How Digital Transformation Affects How We Consume Sports

Prior to the pandemic, the idea of watching sports in 3D with your friends was supposed to be “the next big thing”. However, even though sports came back last year minus the presence of their fans, there was very little talk of being able to watch a game in 3D. There were NBA games where fans faces were shown on the side in the bubble, and the thunder dome, which is a similar concept, exists in WWE. While Microsoft Teams “Together Mode” allows fans to interact as if they are at the game, it is not the same as giving a high five to a stranger sitting next to you after a big play is made. While sports organizations were trying to deliver more than just the “game experience” I found it surprising that more technology like augmented and virtual reality has not been leveraged, especially since there is so much data available now regarding the way fans experience games. This got me to thinking how other things have changed in sports recently, both pandemic induced and not, and how these changes have shaped the sports industry, for both the teams and those who consume it.

One of the ways teams have adjusted to the use of new technology is how they monetize their digital audiences. Given only 1% of sports fans ever actually attend a game to begin with, the digital fan has always been important, but now more than ever teams and leagues need to determine how they keep that fan engaged. Pre-pandemic the rise of smartphones and tablets as well as streaming has led to an erosion of attendance at events. With more and more people cut the cord, there are a lot of sports leagues and teams that are looking to provide their own OTT services to share their sports directly with consumers and eliminate the intermediaries. One of the biggest examples is the English Premier League (EPL), which has its own dedicated online platform to show non-live content like highlights and the league’s community initiatives. Recently, ESPN and NHL just agreed to a deal where there will be 15 games streamed exclusively on ESPN+, a digital platform, allowing anyone to watch the game as long as they have the subscription. We have seen something similar with Facebook hosting MLB getaway games in the past few years hoping to engage with a younger customer and to have more of a social presence when watching the game. With the NFL, Amazon has exclusively streamed 1 game a year, but the ongoing negotiations for the next media deal have indicated that the Thursday night package will be streamed by Amazon and offered on the NFL Network for those willing to pay for that package.

NFL attendance has dropped over the past several years.

While physical attendance will come back slowly, fans will continue to engage through digital transformation. Additionally, fantasy sports are not a new phenomenon and have grown tremendously over the past several decades. On top of fantasy sports, online betting has risen through DraftKings and Fanduel helping to continue engagement. Instead of going to Vegas, or other places that have legal sports books, one can now participate in online gambling platforms that have partnerships with the sports leagues themselves. In fact, earlier this year DraftKings and ESPN entered into a content integration agreement and the Tennessee Titans have a direct collaboration with BetGM, which includes betting options on their app as well as branding in-stadium. Many people now use betting to have skin in a game that they would otherwise not care about. As online sports gambling becoming legal in more and more states (currently 14, with 19 more on track to do the same) increasing tax revenue, I expect these apps to continue to soar in popularity and therefore keep engagement in sports.

Esports has grown precipitously over the past 5 years

Digital transformation is also responsible for the growth of esports. My daily ESPN newsletter made recommendations about which esport you would like based on your stick/ball sport interests. I did watch some snippets of former big events, but I had no idea how popular this really was. In fact, it has become so big, that it will be an Olympic sport in 2024. Initially the pandemic shut down regular sports for several months, but esports kept moving along. The only change was moving their tournaments completely online rather than playing them in giant stadiums for people to watch. This allowed streaming platforms like Twitch to grow over 20% in terms of hours streamed and had increased engagement on the platform, given that people were stuck at home with nothing to do. The industry is worth $1.1 billion but is expected to grow to $1.8 billion by 2022, driven by the expanded audience from 120 to 495 million users in the past 5 years.

There is also a lot of opportunity that exists given that people love personalized content. Our class has discussed how people are more willing to share data if they get a benefit out of it. 60% of millennials are willing to share data for promotions and 71% say they would rather see ads that are focused on their interests. The digital tools that now exist will allow for fans to have a more personalized experience when watching a game. For example, a person who likes a more analytical view of a game can watch with advanced stats on the side of their screen, or be able to watch a game with twitter reactions throughout the game. This will also allow teams to unlock new revenue streams as they get a better sense of what their fans want to see.

