“Technology is changing the world; it’s changing our sport. It’s changing the way people are following the NBA.”ADAM SILVER, NBA COMMISSIONER
Digital transformation in any industry is about using digital technology to transform the customer experience, operational processes and business models. The sports industry is no different and established models are being disrupted. Digital transformation in sport is driving both performance and engagement – performance for the team, property or federation and engagement with fans for more powerful and immersive experiences. Sports businesses such as rights holders, teams and federations must adapt to the current trends to remain competitive.
The NBA was one of the first to recognise the need for change and has a well-developed digital strategy. For some time, they have been well aware that they are competing against every other possible form of entertainment, nice weather or anything else people could be doing instead of watching their games.
Successful transformation depends as much on how businesses manage digital transformation than solely implementing new technologies. Ultimately, digital is about growth and is more about aligning strategy and the organization to behaviours and expectations of modern fans than it is about the technology itself. This process of transformation has been likened to building the plane whilst flying since the business needs to continue delivering on existing brand promises whilst also adjusting to new consumer realities.
Sport is about passion and competition. Being part of that journey through the good times and bad that makes you feel as if you’re part of the same team as those on the pitch or track. And ultimately, we hope, success.
The drive for that success has fuelled a desire to find areas that will have an impact and make a difference. Helping to drive extra revenue that can then be spent on facilities and athletes. Having the best stadium, the best training, the best atmosphere, these all play a part in what takes a team to the top and keeps them there.
This has led to much greater opportunities for technology companies to become involved, whether it be IBM at Wimbledon, Alcatel-Lucent Enterprise in the Tour de France or Tata Communications in MotoGP, F1 and the European Tour. All three companies spoke at our recent event talking on this very subject, providing fascinating insights into their unique approaches to sport and why they are involved in the industry.
…sport is so attractive to tech companies because it is so tangible. if you say “we’ve improved internet connectivity around the world by 30%” no one really cares. but If you say that we helped a cycling team improve their performance by 30% and now theY’RE winning, then they’ll be like “OK now I’m happy to listen”.Grant Dall – Global Alliances Manager, Alcatel-Lucent Enterprise
This adoption, even embracing, of technology has led to what we now see as a huge disruption of the sports industry. Changes in fan behaviour, changes to rights models, changes to sponsorship models and changes to fan experiences.
Sports organisations are largely playing catch up and their ability to harness the potential of their human capital – and listen to customers and fans – will determine their success or failure in the future. Sports organizations that are digitally mature have transformed their business so that all factors that go into delivering a seamless digital experience are personalized and relevant for fans. On the business side, digital is so much more than fan-facing touch points. Businesses in sport need the same robust enterprise grade platforms as any other business and choosing the best delivery model is key which is opening up new opportunities for technology companies who are becoming a much greater part of the ecosystem.
With digital disruption accelerating across the board, pressure on traditional sports is increasing. Sporting are more aware than ever of the rising threats such as the shift away from traditional TV consumption and access to new entertainment formats. The writing is on the wall; sports organisations need to innovate in order to address changing consumer behaviour and compete against new forms of entertainment or other forms of leisure.
In the following pages we’ll be looking at how these advancements are driving change within the industry. To help guide us through this huge evolving landscape we are going to in deeper on the following six areas;
- Digital consumption
DIGITAL CONSUMPTION IS EVER EVOLVING
Go back 10 years and the main ways in which fans would consume are still fairly traditional. Through newspapers, magazine, TV, DVD and radio with most having websites although they would be quite primitive.
That all changed when cloud computing arrived and all of sudden people could stream content when they wanted from Netflix and the like which started to change consumers behaviours and more importantly expectations.
Combine that with the popularization of social media, even though Twitter, Facebook and YouTube had all been around for a few years by that stage, the mass adoption by sport still hadn’t happened, especially in the UK.
Football led the way here with Liverpool and Arsenal early adopters as they tested what had already become a phenomenon in the US with UFC, NBA and players such as Shaq O’Neill showing the way.
