Cash, content and corona
As we approach the end of a turbulent year it would be brave to predict where we will be in 12 months’ time. When the Covid-19 pandemic swept round the world earlier this year, there were many predictions about accelerating new technology and innovations that would bring fans closer to sport inside and outside the sporting arena. The fan experience would be enriched as primary fan data is captured and used to develop more personalized experiences with VR, AR, streaming video, real-time stats, immersive behind the scenes footage and enhancements to the in-game experience.
Meanwhile, the single biggest sporting bonanza of the year, the Tokyo Olympics hangs in the balance. Originally estimated at $12.6 billion to stage with some suggesting it might be double and at least $2.8 billion extra due to the cancellation in 2020, this could eventually reach $30 billion. Even then it will be a very different Olympics to recent years. The announcement to add break dancing – also known as ‘breaking’ to the 2024 Summer Games in Paris illustrates another challenge facing the IOC in attracting new, younger audiences to watch the games. Some of the longstanding Olympic sports such as weightlifting, and athletics will be trimmed as a result. For the IOC, the name of the game is still attracting eyeballs as 73% of revenues come from broadcast networks like NBC and Discovery Channel.
Another media giant, The Walt Disney company already decided the future is streaming. And, despite Disney Plus racking up 70 million subscribers since the launch on March 24th this year, it is still a loss-making business. Unfortunately, all traditional Disney TV channels are losing subscribers, including ESPN that reduced from 90 to 80 million since 2016. For ESPN Plus to be profitable media experts suggest the monthly fee needs to be closer to $45. At present there are 10 million subscribers paying $4.50 per month. Even Elon Musk would struggle to raise the valuation to that level!
Essentially, the pandemic and intermittent lockdowns resulted in more downtime at home. As a result, rightsholders and media owners have gone into content overdrive to try and bridge the void of fewer live sports events. I have content coming out of my ears! One of the digital publications I am happy to pay for is The Athletic. Today I received an email with 2020 highlights selected from 50,801 stories, 10,614 podcasts and 2,244,812 comments from readers! This is the equivalent of 140 stories per day and 44 comments per story. Amazing achievement, I just need three years to catch-up.
At a time when governments are spending billions propping up the economy to survive the pandemic, the sport business is still attracting new investors. Today McLaren announced the sale of 33% of its F1 business for £185 million, valuing the total business at £555 million. As well as cash the new partner MSP Sports Capital brings sports management expertise from MLB, NBA and ESPN. With a third-place finish in the 2020 F1 Constructor’s Championship, the best result for McLaren since 2012, the team is heading in the right direction. Catching Lewis and the Mercedes F1 team will a different challenge.
Another franchise heading in the right direction is eSports according to The Kids Insights Future Forecast Report from The Insights People. In the US and Spain, 25% of 13-to-18-year olds watch on screen content with Twitch being the platform of choice. In other major European markets, the figures vary from 15% in France to 22% in the UK. Twitch audiences stayed above 2 million every month since April. This attracts continued brand investments in eSports that are projected to exceed $800 million this year. As a simple comparison, in 2016 total sponsorship revenue of tennis worldwide was estimated at $801 million. No wonder the ATP has just launched a new global marketing campaign, described as a significant brand shift aimed at speaking to a younger audience. The name of this new campaign? This is Tennis. Yes, I will leave you to check that one out….
There is no magic wand to remove coronavirus, but continued investment in sport is the only way to deliver personalized fan experiences. Whatever your predictions, have a healthy and prosperous 2021.