A sun-drenched day in July 2021, Novak Djokovic has retained his title in Wimbledon, Mumbai Indians have successfully defended the Indian Premier League trophy, the wood-panelled room overlooking the 18th green of the Old Course at St Andrews has a view full of spectators watching The Open, a new indigenous sports league Ultimate Kho Kho* in India is hitting the right chord with fans in India, the Olympic flame burns in Tokyo and Lewis Hamilton is preparing to succeed Michael Schumacher as the most successful Formula One driver with an eighth world title.
What could change?
The coronavirus outbreak has highlighted the vulnerability of commercials in the world of sports, with leagues, championships, teams deprived of valuable time on the pitch, where most of their income comes from. With the Summer Olympics, arguably world’s most-watched sporting broadcasts, being pushed back a year to July 2021 amongst other big-ticket sporting events like Formula One, Euro, NBA, NHL amongst others, stadiums full of fans and chants in days-night fixtures will certainly be a thing of the past for the coming months.
Greater changes await if we create.
- Strategic Business Modelling (Sharing of Franchise expense by rights holder) fast paced sports leagues will favor investors book.
- Revenue-share model between rights holder and broadcasters who find themselves with empty airtime.
- Efficient post pandemic recovery system for athletes, coaches, sports facilities, workers and staff by sports administrators.
- Public & Private Sector alliance for last mile delivery to ensure commercial fulfilment towards stadium support staff, grounds man and school development programmes.
- Spread the right message via sports leagues that Moneyball is not bigger than the sport itself.
- New viewing technologies to make the fan journey worthwhile - Forget 360, think 365
Reality is there is no beginning or there is no end. It is all about adapting. The ultimate goal is to observe what is happening in the market and quickly prototype the solution. If there is value for business, then why couldn’t this be a long-lasting solution to drive stability.
The commercials involved
To begin, the basics. In the simplest terms, there are three main income streams for sports leagues: broadcasting (sales of media rights), commercial (sponsorship and advertising partnerships) and match day revenue (ticketing merchandise and hospitality). The growth trajectory of all these are ensured by deeper engagement with fans and spectators. The reality in both sports and entertainment is that the more eyeballs on the product, the more valuable it is. With finances under considerable strain, many sporting outfits are adapting in order to withstand the next financial shock.
We might witness a value dip in on-ground activations and in-stadia promotions across sports outfits. On the other hand, if TV viewership stays healthy, advertising spends will continue to come to the leagues. The rise of indoor arena sports like Kabaddi, Kho Kho, UFC and eSports has shown that a stadium with around 2000- 3000 seater capacity can make a product appealing to home viewers. The rationale here is to create avenues for brands to explore and UFC certainly is creating the right noise with the recent pay-per-view sales of 700,000 for UFC 249 which was played behind closed doors.
Brands and sports bodies will first look to secure commercials and media rights. The one thing which comes out evidently is that the sports landscape will be different in five years from now. While no one can negate the importance of fans in stadium, the absence of “real” sport presents an opportunity for virtual technologies to grow. Immersive technologies could enable fans to experience games live in times to come, without having to be physically present – an idea that once may have been unreasonable, now seems like a rational thought.
The digital 24/7 fan during lockdown
Digital interactions from leading sports leagues should increase at times like these. Team owners could look to create direct link with fans over branded content of informal interviews between players and governments.
With no live content, stakeholders are competing more than ever with Netflix and with video games.
With government restrictions preventing fans from physically interacting with their favourite sports, there is an argument that clubs and leagues are relying on their social media teams more than ever before.
Team owners of local leagues have relied upon their content bank till now. They could go that extra mile and create multiple live video sessions discussing how they develop pre-game team strategy, locker room secrets, favourite moments etc. to build a sense of belonging and connect with fans.
The concept of virtual community in my mind would be a long-lasting solution, as we see the young adults feeling comfortable socialising virtually and what could be interesting to see is whether these virtual solutions becoming mainstream practices going forward.
In this scenario, the main question is – How do we capture the imagination of youth? NHL has put in exceptional effort in this regard by introducing Power Players. It seeks fans aged 13-17 to serve as youth advisory board helping increase fandom amongst youngsters. This new initiative is focused on selecting young hockey fans to help advise the League on hockey-related topics important to them.
Innovating to the new reality
Digital engagement tool has become a priority for brands connecting with consumers. It is never going to replace the television inventory purchased as part of a match day or studio segment, but one can imagine giving fans a great chance to directly interact with star players, coaches, team owners as branded segments. There is potentially a lot of value in that for brands because live programming on YouTube or Insta Live, will get a sweet spot north of 30 minutes to two hours with a captive audience. Any brand that delivers the enhanced experience will result in share of mind space, which historically has equated to share of wallet, too.
The reliance of sports leagues on broadcasters, and of sports channels on ad sales revenue is laid bare as they can include live monetisation models, such as gamified viewership (e.g. live payments for digital items, statistical analysis and quizzes and fan commentary)
Gamification of re-run matches are a possibility of lesser known matches. Hotstar’s social interactivity model could become bankable avenue for predictive gaming, based on IPL league matches or World Cup round-robin encounters. Fans could be gratified which supports sponsors and brands integration to create product stickiness.
According to Statista, India is predicted to have 628 million gamers by 2020.
People in isolation are naturally searching for new home entertainment options, and with no traditional sports on offer, esports are seemingly filling the live competitive void. They are attracting a wider audience, with an uptick in esports viewership across most mainstream platforms including Twitch increasing by 15%, YouTube gaming increasing by 15% and Verizon US reporting a 75% increase in gaming at peak hours. India itself saw a 180% growth in esports prize pools due to PUBG Mobile in 2019 with over 50 million PUBG Mobile players in the country alone.
Traditional sports are also looking to capitalise on the influx of engagement with esports. F1, NASCAR have taken pole-position in this move online and has notably put much of its social media and marketing focus into its online offering. While the eNASCAR series drew more than 1.3 million TV viewers, F1 held the inaugural virtual Bahrain grand prix with a host of Golfers, pop stars and Olympians going head-to-head on the virtual grid including Ian Poulter, former One Direction member Liam Payne, Nico Hulkenberg and Sir Chris Hoy. With 3.2 million viewers online and 1.2 million on broadcast, YouTube, Twitch and Facebook were bigger audience platforms.
Lessons of hope
In these difficult times, the ability of sports to bring people together is missed more than ever. The industry itself may be in new territory, but with the right strategies can emerge from the crisis stronger and more popular than ever.
Both 1918 (Spanish Flu) and Covid19 stand as reminders that humanity is always captive to the natural world around us. But just as these dreadful conditions are indiscriminate in who they infect, the similarly universal world of sport shall continue to unite people.
Fans are the key component of Sports eco-system and I believe they will take time to come back to stadiums. That is where technology and innovations will play a critical role. And one thing which comes out truly is whether you view on-ground, in-stadia or consume it at home, sports will play an integral role in integrating the sense of togetherness.
And as American football player Doug Williams said, “Never give up, never give in, and when the upper hand is ours, may we have the ability to handle the win with the dignity that we absorbed the loss.”
Tenzing Niyogi worked as a Sports Advisory and Segment Leader with Ernst & Young LLP (EY) before taking over as the *CEO of Ultimate Kho Kho League that is scheduled to be launched in 2021.