Rio Ferdinand and Robbie Savage were two of the first footballers to take to Twitter and used it as a way to respond to the press and interact directly with fans. This closeness to those who are most passionate about the sport plus the ability to bypass traditional media led to the adoption of social media at a rate few people expected.
But it’s not just the rise of social media that has led to disruption in digital consumption. Perhaps more important has been the mass adoption of mobile phones, with them as part of our person as wearing clothes and driving cars. They are an integral part of everyday life and on average people look at their phones a staggering 52 times per day (Deloitte’s US edition of the 2018 Global Mobile Consumer Survey).
Previously rights holders and broadcasters had been very reticent to let anyone view goals or key pieces of action anywhere outside their paywall. With the mass sharing of highlights on social media however, it meant that people were getting what they want, when they want it via their phone. Now you have Sky posting highlights on YouTube, BT showing goals as they happen on Twitter and apps such as Manchester United’s posting goal clips within a few minutes. All allowing fans to get what they want they want, when they want it and mostly importantly where they want it.
Mobile technology has changed everything. With improvements in wifi and 4G coverage, the imminent arrival of 5G and costs reducing, people can download or stream programmes with very little worry. This provides a challenge to broadcast incumbents as sports organisations have the opportunity to sell direct to consumer (D2C) via their own apps.
This shift will be one of the most closely watched changes in sport and presents both challenges and opportunities to those involved.
DEMOCRATISATION OF BROADCAST
It is not just about the way fans consume content. The very way in which broadcasters are producing the live events we treasured so much has been revolutionised over the past few years.
Competition in the space has heated up with new players in the game such as Disney and DAZN, not to mention Amazon, YouTube and Facebook. This has meant that traditional sports broadcasters have had to up their game by delivering greater in-depth analysis, better camera angles and more impressive, immersive experiences.
Most studios now involve an element of mixed reality as they record in front of green screens and plays are brought to life with the presenters’ part of that action now too. Examples include The Cube from Eurosport during the 2018 Winter Olympics and SkySports Monday Night Football coverage.
But one of the biggest disruptions has been the opening up of opportunities for sports organisations to go direct to their fans with coverage. They have a relationship with the fans which means they can now broadcast to them at low cost. A big driver has been the growing number of traditional TV providers making their content available on digital platforms, along with greater amount of sports content distributed digitally by rights owners and pure OTT providers. Ensuring a high-quality of service followed closely by challenges in creating sufficient content to generate long term interest means the uptake of OTT has not been as smooth as expected. Rights holders face a big problem in keeping pace with huge content production and distribution machines such as Netflix, Amazon or DAZN that are competing for the same entertainment budget.
It is now universally accepted that the future of sports consumption will be digital. While traditional linear TV will continue to play a fundamental role in the years to come, with older generations continuing to spend a significant amount of time watching the old way, the trend towards digital is clear and so is its growth potential.
Consumers are generally willing to pay for premium content across most regions and most age groups. Growth is strong for millennials whilst older generation plateaued. There is a dilemma for older generation of choosing between their pay TV and adding new OTT services.
Companies such as Tata Communications are at the forefront of this change by working with the companies like Dorna Sports, rights holder of MotoGP and others to provide the broadcast infrastructure and remote production for races to be streamed live through their own OTT (over-the-top) service.
It’s not just the speed and low-latency that have helped bring about these changes but negating the need for production facilities to be on-site is a huge shift. This means that Dorna can produce the whole broadcast from their headquarters in Barcelona, no matter where in the world the race is taking place. This not only generates huge cost savings but increases employee morale and retention.
This type of digital transformation has provided an opportunity for not only the rightsholder but also Tata Communications in showcasing their technology to the sports industry, and their wider customer base. A win-win scenario is built.
We are seeing the same with Amazon Web Services (AWS) working closely with the NFL and Formula One to offer fans insights beyond what they are used to seeing.
