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.
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.
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.