‘Digital adoption will become table stakes’: The rise of data-driven sports and where they’ll be in 2030

How will the sports industry look in five years’ time? In the larger scheme of things, five years is a drop in the ocean when we stand it alongside sport’s rich history. However, if we consider the speed that digital transformation is shaping the sector in 2022, including the proliferation of direct-to-consumer (D2C) media and the ease with which consumers shift between digital platforms, it may be unsurprising that the value of the sports technology market alone is expected to more than double in size by the end of 2027, surpassing US$42.5 billion.

Although the future of sports consumption holds many unknowns, if we look further into the future, into the 2030s, we expect to see a time when digital adoption will no longer be the trend it is today, but rather a standard that only the successful properties have already undergone. Data-driven decision-making will have become the norm before the end of the decade. Therefore, in order to remain relevant in a disruptive, digitally native market, and adapt to changing consumption habits among fans, many sports entities are all too aware of the need to digitize their operations to stay competitive in the years to come. 

Data will be key to this transformation. According to research carried out by the International Data Corporation (IDC), cited in our 2022 Digital Trends in the Sports Industry report, data consumption is set to grow by 23 percent through 2025. As the industry’s innovation leaders implement data analytics tools to drive better business decisions, it’s vital that they also support the wider industry to integrate digital solutions that generate more equitable value across the sports market and give rights holders an opportunity to draw on their own data estate to diversify their content offerings and revenue streams.

Speaking to the current state of play for data capture inside sports organizations, N3XT Sports Chief Operating Officer, Hisham Shehabi, explains that – despite the various permutations of data available to the industry – rights holders “seem to be struggling to understand how to use that data for insights” and are unsure how to connect different datasets generated via the property’s respective domains and digital assets. 

“There is definitely a gap in knowledge around centralized data and how to leverage data that everybody in the organization has access to,” he expands. “Although everybody appears to understand that the shift to D2C is happening and that they need to own their data points and adopt technologies that maximize audience engagement, data literacy needs to increase inside organizations for this to happen.

“Whether it is fan data, operational data, or sports data, there doesn’t seem to be a shortage of data and sources of data,” Shehabi continues. “However, for sports organizations to be able to ingest and share datasets that inform better decisions in the boardroom, the organization’s data lake needs to be really easy to interpret and requires investment in data-literate personnel.”

Whereas the traditional sports revenue model is built on the sale of broadcast and sponsorship rights and the organization’s ticket and merchandise income, new entrants to the sports market are being built on data-driven infrastructure designed to capture and monetize digitally native audiences in alternative ways. In return, this enables data-driven organizations to adapt to disruptive revenue streams with greater ease than those yet to digitize their assets. 

In 2022, this includes investment in cryptocurrency and non-fungible tokens (NFT), while several major rights holders are also considering ways to leverage the metaverse to create immersive experiences for fans and sponsors. As fans become accustomed to mobile-supported content, rights holders that fail to digitize and adopt disruptive technologies are likely to lose the interest of their audience over time and therefore reduce their opportunity to monetize future innovations as their share in the market diminishes. 

For instance, considering that revenues generated via the video streaming market are set to grow to US$330.5 billion by 2030 – almost five times’ its US$70.6 billion valuation in 2022 – sport’s digitalization is imperative if organizations are going to compete for audience attention when their media rights cycles come up for renewal. They’re not only in competition with new sports properties born in the digital age – traditional rights holders are going toe-to-toe with the wider media and entertainment sector, too, including burgeoning verticals in mobile gaming and the social and virtual-content spaces.

“Digital and data-led content helps to grow your audience and your audience is what drives media value,” Shehabi says. “So, without digital and data capabilities, you don’t have an audience that’s engaged nor access to consumers who drive up media rights and sponsorship value. Sport is still an anchor for broadcast; however, while other sports organizations are currently in the process of building their digital acumen, there will be the ones which eventually take over a bigger piece of the audience pie.

“If we look at the value that the media industry is paying for sports, yes, it is growing, but it’s not growing proportionately for everyone. Now that consumers and stakeholders are mobile-native, and other properties are more equipped for the digital era, digital adoption will become table stakes by 2030, and it is going to be very difficult for a sports organization to retain its relevance if it were not to invest in their own digital transformation.”