NextGen Stats allows AWS Machine Learning and AI technology to predict formations, play outcomes, routes and key events in a game. It’s not just for fans but the teams as they delve deeper into what went right (or wrong) in a way and speed never seen before.
Broadcast is just at the start of this revolution, but we’ll see more change taking place as new players come in, new technologies emerge, and more confident sports executives follow suit.
DATA IS POWERFUL BUT TREAD CAREFULLY
We have all seen the quotes saying things such as ‘data is the new oil’ as we see the richest companies coming not from natural resources but those who have most successfully captured and manipulated data on us and our behaviour.
Facebook has developed one of the largest, most powerful and targeted advertising models the world has ever seen. Despite the rough ride the company has been given from the regulators and controversies around their use of data, for example, the Cambridge Analytica scandal, they continue to be successful. It has proved to be too tempting for brands with the pro’s outweighing the con’s, for the moment at least.
We’ve seen sports see this value as well with more sporting organisations putting an emphasis on their own products such as apps and websites. The problem has been that during the growth of social media, sports teams were especially good at building up huge numbers of followers and then spending large amounts of money developing content to keep those fans engaged.
Dominance of major tech firms as a gateway to content is a major threat to industry revenues with the main beneficiaries of this approach being the platforms themselves. As a result, sports organisations have woken up to this realisation. Social media is still important for those original reasons but how they use it has changed significantly as they now work more like a hybrid of publishers and brands.
As a result, rights owners have been compelled to consider distributing content direct to consumer thereby further developing direct fan relationships and the potential benefits this brings. This means that they ultimately want to drive people towards the website or app for full access to content. This could be a live event, in-depth article or video series – the aim is to post a lot of content, as a publisher such as Sky or Unilad would do but with it directed towards their own space. This is where they can add paying subscribers, have their own advertising riding and gain data from fan profiles and behaviours on that platform.
The top sports also act like a brand in terms of using 3rd party platforms to drive awareness of their brand and use paid advertising to sell products and services. The likes of Nike and adidas very rarely post natively on social media platforms now as Jerry Daykin, an established voice in the world of digital advertising, pointed out recently.
Not only is data important for collecting, it’s also knowing what to do with it once you have it. CRM (Customer Relationship Management) is a key tool in the modern age of digital marketing and an area where understanding people and behaviours is the basis for its success. Many sports organisations will have customer touchpoints that include ticket sales, stadium merchandise, food/drink purchase, social media, website, online shop – with some of these hosted on 3rd party sites and details kept on different systems according to what they are.
This leaves an unclear picture. The more you can understand about fans and their behaviours, building up personas and studying patterns, the more this opens up opportunities to develop services that best work for them and make the experience more personal.
This data is not only important internally but also when working with sponsors. Brands have become much more sophisticated and expect any property with which they are considering a partnership to know who follows them, what they do and what they buy. Data that helps them to match their own audience to that of the property. The better the overlap then the more value it has to them. Without any of this taking place, it will be hard to attract brands and the full value of a sponsorship will not be extracted.
But there is also a flip side to this increased knowledge and access to data. They key is who has the data and what they do with it, with this month’s Amazon coverage of the Premier League a prime example. Sam Seddon made this point at our SQN event when he stated that with 6m people potentially tuning in, the data they can gather through their platform on who is watching what, when and when they tune in and out could be invaluable to them. Providing information that gives them the upper hand in any future negotiations;
I wonder whether the people in football are ready for that next phase of negotiation, when the people coming into it will know more about their product and how fans interact with it than they do.Sam Seddon – Wimbledon and RFU Client & Programme Executive, IBM
INNOVATING YOUR WAY TO THE TOP
If you’re not innovating, you’re standing still, and in a time when the speed of change is so fast you will soon be overtaken. The top organisations recognise that they have to keep innovating to stay on top and it’s never been easier in this time of failing fast to be doing it yourself.
