Pro sports is a live events business, but the industry has been dark since the NBA suspended games on March 11th. As a result, domestic sports leagues have suffered sizable unexpected losses. The Sports Innovation Lab (SIL) suggests that North American teams will lose out on +/- $4 billion in live events before the end of Q2 ’20 and that doesn’t even include the revenue lost on the NCAA tournament or NFL draft (on a global basis the number is likely north of $10 billion). Josh Walker doesn’t pretend to believe sports teams are going to be able to recover all of that lost income, but the SIL co-founder insists that the implementation of new technologies across sports organizations can help to diversify revenue streams (reducing an over-reliance on broadcast and ticketing revenues) and create some incremental value.
Howie Long-Short: COVID-19 has shown “just how vulnerable pro teams are”, but Walker says that “even before the outbreak [the SIL] maintained the business model behind them needed to evolve.” That’s because the market intelligence firm believes capturing the ‘fluid-fan’ – not the hardcore fan – is the key to long-term growth. “The fluid fan is open to change, believes in the power to choose (think: customization) and is actively using advanced technologies (think: video chat, voice activation) in their non-sports lives. Those individuals expect to have access to the same features when watching live sports and that’s currently not the case.” The fact that ‘fluid fans’ remain unable to view a game in a social setting and are still forced to use a second screen to access sought after information (think: advanced statistics) – when the technology to integrate both into digital broadcasts exists – reflects just how far behind the curve pro sports teams sit.
It’s fair to wonder why pro sports teams aren’t leading the way in terms to technological innovation and implementation. Walker believes that it’s a combination of two factors. “Pro sports has changed dramatically over the last decade or two. The teams have transformed into billion dollar multi-media companies, but many owners continue to operate like it’s a small family-owned business.” Hiring from outside the industry would help solve that part of the equation.
The other hurdle pro sports teams face when looking to adopt nascent technologies is the lack of ROI. “Historically speaking, the question from team owners has always been where is the return and with so much money being made from broadcast, there simply hasn’t been an urgency to invest in digital. But the idea is those two things aren’t dissimilar – they should be integrated.” It’s likely going to take a change in mindset for pro sports to undergo a digital revolution.
Dr. Anthony Fauci has stated that if the games are to return this summer, they’ll need to take place without live spectators. While that’s not great news for a sport like MLB that relies heavily on ticketing revenue, playing behind closed doors should provide an opportunity for product innovation and the development of new media experiences. It’s certainly not realistic to believe that all of the lost revenue can be recouped, but Walker believes “new OTT subscriptions streams” – which will offer fans a more social experience (think: watch party) – and integrated commerce technology is how much of the newfound revenue will be realized.
The pandemic has also forced teams to think about how technology will make attendance safer once fans are permitted to return to the stadium. Access controls at building entry points (think: thermal cameras), AI that can assist with crowd flow and touch-less concession technologies are among the solutions likely to be implemented. Walker said, “there’s also been a lot of talk about mobile technologies that can do contact tracing and help fans determine if they’ve been near someone who has been infected with the Coronavirus [so they can avoid the stadium and eliminate the risk of spreading it further].”
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