15 comments

  1. Like your post Ryan…When it comes to digital transformation I think that sports has been a great place to see technology flourish. Recently societies’ changing views on gambling will be a driver for this type of innovation to continue to play out. A friend of mine has invested in an in game betting company that allows fans to bet on in-play outcomes. Similar to prop bets at Las Vegas Casino’s a fan can place a bet on whether a particular team will make a 1st down or the likelihood of a Touchdown. They can play for against their friends similar to Fan Duel or compete in larger weekly competitions. I see their being a large market for this type of business in the future especially as leagues continue to embrace gambling as a growing revenue stream

  2. Nice post Ryan. I really like your point about fantasy sports specifically in the NFL. With the popularity of fantasy sports and red zone many people would prefer to watch the game at home instead of focusing on one game the whole time. I am interested to see how the league will combat this problem in the coming years.

  3. abigailholler1 · ·

    The data you’ve including in your post is fascinating! The major drop off in TV viewership is something I’ve heard about anecdotally, but it’s quite stark when you compare across years. Esports is an area of the sports industry that is quite cool – I watched a netflix documentary a year or so ago (called ‘7 Days Out – League of Legends’, highly recommend) which showed teams getting ready to compete in an Esport tournament. The sheer number of spectators at the event, and the seemingly similarities to contact sports totally surprised me (think: jerseys, sponsorships & arenas). It had me wondering if overall sports viewership isn’t necessarily dropping off, but rather just shifting in interests. In our historically less-digital world, contact sports were the only option for content; in a more digitally enabled world, maybe esports is the new football…and to your point, Ryan, maybe virtual reality will be the future of esports!

  4. conoreiremba · ·

    Great post Ryan and given your interest in stick/ball sports, I will have to direct you to the most popular sport that we have in Ireland, Hurling. Think lacrosse, but combined with field hockey and a hint of rugby. But I agree that the dynamic has changed and it seems as if today’s generation of sports fans are increasingly consuming sports digitally as the norm. For me, I just don’t think you can beat the in-stadium experience, there’s nothing like it, no matter how customized digital viewing becomes.
    The latest development that blows my mind now though is Fan-Controlled Football (https://www.fcf.io/). It is almost like a blend of esports and real-life football which is a cool way to engage fans but I can’t help but think that it is fad-league that will suffer the same fate as the XFL and AAF. Surely Johnny Manziel will take the advice of fans for only so long.
    In the future, as fans start to return I think that teams will look at personalizing the in-stadium experience as a competitive advantage, by increasing the revenue per fan per game through the use of some of the technology that Olivia demonstrated in her presentation, perhaps even partnering with in-game betting as you mentioned for the Titans. But I just hope that we can return soon and not just 12% capacity either.

  5. therealerindee · ·

    I really like your thought about tailoring your viewing experience to your preference of game breakdown. I would love to see awesome AWS stats for an entire game because I think they are fascinating. It really will be interesting to see if personalized viewing is the next step in watching sports, which would be super detrimental to the arenas and stadiums that host games. I wonder if things continue to trend more to the home viewing experience if leagues will start to push back on some things.
    Also, a complete aside, I do not believe esports to be a true sporting activity and therefore should not be included in the Olympics, and I will die on this opinion mountain.

  6. As a big sports fan I enjoyed this post. The point you made about how there has been a lack of innovation in sports viewership is important. I would have thought by now that teams and leagues would have their own apps that deliver exciting content and value that draws people to watch each game from start to finish. A big part of why interest and viewership has declined is because of the short attention spans that younger generations have. They no longer will sit down for hours long games because there is something else that is fighting for their attention. If sports leagues and teams can push for exciting features for the fan at home, maybe that can recapture some of that audience that has drifted away.