When we talk about innovation we often think about technology, but it can be more fundamental than that. Innovation requires structure but people are key to success. Success factors to enable innovation are structure and strategy; actionable strategy with clear KPI’s, organisational structure, tools and processes around innovation plus external collaborations and partnerships. On the people side innovation requires diverse, skilled and talented staff, a corporate culture that incentivises innovation and a top down leadership approach and vision.
Formula One is constantly striving to keep up with the cars as we’ve seen in the recent regulation changes for the 2021 season. Cricket has long been an advocate with first Twenty20 cricket and now The Hundred as they move with the times to try and engage with audiences who have grown up with different experiences and expectations.
Golf is another example of an organisation open to change – testing new formats from GolfSixes, to the new end of season format for the FedEx Cup. They show an openness to change and ability to take it from an idea to public test.
A lot of innovation does originate from technology though. We’ve seen the introduction of VAR (Video Assistant Referee) in football, one of the slowest sports to change on the field, whiles new sports being formed such as the autonomous cars in Roborace and newly developed piloting skills in drone racing.
Then away from the pitch or track we have advancements in fan engagement, as we’ve already discussed, and athlete performance. Cisco recently extended their partnership with City Football Group as Manchester City realise the benefits of the involvement of a large technology provider and how they can assist in player tracking and implementing this into improving the team.
IBM’s partnership with Wimbledon is well established, with involvement in 30 occurrences of the championships. They have helped redefine what technology can do within a traditional sports organisation, evolving from basic branding to setting up the IT infrastructure, websites and apps that have developed over the years. Adding new layers each year to showcase their technology including integrating Watson, their AI platform, to take huge amounts of data and adding it to enhance the fan experience of the event
An example is the use of AI to measure crowd and player reactions to determine crucial plays and then clip that piece of action into a video ready to be distributed to the world via social media. Having such a huge event in which to test and showcase products is one of the key reasons why technology companies are becoming more heavily involved in sports.
Finally, in this section we have to talk about the incentives that are being put in place to create more technology advances as everyone looks to identify the next Google or Microsoft.
According to Colosseum Sport there are 4000+ startups, 100+ innovation hubs and a market value of around $8.7bn (predicted to treble over the next five years) globally. A huge amount of money is being put into sport by investors, federations and clubs as they look to unlock performance on the pitch and revenue streams off it. Arsenal briefly tested their own innovation hub, which only lasted one series with few signs of whether it was a success or not, and FC Barcelona have an ongoing tech hub within the club that has become well established.
In the US there is a more established model with the NBA constantly on the lookout towards new start-ups around the world and bringing them into the sport. This allows them to continue to innovate and stay ahead of the game, with many others looking to them as the blueprint for success.
As the industry becomes more business-like and less like the image we had of sport in previous decades, there will continue to be more investment in technology. At what point it will become too much we are yet to see but the opportunity for technology companies to partner with sports teams and leagues has only just begun.
SPORTS SPONSORSHIP AND TECHNOLOGY
In our previous reports on the power of sponsorship and sponsorship measurement we have seen the benefits that a company can garner from their involvement in sport. Although relatively new, having only really taken off during the 1980’s in a way we understand it today, the sponsorship market is thriving and evolving. Gone are the days of just eyeballs on a shirt logo, now it is about co-creation of content for delivery over digital platforms, integrated campaigns to both the brand and property audiences, shared story telling.
This industry, as much as broadcast, has come under most scrutiny as more points of measurement are available and results are demanded beyond being a director’s ‘jolly’. As Sam Seddon mentions in his podcast interview with us, IBM can track to a single digit what their ROI will be, or want it to be, from this year’s Wimbledon championship – how many other sports sponsors can say that? – and Tata Communications have to prove that what they’re doing makes a difference to the business’s bottom line.
We rely a lot on data driven metrics to prove that what we’re doing is working and that we should continue to get the dollars we need for sponsorship.Bijaya Basu – Marketing Director, Tata Communications
Brands have more clear objectives in mind and sports organisations have to be ready to meet that demand for results. Unlike any other marketing discipline, sponsorship can tap into so many different parts of a company and achieve so much if it is allowed to do so. From helping to attract and retain employees through to driving sales, from brand awareness to money can’t buy opportunities for entertaining key clients and prospects.
