Today’s guest columnist is Meredith McPherron, CEO and managing partner of Drive by DraftKings.
Necessity is the mother of invention, and over the past two years during the coronavirus pandemic, we have witnessed long-overdue technology adoption in sports tech and entertainment change how we play, perform and connect with each other.
Record venture funding is flowing into the market, supporting both emerging and rapidly scaling disruptive new ventures. According to the recent SportsTechX VC Report 2021, a record-breaking $8.3 billion has been invested globally in sports tech through September, and $12.7 billion was projected by year’s end. This is more than the previous two years combined. Eleven sports tech unicorns also emerged in 2021 from across the globe, driving an increasing appetite for venture funding to support a sector clearly becoming mainstream.
Their framework complements our thematic focus on human performance, media and fan engagement, and sports and gaming solutions. When you also include igaming, mobile gaming, esports, metaverse and associated blockchain technology, the addressable market and funding in the space are even more significant.
As entrepreneurs and investors seek to develop and fund new companies in dynamic, high-growth markets, here are four trends in sports tech we are watching in 2022:
Expanding Our Universe With the Metaverse
NFTs were the breakout sports tech trend of 2021, and the metaverse will define 2022. While we aren’t flying around from miniverse to miniverse with our carefully curated avatars yet—though it may only be a matter of time—aspects of the metaverse will cross over into our day-to-day lives as we lean into a more hybrid, synthetic reality through gaming, glasses and headsets.
Meta (formerly Facebook) hopes to be at the forefront of this movement, with the metaverse market and its possibilities as vast as the potential metaverse itself. Morgan Stanley estimates the metaverse to be an $8 trillion market if it succeeds as the “next generation social media, streaming and gaming platform,” with Epyllion CEO Matthew Ball saying it could be worth up to $30 trillion over the next 15 years.
The coronavirus pandemic magnified our reliance on technology, allowing us to remain connected despite being physically distant. Regardless of what lies ahead with the pandemic, expect more 3D and mixed-reality interactions to continue into 2022 and beyond.
Look at the popularity of platforms like Roblox—which is up to 47 million daily active users after watching DAUs skyrocket 85% in 2020, compared to the previous year. The metaverse has a lure of the next gold rush for developers, brands, musicians and everyone in between jockeying for eyeballs, especially among younger demos, given that more than 50% of Roblox users are under the age of 13.
Seeing Is Believing With AR/VR
Augmented reality and virtual reality are like the shiny new toys you got for your birthday a few years ago and haven’t really spent the time learning how to use.
AR/VR emerged about five years ago as the next best thing but lacked practical uses in the consumer market. Since then, technology and society have caught up to AR/VR, and we’re seeing more realistic applications in gaming, training and in-venue experiences in sports and fan engagement.
If the highly anticipated Apple glasses and mixed reality headset are introduced in 2022, we will likely see a meaningful shift in adoption. The increased attention developers are putting toward the metaverse may also result in further AR/VR adaptation and usage.
Powering Personalization With Intelligent Data
Data is the lifeblood of everything we do, pumping behind the scenes to make experiences more personalized, relevant and interactive. AI and machine learning applications within sports tech and entertainment will elevate gaming, fantasy and sports betting experiences and provide greater utility to health and fitness and an array of fan engagement apps. The more intelligent enterprise will anticipate and deliver what we want and need, and help guide our decisions on everything from personal health and wellness to e-commerce, connectivity, play and performance.
My sports betting experience differs from yours, so having the technical competency to collect, analyze and act based on that data is necessary moving forward. While that’s easier said than done, companies are investing more time, money and resources into making it a priority.
Much like the usage and applications for AR/VR, how and when to harness AI and machine learning across a variety of sectors will continue next year and beyond.
It’s Game Time for Women’s Sports
This past year showed us that prime time is finally ready for our female athletes.
The 2021 WNBA Finals boasted viewership up 60% from 2020 and was the league’s most-watched since 2017. Viewership for last year’s NWSL championship was up 216% over the 2019 finale, making it the league’s most-watched title game.
Seeing both the WNBA and NWSL capping off their recent campaigns with record-setting viewership is a testament to the tireless work being put in, on and off the field, by players, leagues, organizations, sponsors, broadcasters and media to level the playing field.
The rise in women’s sports-specific outlets, including Just Women’s Sports, HighlightHER and On Her Turf, are spotlighting these amazing athletes, while continuing to fill the market gap, where only 4% of media coverage was dedicated to women’s sports despite women comprising 40% of all participants in sports.
Even the postponed 2020 Tokyo Olympics resulted in record-breaking coverage and viewership rates for women’s sporting events across the U.S. and Canada.
The market is moving quickly in sports tech and entertainment, and there is tremendous innovation underway. Questions around durability for many of the new ventures are fair and will require the normal discipline and diligence of strong investors to sort out. But you can bet 2022 will be another year of game-changing innovation.
Drive by DraftKings is a multi-stage venture capital firm investing in sports tech and entertainment. The seed-led firm announced its Venture Fund I of $60 million on October 20, 2021.