Culture cash

“It’s up for debate. Ultimately, money talks. And, despite having all these global values, money and commercialism is going to dictate it.”

This is a statement that could apply to many walks of life but especially the sports and entertainment industries. And to a large degree, you hope money is not the singular driving force that will define the cultural fabric of how we live, work, and socialize in the coming years.

But then look at some recent headlines. Amazon became the largest advertiser in history with total advertising and promotional costs of $16.9 billion in 2021, an increase of 55% from the previous year. Mobile continues to break new records as detailed in App Annie’s State of Mobile 2022 report where consumers spent $170 billion on apps. Publishers released 2 million new apps and games bringing the cumulative total to 21 million. The merger of Mexican broadcasting group Televisa and Univision will result in a new streaming service to target the world’s 600 million Spanish speakers. According to Newzoo, esports revenues exceeded $1 billion for the first time with viewership at 728 million in 2021.

Scale and size are key. The Athletic subscription sports publication was acquired by the New York Times for $550 million in January and is now exploring how to leverage the NYT muscle. One of the founders of The Athletic, Alex Mather is quite open about the way forward: “Don’t be afraid to charge for content you create. You’re never going to know how to do it right and what folks want until you start charging.” Everything has its price, or so it seems. As a satisfied subscriber of The Athletic I hope they don’t start charging more. The quality, quantity, delivery, and price are fine just as they are.

But simply investing more resources into new partnerships and content production is not enough. Data from research company Antenna found that 31% of users who signed up for HBO Max within three days of Wonder Woman 1984 being released on the platform had left within one month. With Netflix, Disney+ and Amazon Prime all investing billions into expensive programming, the stakes are high. Acquiring subscribers is one challenge but retaining them is another. And this is where sport has a small advantage, although it is also expensive to produce high quality content.

The opening quote was made by Steven Martin, CEO of M&C Saatchi Sports & Entertainment in an article about the growing appeal of the New Zealand All Blacks. Despite the impact of the covid pandemic, the All Blacks has more than 20 commercial partners and recently signed French engineering and construction giant Altrad, in a six year deal estimated at €70 million. They also have a deal with petrochemicals giant Ineos, that has attracted criticism from climate activists due to the production of single-use plastics.

Taking money from a company perceived as contributing to the climate crisis is a risky move but one Richard Thomas, chief commercial officer of New Zealand Rugby is willing to take. “It’s up to them to answer questions around [whether] what they do is sustainable, not us. However, we need to look ourselves and our fans and stakeholders in the eye and say ‘we believe in what they are doing’, and we do.” Ultimately, fans connect with the culture and values of the organisation, club, team, athletes, and officials representing the All Black brand. How far can you go without compromising the original values and culture that has evolved over more than 100 years?

This is a dilemma many leading brands in the sports and entertainment space now find themselves, coming out of a tough period seeking to replenish the coffers and build for the future. In this turbulent post pandemic market, brands would be wise to consider how to cash in without giving up their most valuable cultural identity and loyal customers. As Warren Buffet used to say, “price is what you pay, value is what you create”. Or you can just take the culture cash and hope for the best of both worlds.