So, the challenge to agencies and brands is to understand what outcomes are to be achieved and what technology is available to help achieve that? New tools are being developed to help track brand mentions and logo exposure, which alongside key event periods can help to show how well the creative used can cut through, and benchmark against your competitors.
There are many fundamentals that stay constant in this area but having an awareness of technology and how it can benefit your brand or client is key to success.
WE LIVE IN AN EXPERIENCE ECONOMY
In a world where, in parts, there is so much that we own materially, there comes a point when it becomes quite meaningless. Thus, we’ve seen a shift in recent years towards experiences – those moments that live with you for the rest of your life and you can’t wait to tell everyone about them.
The ability for a sport or brand to be part of that moment has become the holy grail for many. Why turn up as a fan to a basic stadium to pay far too much for poor food and watch what is, in all probability, going to be an average game? For the hardcore fan this is part and parcel of following your team or player through thick and thin, hoping for that amazing moment when it all comes right, and you can say that you were there.
But for many who aren’t in this group it can be a one-off experience that is likely to stay with you for years. Sport in the US and esports in Asia are seen as entertainment properties and thus approached with an entirely different mindset. This opens up many more opportunities.
Tottenham Hotspur’s new White Hart Lane stadium is not only home to Spurs the football team but it is also set up for NFL and will host esports events. The fan experience has been fully taken into account with Harman Kardon surround sound and offers opportunities for fans to enjoy the atmosphere. All leading, all being well, to a more positive atmosphere once the teams take to the field.
The NFL has long led the way. Partly due to the length of its games, it’s been a full day out for fans with tailgates set up and food and drink for all. Interactive experiences are mixed in as brands look to ways in which to create that WOW factor. Dallas Cowboys recently showcased their AR player photo booth, enabling fans to get pictures with their favourite players within the 80,000 seat stadium.
During the 2018 Winter Olympics in PyeongChang, South Korea – home territory for Intel – they took the opportunity to showcase their VR technology by delivering immersive experiences around 30 events during the tournament.
These examples show just the tip of the iceberg in terms of what is going on within stadium technology right now and what is being worked on that will make a difference in how fans experience events in future. There will always be a place for the local football team and hardcore fans of teams, but for the top teams and bigger events, having an experience outside of the pitch or track is going to become a must.
The arrival of 5G, which is already being rolled out and tested within sport, could be a significant game changer as a fans ability to firstly get online when there are thousands of other people around – something that is still a pain point for anyone at a stadium or train station – and then be able to run AR, VR and video that is instant and high quality. Streaming will become easier and at lower cost and having an overlapping layer of information over the game will become possible.
There is always a fine balance to be made between engaging with fans via digital, especially at events, in a way that doesn’t detract from the live event but instead enhances it. Sports organisations and technology companies are still feeling their way in this promising field, and the fans will soon let them know when that line has been crossed.
Digital transformation is happening all around us with much of it out of sight. As the sports industry goes through a period of unprecedented change, the ability to recognise this market disruption and respond effectively is more critical than ever. Advances in the underlying infrastructure will enable more opportunities to become available in fan engagement, broadcast and personalization but to succeed, sports businesses must defend and grow their fanbases, and build sustainable business models that ensure ongoing profitability.
Digital technology offers the potential for sports organisations to enhance their engagement with both new and existing fans, and to monetise growing international audiences. However, technology increasingly brings the potential for disruption. Many traditional revenue streams are under threat as new rights and sponsorship models emerge that compel sports organisations to find alternative sources of income. In the battle for consumer attention, sports organisations are facing fierce competition for fan loyalty.
And with each advancement care needs to be taken in how it used so that fans aren’t being used and seen only as commodities and revenue streams but looking how it adds value to the experience and enables things to be done better. Not just for the sake of looking ‘cool’ or being the latest trend.
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