It is a testament to sport’s global appeal that the industry’s value continues to grow at a remarkable rate. The rights holder’s worth among media partners, sponsors, and investors relies on its global reputation and its ability to market to consumers. According to the Sports Global Market Report 2022, the value of sports is expected to grow from US$354.96 billion in 2021 to US$501.43 billion by the end of the year.
Among sport’s largest sources of revenue, media rights sales surpassed US$52.1 billion in 2021, as per the Global Media Report, published by SportBusiness – representing a year-on-year increase of US$7.2 billion in the wake of sport’s widespread Covid-19 shutdown in 2020, and in the region of US$1.1 billion over pre-pandemic broadcast spend.
As direct-to-consumer (D2C) technologies become more sophisticated and rights holders expand their digital footprint, there is capacity for the industry to grow its value further; driven largely by the influence of its top-tier properties, but also the digitalization of the entire sporting pyramid, with many smaller properties exploring their own digital transformation.
We are already seeing non-traditional revenue streams come into focus on the back of sport’s digital transformation. Despite continued demand for the live-sports experience, sports properties are discovering new ways to monetize the non-live fan experience, including the launch of freemium streaming platforms, the distribution of high-performance data, and the creation of mixed-reality features via mobile.
FAN DATA UNLOCKS UNTAPPED REVENUE STREAMS
Without the fan, sport would mean very little outside the game and wouldn’t drive innovation at the level that it does today. Through innovation, the sports industry is able to expand its digital product and content offering and adopt technologies that improve the fan experience at every stage of the fan funnel. This unlocks new engagement opportunities that enable sports properties to capture and ingest more first-party data that inform and diversify the organization’s monetization strategy.
In order to drive engagement, digital media presents sports entities with alternate avenues to connect with fans worldwide, while the advent of mobile technology is accelerating their ability to take content directly to the consumer. In response, consumer appetite for always-on, frictionless sports content means the industry faces a challenge to meet consumer demand in multiple markets, as well as an opportunity to enhance its digital inventory based on the wants and needs of its casual and core fan base.
Just as revenue streams can be traced back to the fan, and digitalization allows properties to personalize the consumer experience, data underlines sport’s future profitability. Therefore, understanding the fan is essential to the organization’s ability to maximize its revenue opportunities – and requires both a strategic approach to the entity’s content delivery and is underpinned by a robust customer database.
TURNING DATA INTO COMMERCIAL OPPORTUNITY
There are many ways sports properties are diversifying their revenue streams. In order to evolve a monetization strategy that utilizes the organization’s digital capabilities, an entity must first understand how their current infrastructure supports value-generation inside the business and, importantly, where it can adjust its operations to improve return on investment (ROI) and generate new sources of income.
- Broadcast & OTT: Sports properties are able to generate greater value in the sale of broadcast media rights by investing in research and development (R&D) in digital content solutions that enhance the viewer experience. In an interview with N3XT Sports, LaLiga Tech’s product lead, Fabio Gallo, explained that the adoption of “data-driven and data-compatible solutions” aren’t only important for fan engagement, they also support the Spanish football league in its negotiations with third-party media rights holders. “LaLiga Tech’s primary role is to leverage LaLiga’s digital assets and to evolve them into more strategic market solutions,” he said.
- Sponsorship & Licensing: Fan intelligence is fundamental to building a fan engagement strategy. Many sports properties seek to build a customer relationship management (CRM) capability that the organization can leverage when negotiating sponsorship and licensing deals with prospective brand partners. Speaking to SportBusiness, Liverpool FC’s Senior Vice President of Digital, Drew Crisp, says the club is taking a different approach by adopting a customer data platform (CDP) that helps to “curate” the journey for each of its 40 million fans. He said: “The fundamental part of our strategy is, how do we gain that insight and information for the good of the fan, the good of the club, and the good of our partners in equal order.”
- Tickets and Merchandise: While digital ticketing is presenting rights holders with vastly more fan data points, event organizers and stakeholders are in turn able to monetize the digital in-stadia experience by bringing personalized offers to the fan. For example, in 2021, the National Football League (NFL) and Visa presented fans with the first cashless Super Bowl at Raymond James Stadium, in Florida. According to Visa’s research, customer spend increases by 25 percent at venues where they don’t deal with cash, highlighting the opportunity for sports properties to curate the fan journey via mobile – from the sale of tickets and merchandise through to in-event brand-partner promotions.
- Performance data: The decision to invest in high-performance data analytics is proving beneficial, not only to athletes and coaching staff, but also to the fan experience, with in-game athlete data nurturing audience engagement. As a result, the value of the sports analytics sector is expected to grow to US$8.4 billion by 2026, more than trebling from its US$2.5 billion market value in 2021. How sports properties – and athletes – capitalize on this upward trend will depend on their capacity to analyze performance data and understand its value to their team, partners, and fans. In an interview with N3XT Sports, Intel’s Director of Sports Performance Technology, Jonathan Lee, predicts that the integration of athlete data into the broadcast experience will only help build advocacy for and influence the proliferation of performance analytics technology.
- Sports betting: In order to see the impact sports betting is having both on fan engagement and the industry’s rising value, decision-makers should look no further than the US market, which saw legalized sports betting double in size through 2021. According to a report published by data intelligence company Morning Consult, Americans wagered more than US$52.7 billion on sporting events throughout the year. N3XT Sports Chief Operating Officer, Hisham Shehabi, says that growth across the sports betting market has also seen increased investment in data analytics tools to better understand fans and when and how they bet on sports.
WHAT’S N3XT?
The digital fan is changing how sports organizations operate. On the one hand, properties are exploring how their digital inventory can carve out new revenue streams by personalizing the fan experience with the help of customer data. On the other hand, they are faced with a saturated technology market in which established software companies and startups are seeking to capitalize on sport’s digital transformation.
In order to navigate this thriving marketplace, an organization must first understand where its digital marketing strategy is already succeeding, and improvement is required, before updating its infrastructure. By establishing a clear roadmap for the property’s digital transformation, only then can it fully understand which solutions will receive the best return on investment (ROI) for the company and how data is able to drive revenue growth.
Our team at N3XT Sports collaborates with event organizers and rights holders to help them develop and implement their very own digital transformation and understand where they can improve their internal infrastructure, operations, and digital capabilities to generate new and greater revenues.
To find out more about what N3XT Sports can offer your organization, please fill out the form below and we’ll be in touch. We look forward to hearing from you.