The Top 4 Sports Tech Investments for 2017
JULY 25, 2016 • BY SETH DECROCE, PAPER MAGAZINE • BLOG POST
IN THIS ARTICLE
- Investing in sports is moving beyond just buying teams
- Data analytics, media content, fan tracking and eSports are changing the sports investing game
Big Data is rewriting the sports playbooks, disrupting age-old revenue channels and revealing opportunities that no one saw coming
Making big plays as a sports investor used to mean buying and selling teams, locking in top talent and securing a killer sponsorship. Today, Big Data is getting into the mix and making technology the star. Sure, an analytics platform might not sound that sexy or make for high drama on social media, but savvy investors don’t mind—especially when they’re spinning data into gold. Whether the technology is in the boardroom, on the field or in the home, Big Data is rewriting the playbooks, disrupting age-old revenue channels and revealing opportunities that no one saw coming. Here are just a few of the big opportunities investors will be taking a close look at in the coming year.
The real value of data isn’t the information you pull off the field, it’s how you translate it into winning strategies for teams and their investors. Today, technology is making data increasingly accessible to the point where organizations are swamped with information—with no idea what to do with it. To fill the need, new analytics platforms are moving in, transforming data into meaningful information that coaches and general managers can put to use immediately.
With so many data sources to pull from these days, sometimes it means choosing one and running with it. Video, for instance. Krossover, a sports video analytics company just received $20 million in Series B financing for its platform that analyzes game footage, play-by-play, and distills it into usable insights. Krossover can turn around the analysis in less than a day, which is a treasure trove for coaches, allowing them to learn all they can from yesterday’s game and put the knowledge into action the very next day. On the fan-side, analytics platforms like Sportsradar are funneling data into fantasy sports and social media, and even sports betting. Michael Jordan and Mark Cuban have invested $44 million alone into the Swiss company that is poised to become a leader in Big Data sports analytics. But even the best data analytics are no help at all if your star player is out for the season. Platforms dedicated to analyzing biometrics, player fatigue and the possibility of injury are likely to become major investment opportunities moving forward.
- Sports media content
What would an NFL team be worth without its media rights? Or looking at it from another perspective, what would a company like Penske be without auto sports to promote its products? This was a topic of debate at the 2016 MIT Sloan Sports Analytics Conference, a forum dedicated to the increasing role of analytics in the sports industry. The consensus that was reached: sport is essentially content, and where there is content to be consumed, there are advertising and sponsorships opportunities to be reaped. Today, TV ad spends are being rerouted to Facebook and Snapchat where audiences continue to grow—and simultaneously, consumers are unbundling cable from their home entertainment packages. In 2015, Nielsen reported that ESPN had already lost 3.2 million television subscribers. But that’s not to say that sports audiences are dwindling. In fact, 2015’s Super Bowl 49 was the most-watched show in TV history with over 114 million viewers. And let’s not forget 2014’s FIFA World Cup, which reached 3.2 billion viewers worldwide—one billion of which tuned in for the final. The disruption continues to open up new opportunities for organizations that are making their sports content accessible on the audiences’ terms. Digital, and especially social media, is offering a multitude of new channels for ad sales and sponsorships, not to mention ticketing and merchandising. For today’s highly-connected consumers, the question is no longer which team or sport is more popular, but rather which one is speaking my digital language.
- Fan tracking
Today, the better you are at tracking your fans—how, where and when they engage—the better you’ll be able to tailor the sports experience around them. In some cases, stadium technology can actually perceive when a fan is looking at their phone versus watching the game, giving owners a better understanding of what’s holding people’s attention. Or take the data and research company LiveAnalytics, which offers insights into fans’ tastes for things like an opposing team coming to town, or what window of time they’re most likely to attend a game versus what’s too late. Fan tracking is also effective on a CRM level—for instance, providing season ticket holders with a more customized experience as a loyalty incentive. Fan tracking has proven to be effective in generating higher revenues in the off-season as well. Many teams have begun gating in-stadium Wi-Fi, mobile apps and online video content to capture data in order to better understand their fans and how to target them with content and promotions to keep them engaged all year long. But what about an entire generation that just doesn’t seem to be interested? Millennials continue to elude pro sports, and organizations are having to change their strategy to capture these digital natives. For instance, the LA Galaxy ditched traditional press releases in lieu of unedited access to potential fans by posting directly to YouTube. On the hockey side, the Florida Panthers recently adopted Umbel, a platform that pulls together data from a variety of third-party vendors and social media sites, creating a big picture view of who’s engaging with Panther content, buying tickets and attending games. The platform puts the team in control of their business, allowing them to connect with fans directly and offer the customized Panther experience fans are looking for.
If you didn’t think video games were a spectator sport, you should ask one of the 100 million fans that tune in worldwide to watch players battle wizards, aliens and trolls from the comfort of their living rooms. In a study conducted by Electronic Sports League (ESL), the largest video game event company in the world, eSport audiences are predicted to reach nearly 200 million in 2017 with revenues of $465 million. According to research firm NewZoo, eSports revenues could surpass $1 billion as early as 2018. Could 12-year-olds with headsets and giant Slurpees be our new generation of gladiators? One of the attractions of eSports for investors is that it offers a completely new set of opportunities in the live-streaming space. For instance, brands can sponsor individual players or an entire team, depending on which has the bigger following. If a player ends up switching teams, it means that the sponsor can move with them rather than remaining shackled to an organization. It’s also easier for brands to go big, sponsoring an entire gaming league and amassing its entire audience—with all the touchpoints that go with it, from products to conferences to in-game advertising. Still in its nascent phase, eSports is offering lucrative opportunities for smaller brands that might not be able to afford major sports sponsorships. However, as larger brands realize the potential, it’s likely that we’ll see major corporations like Coca-Cola and McDonalds moving into the space. At the center of these new opportunities is Big Data, making the most of a highly-tracked, digitally connected sports industry. Where some might see the ubiquitousness of technology, from tracking every move on the field to every face in the crowd, as overkill or a Big Brother phenomenon—investors see it as potential windfall. As it becomes easier to decode the information being gathered and translate it into better decision-making and higher revenue, Big Data is poised to become the most important tool in sports investing. Sure, it might not be as sexy as the old days of trusting your gut, but then who needs sexy when you’re stacking millions?