As rights holders digitize their content offering, including via their own over-the-top (OTT) streaming platforms, mobile apps, and social media channels, traditional sports properties are adopting digital infrastructure to diversify their audiences, too. For example, World Rugby grew its core fanbase by 61 million during the 18 months leading up to the 2019 men’s Rugby World Cup in Japan, including a significant increase in its female support, which at the time was expanding at six times’ the rate of its male support, globally.

Looking ahead to this year’s deferred 2021 women’s Rugby World Cup in New Zealand and the 2023 men’s tournament in France, World Rugby – which was founded as the International Rugby Football Board (IRFB) in 1886 – has appointed French technology services company Capgemini as its global digital transformation partner to support on both the governing body’s men’s and women’s strategies. 

Emphasizing the opportunity to grow women’s rugby union alongside its digital transformation, World Rugby’s Chief Executive Alan Gilpin said that the partnership will “invest not only in our major women’s competitions, but also in driving a core element of our strategic plan, as collectively we strive to develop more female leaders throughout the global game”.

If we cast our minds back to September 2017, when the International Olympic Committee (IOC) awarded hosting rights for its 2024 and 2028 summer events to Paris and Los Angeles, their joint allocation became the first in the Olympics’ history to put “sustainability, inclusiveness, and innovation” at the heart of a memorandum of understanding (MoU) signed by both of the cities’ respective mayors.

This represented a significant step for the Olympic Movement and the efforts to increase the rate of digitalization inside its National Olympic Committees (NOC). As part of the governing body’s Olympic Agenda 2020+5, the IOC aims to expand the digital capabilities of those sports that are “currently digitally underserved”, meaning that the forthcoming Olympic Games – in collaboration with their Paralympic counterparts and TOP partners – will act as catalysts for transformation inside global sports federations and demonstrates the influence rights cycles have over sport’s digital evolution.

Elsewhere, regional rights holders are also modifying the length of their broadcast rights contracts in order to provide greater stability for their product. For example, whereas some European football markets were traditionally restricted to auctioning their media rights every three years, many are now exploring five-year contracts with domestic and international broadcast partners.

As Europe’s top leagues continue to digitize their content offerings, longer-term deals allow rights holders to invest in their digital transformation earlier and will, in theory, give them more time to establish a loyal digital fan base and therefore greater leverage by the time their broadcast rights come up for renewal. 

“What’s happening now is they are creating room for experimentation, but it’s also to do with how quickly the industry is moving towards digital media,” Shehabi explains. “There’s a greater focus on stability. By locking in a long-term rights contract, the earlier you make your investments in digital infrastructure, the more you are able to influence the next rights cycle. 

“With the media landscape shifting so quickly, investing in your infrastructure and the connection to your audience gives you resilience in this changing landscape, and also the ability to diversify your revenue mix by exploring all the possible ways to monetize your assets in a digital world.”

Athletes and coaches talk often about living in the moment and refuse to look past their next game. For the overarching industry, however, while organizations invest in near-term goals as part of their digital transformations, understanding where the sector is moving in the next five to 10 years is important for properties to establish their own digital roadmap. 

This includes how and when they invest in solutions that seed opportunities for commercial growth in the future. In order to understand this, N3XT Sports offers the industry access to a free Digital Assessment Tool (DAT), designed to give sports properties clarity around their digital readiness and the best route for digitalization.

“To create this type of digital architecture, sports organizations will work more like tech companies; hiring more development, engineering, and media talent, and that means the organization should shift accordingly,” Shehabi says. “In order to be relevant in the year 2030, rights holders must already be investing in data solutions and their digital literacy.

“The new crop of sports administrators coming in are more digitally literate than people inside sports organizations today. They will push the rest of the organization to adopt data insights at a more senior level. Where we are now, it is inside the marketing, communications, and IT departments where we find sport’s most data-literate talent and that’s because the stakeholders they liaise with day-to-day are already working in this way.”

As the industry navigates this digital evolution, N3XT Sports is supporting teams, leagues, and federations in the development and implementation of digital solutions that empower data-driven decision-making and help execute the organization’s long-term fan engagement, athlete development, and commercial strategies.

To find out more about what N3XT Sports can offer to your organization’s digital transformation, please fill out the form below and we’ll be in touch. We look forward to hearing from you.