Introduction to the "Technology in Sports" Series
Updated: Feb 8
For years now, the sport industry has relied on digital technology to generate new business, whether it is by enabling the acquisition of new fans, transforming the current fan experience, or improving operational efficiency.
It has even driven the creation of new forms of competition as observed with the emergence of eSports.
These technological advancements had the industry experiencing constant YoY growth, contributing about 1.5% - 2% of the World´s GDP. In 2020 though, with all the events related to the Covid-19 pandemic, the industry suffered a huge impact in terms of revenues. In fact, while Statista projected a 5% growth between 2019 and 2020, their latest adjusted projection was a decrease of 43%.
It seems fair to say that the industry will not be the same from now on, at least in the short – medium term. Many questions arise such as:
How will fans approach the live sport experience once teams can bring them back into stadiums and arenas?
How will sports broadcasting and advertising evolve?
Will sponsors keep supporting right holders the same way?
Are some of the most recognized teams or leagues at risk of disappearing?
In essence, the question is how commercial business models will evolve for sport organizations. For instance, let´s take a look the revenue breakdown of the top 20 football clubs as published in the 2020 edition of the Deloitte Football Money League:
Probably, most of the matchday revenue, if not all, will be lost in the 2020/2021 season given restrictions on fan attendance to arenas and stadiums. This would drive a series of “domino effect” related events that would impact the other sources of revenues:
Sponsorship deals and activations will change if the live action is removed from the equation.
As reported by eMarketer, TV audiences and TV sport advertising are decreasing, which may lead to fewer broadcasting rights revenues.
Along the same lines, sport viewership is fragmenting due to the emergence of digital platforms. While the following eMarketer graph shows the increase in sport viewership through digital platforms in the United States, it would not be strange to notice similar trends worldwide.
Technology will drive new opportunities for revenues in the sports industry
By now, it seems clear that live sport competitions will not be the same again and consequently, the sport business model is bound for change. Adopting technological solutions should be the way forward for sport organizations to recover from this impact and generate new lines of business that will enable them to recover the lost ground.
Consulting firm Atos identified four potential transformation areas with challenges and opportunities for sport organizations:
Similarly, back in 2019, the Global Sports Innovation Center carried out a survey looking to identify the areas in which sport organizations needed to focus the digital transformation efforts on.
The Disruptive technologies and their potential areas of impact
In this scenario, we wanted to create this “technology in sport” series to provide further information on how the most disruptive technologies are shaping the world of sport. To do so, we will use the following model provided by Atos, which is particularly useful to understand the current level of adoption of each technology and the potential impact they could have on a sport business:
Our aim will be to bring you insights, business cases and expert opinions that will help you become more knowledgeable in each area.
Going back to the model presented by GSIC, we can already identify opportunities in all the areas mentioned above:
- In the “Fan Engagement” area, which has been identified as the top priority for sport organizations, there are opportunities to connect 24/7 with fans through digital platforms and personalize content and experience offerings thanks to data gathering software. Similarly, AI will help drive further engagement and monetization initiatives. In the 7th article of our newsletter, we summarized the solutions offered by three businesses in this field.
- While “Smart Stadium” initiatives may be put on hold until we get to a “new normal,” there are opportunities around personalized content, experiences, and even security that sport businesses will be able to offer once fans are allowed back into arenas and stadiums.
- Technology will also be beneficial for “Athletic Performance” as it will enable to prevent injuries, predict performance on a given game, improve scouting efforts or even simplify contract negotiations.
- To leverage all these potential benefits on “Business Insights and Productivity,” sport organizations will need to hire for new skills.
- Finally, “eSports” are evolving into a major competition with fans around the world. In fact, gaming research firm Newszoo predicts that the industry will reach around $974 million in revenue by the end of 2020. If we look at the different revenue sources, they do not seem that different to the one shared by Deloitte in their Football Money League
Moreover, some sport organizations are embracing eSports as an additional source of potential revenue given their popularity, especially among younger fans.
As you can see, there is a lot to cover and much to learn. We hope you can join us as we explore how technology is expanding the frontiers of the industry and please feel free to suggest topics or sources we could use for research.
Meanwhile, keep safe.