End in sight for the TV era?

The last couple of decades have seen a phenomenal rise in TV rights revenue of professional sports bodies and clubs [1], so much so that 2018 was the year when media rights overtook gate receipts as the chief revenue generator in sports. Sponsorship and merchandizing came in as 3^rd and 4^th largest revenue sources [2], which in turn were influenced by the media exposure generated by the sport / club / players. Live sports captures maximum audience for TV networks, almost 50% of the top-watched programs in Nielsen reports are sports broadcasts including 7 out of the top-10 in USA 2018 list. With TV broadcasters and distributors dependent on sports to keep ratings up, can sports bodies be relaxed about the media rights revenue stream?

The information published by television rating companies suggest otherwise. TV viewership ratings of live sports broadcasts have been trending downwards in last few years; the trend is evident whether we look at the sports league with biggest annual TV revenue, i.e. the NFL or quadrennial showcases like the Olympics. NFL 2017 viewership was down 17% from 2015 [3], while Winter Olympics opening ceremony in 2018 was down 11% in comparison to 2014 [4]. This steady unravelling of live sports TV has multiple underlying reasons ranging from consumers watching less hours of live sports on TV (and indeed less of cable/pay TV in general) to the rise of streaming platforms as well as ad-free highlights packages. Currently TV sports sponsorship is bucking the trend on viewership, rising 5% annually in 2018 [5]. However, with audience migrating, eventually advertisers will shift and networks will be unable to sustain the spend on media rights.

The digital transformation game

"There isn't another industry that is being so fundamentally transformed with data and digital technology like sport" stated Satya Nadella at a Microsoft Ignite conference a few years ago. He was speaking on stage with Real Madrid FC CEO, jointly announcing a platform for 450 million Madrid fans worldwide [6], which makes it a global social network in its own right. While having a large online following is a great start, monetizing the same is easier said than done, as internet companies would vouch. The tenets of the digital game are wider than replacing depleting TV or stadium audience with digital and social ones.

Cable and Pay TV have brought lots of money into sports. Having said that, it has also alienated the uninitiated fan by limiting viewership, and far less people are watching and playing traditional sports now. This trend coupled with competition from online entertainment options, rise of e-sports and increased outdoor lifestyles means that every traditional sport has to look at its long-term health among millennials, generation Z as well as moms and dads in gen X. True digital transformation encompasses all four revenue streams in sports – media rights, gate revenues, sponsorship and merchandizing - and is about making the experience as convenient and intuitive as in the popular digital economy platforms for all stakeholders.

State of play

The sports and entertainment industry is unique in that it has ‘fans’ as customers and ‘fan engagement’ as its core business long before customer experience management became a beacon for the wider world. Pioneers in the industry are acknowledged for vertical integration of sports venues, teams / franchises, ticketing and media distribution. Also noteworthy are forays into creating multipurpose venues, digital direct to consumer media as well as e-sports. Impact of quantum jumps in mass communication technologies is not new – each of which from wirephoto to live broadcast to cable and internet has had a deep impact on sport entertainment consumption – and the sports authorities and franchises which best resonate the technology zeitgeist often turn out to be winners in the race for consumer attention. However, digital is more of a quantum jump in communication capabilities and succeeding in the new playing field requires adoption of a platform approach to sport [7]

Platform to win

This section covers the key blocks of the proposed digital sports platform. At its core, it’s a fan engagement framework which enables sports bodies (as well as their media and sponsorship partners) to discover new fans and know the existing ones better, deliver engaging emotional experiences to fans at the right time on the right device, all the while increasing retention and consumption and driving up monetization possibilities in a secure environment.

1.  Data platform: All sports bodies have a wealth of first-party data, and with digital assets spanning from tickets (watch) to merchandizing (buy), they are in a position to gain a deeper understanding of their consumers. With falling costs of cloud computing, availability of 3^rd party data, democratization of big data machine learning and data onboarding, it’s possible for sports bodies to tie up with IT service providers to create their own data platforms. The goals are to help clubs discover new fans, enrich views on existing fans and enable personalization across campaigns. The same platform can be leveraged by sponsors and media partners to undertake user activation of the sub-set of club’s fans relevant to them. Besides data on fans, sports bodies have vast information around statistics associated with the game; making it available and usable to fans is another aspect of the proposed data platform. For fans, it’s an exciting area - the use of data as sports entertainment – every match is an event trigger to engage in exhaustive data-based debate, social media exchanges and may be even gain a deeper understanding of athletes’ challenges.
2.  Fan experience platform: Clubs have a plethora of digital assets – websites, apps, ticketing systems, experience tours – in addition to physical assets. However, not every club offers seamless experiences for fans across these assets. Customer experience engineering is another area that sports bodies should actively invest in; a deeper understanding of a fan’s journey from the uninitiated fan to the super fan and touch points across the digital and physical assets during that journey will help design a seamless experience. A true digital experience platform helps sports bodies tap into the in-the-moment relevance – e.g. channel trends in social media seamlessly into clubs’ digital assets helping drive up conversion and consumption through ease of use and personalized relevance of offers.
3.  Direct to consumer channels: Today’s digital world allows all clubs to reach their fans directly across the globe and across devices. Creating a digital omnipresence requires creation of direct to consumer channels as well as entering into partnerships with various players in the digital ecosystem. Availability of media cloud platforms with machine language enabled content pipelines have lowered barriers of entry into this space; by partnering with the right IT service provider, clubs and sports bodies can reach fans with high-quality reliable content services. This channel can be leveraged to deliver video, news, live updates, stats, plays of the day or hour with appropriate social share enabled. The channels would be part of the overall experience platform, enabling seamless navigation for fans, while the data platform enables personalization of content, sponsor messages and promotions.
4.  Mixed reality and futuristic modes of engagement – Esports are creating another entry point into fandom. The first experience youngsters have with a sport is more than likely through its electronic counterpart such as FIFA or Madden NFL. Clubs can combine the power of VR, gaming, drone photography, immersive video, streaming content and advanced analytics to give fans the feel of the pro game, techniques of star players and bring to life key matchups. With the advent of 5G, clubs will be able to deliver these experiences in the stadiums as well as in fan-zones. Clubs that master the digital twin to real-world sport interaction are more than likely to be winners in tomorrow’s digital world.

Fan engagement may have started off as a means to engage fans before, during and after a game, as an always-on means of connect between the club and the fans. What had started as an ‘app’ is slowly and surely evolving into a platform, one that can define the future of the club and even the sport it represents, by connecting fans, players, sponsors, broadcasters and other service providers. Sports bodies and clubs that are successful in creating and evolving successful fan engagement platforms will end up winners in the digital era

Reference

[1] https://globalsportmatters.com/business/2019/03/07/tv-is-biggest-driver-in-global-sport-league-revenue/

[2] https://www.pwc.ch/en/publications/2018/2017%20Sports%20Outlook_FINAL.pdf

[3] https://www.espn.in/nfl/story/_/id/21960086/nfl-television-ratings-97-percent-2017-regular-season

[4] https://www.adweek.com/tv-video/nbcs-2018-winter-olympics-opening-ceremony-coverage-is-down-from-2014/

[5] https://www.warc.com/newsandopinion/news/sponsorship_grows_despite_roi_concerns/41083

[6] https://www.geekwire.com/2015/real-madrid-ceo-on-how-technology-and-microsoft-are-transforming-our-soccer-club/

[7] https://www.zdnet.com/article/sport-isnt-just-for-spectators-its-a-platform/