  7. olivia_levy8 · ·

    This is a great post. I ran into this a ton when doing research for my presentation on IoT in stadiums, the reason they need to drive fans back into the stadium is in part because of the new fan experience and how we now consume games from home. The best example to show this is the idea of how we now watch sports, on the couch, with our phone in one hand, laptop in another, tracking 3 different games, the money line, standings etc. The way we consume and interact with sports has changed vastly, especially with the increase in sports betting. Not to mention how we have 10 different tabs open and go on Twitter to check what our favorite sports broadcasters are saying and watching replays of the best shots. Really great analysis and post!

  8. alexcarey94 · ·

    Great post- very interesting facts in here. I find it interesting how TV viewership has gone down over the past few years (it makes sense with the growth in social platforms like youtube and tik tok to consume video) but I also wonder if watching TV has declined due to the increase in streaming? I think it was very intersting to see you can now package Disney+, ESPN+ and Hulu together for only 12.99 a month. I wonder if this is factored into some of the stats and if companies like ESPN are trying to package or get away from cable since the younger generation is moving away from traditional cable packages.

  9. lisahersh · ·

    Thanks for writing about this, Ryan! I must admit that I don’t really watch sports (except the Olympics) but my husband is obsessed so it’s often my background music while studying or cooking. I was surprised how much TV viewership has gone down for games though! My husband’s sports watching is pretty much the only time we use cable. He doesn’t have any sports streaming apps as most of the games are available through our cable contract. Funnily enough, it’s actually cheaper for us to have a bundled high-speed internet + cable package vs just high-speed internet or we probably wouldn’t have cable.

  10. shaneriley88 · ·

    Wicked post, Ryan. You covered a lot of ground and packed in a lot of rich data. I’m all for a more analytic viewing experience. However, I’m a bit particular, especially when watching it comes to sports I played. I’m not sure any DX level will compete with my draw to the “in-stadium experience,” as Conor stated. Catching warmups, the hum of a Zamboni, skate sounds, and the echo of a puck on the crossbar is something I miss and have certainly taken for granted. It will be interesting to see how clubs/teams address this. I’m blown away to learn that e-sports is on its way towards the Olympics. I can understand the allure, having lived in South Korea for a few years; however, I’d rather see something like mixed martial arts, bowling, or even surfing.

    1. shaneriley88 · ·

      ex-post: Surfing made the cut into the Olympics (2020).

  11. Scott Siegler · ·

    This is a really interesting topic Ryan. I’m especially interested in the deal that the NFL is working on with Amazon. I feel like sports and news are the only two categories of content that are anchoring people to cable these days, and so much of the NFL viewership is individuals who pay for traditional cable box sets, and are less interested in casting/streaming games, so it will be very interesting to see how much viewership drops off initially on the Thursday night games. While I feel like it is inevitable that sports viewership is moving to streaming platforms and society will need to adjust, it’s going to be interesting to see this change unfold in slow motion.

  12. changliu0601 · ·

    Great post Ryan.I am a sports lover.What i want to do most here is to watch NBA and US open live. I believe sports fans like me crave for interactivity and the excitement. I read a article which talks about the deployment of AR and VR to create customized sports broadcast experience for sports lovers.AR and VR will permit the creation of immersive media, allowing every user to display stats, social media feeds, betting crowds or other screens around their TV.

  13. courtneymba · ·

    Awesome post, Ryan! As someone who doesn’t follow sports, this was both really educational and interesting for me. I had no idea that esports were taking off like that! I wonder when it was decided that they’d be part of 2024 Olympics and if that was determined pre-COVID or more of a result of COVID.

  14. kellywwbcedu · ·

    The world of sports is constantly changing and adapting. Your early talk of watching sports in 3D made me think of watching sports with holograms… now that would be some digital transformation! I find myself watching esports highlights on youtube more than I watch regular sports highlights! It will be interesting to see if the Big 4 leagues can pull the attention back to their games and a big part of that will be the customization of the viewership that you touched on before. If fans are able to watch these games just how they refer to, it will draw more fans to do so. I believe these leagues will have to adopt the “Burger King mindset”… have it your way!

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