in China in 1979, when the
Samantha Marshall, “NBA’s China Strategy a Slam Dunk,” Crain’s New York Business.com, May 29, 2008. 2 Source: Plunkett Research, Ltd
Washington Bullets traveled to China to play two exhibition games against the Chinese National Team. Seeing the potential for the Greater China market, the NBA sent its first Asia-based employee to Hong Kong in 1990.3 The association’s operations in China have grown substantial since, leading up to the formation of NBA China in 2008.
As a subsidiary of the association, NBA China is responsible for conducting all of the league’s business in Greater China. While...