Covid dried up revenue streams
Creating and sustaining fan engagement is critical for rights holders. Whether it’s linear media, digital media, sponsorships, advertising, or consumer revenue – the fan experience is the fuel that powers their revenue streams. Simply put, deeper fan engagement translates to increased revenue across the board.
All your digital touchpoints have the ability to improve your fans’ experience and drive revenue. The second screen experiences give your fans more reason to watch the live event. Getting fans to watch streaming content or VOD enables advertising, sponsorship, and subscription revenue. Having a useful and engaging website drives advertising and consumer revenue. And game-changing fan experiences or smoother and more intelligent in-venue experiences drive digital sponsorship, advertising opportunities, and consumer revenue.
But Covid-19 put a temporary stop to the games and the revenue streams started to dry up fast. The losses for the NCAA and the four major US sports leagues hit at least US$14 billion by March of 2021, according to Forbes estimates. And the rest of the world suffered, too. In the 2019/20 season, the Premier League saw revenues fall by 13 per cent, culminating in a pre-tax loss of almost UK£1 billion (US$1.37 billion), the largest in the competition’s history, according to Deloitte.
Changed the game
Maybe more troubling than the negative hit on the revenue streams was that fans began to look elsewhere to occupy their time and attention. And, in the process, they developed new attention-grabbing, time-consuming habits, making the negative impact more challenging.
Where have the fans gone? A lot of new places, including TikTok – one of the most popular apps downloaded globally in 2020. With over one billion monthly active users, TikTok boasts enviable engagement with users who open this app eight times and spend an average of 52 minutes per day on the platform.
And when the games finally came back, the results weren’t reassuring. Sports viewership dropped across the board in 2020, despite people spending more time at home. Compared with 2019, ratings were down 51 per cent for the National Basketball Association (NBA) finals, 61 per cent for the National Hockey League (NHL) finals, and 45 per cent for tennis’ US Open. Even the Kentucky Derby suffered as its ratings dropped 49 per cent from the previous year, its lowest TV audience ever.
And accelerated a troubling trend
Maybe this was inevitable anyway, it just came sooner than expected. There are increasingly more choices for fans’ attention and an organisation behind each option with money to try and grab it. Covid seems to have accelerated that trend. But regardless of how we got here, it all adds up to change happening fast.
Fans are forming their new habits. This involves them decreasing their engagement with certain options and abandoning others entirely, leaving rights holders and their revenue streams at risk.
Which begs the question: how do rights holders generate desperately needed engagement and revenue just when their fans are starting to look away?
It’s easy to get anxious
The feel of this situation is reminiscent of the early days of the internet – when we went from the dream to the nightmare, almost overnight. There were so many things happening and so many things to consider. The pace of innovation was overwhelming. The effort to keep up was mind-boggling. In retrospect, most people spent much of their time lost. They started chasing what the others were doing. Or they focused on the technology. Or faithfully followed the trends. But, as they searched in vain for their way, they lost sight of their customers.
So think of your fan experience as a product
When you put the customer (or in our case, the fan) at the centre of your thinking, you focus on the value you bring to them and the experience they have receiving that value.
Bain and Company conducted research to determine the difference between a good product or service and a great product or service. They started by breaking down the world into 30 possible value exchanges. And then they talked to more than 10,000 US consumers about their perceptions of nearly 50 US-based companies.
Their first hypothesis was that the companies that performed well on multiple elements of value would have more loyal customers than the rest. Their second hypothesis was that companies doing well on multiple elements would grow revenue at a faster rate than others. The survey confirmed both. Strong performance (a score of eight or above on a scale of 1-10 by 50 per cent or more respondents) on multiple value exchanges does correlate closely with loyalty and higher and sustained revenue growth.
For every industry there is a different combination of approximately seven to ten value exchanges that are most relevant. When we apply this framework to the world of rights holders we see the following subset of those 30 that is particularly relevant:
Connection: Providing ways for fans to create a sense of community.
Access: Providing a rare ability to get closer to the players, coaches and games.
Entertainment value: Just making aspects of it more entertaining.
Informs: Provides useful information.
Rewards: Rewarding the fans for their engagement.
Avoids hassle: Making the experience of watching the games (in and out of the stadium) easier and more enjoyable.
Affiliation: Creating that feeling of belonging to a team.
The first question you need to answer is: how well are you delivering on these most valued value exchanges? When you perform this audit you will likely see that you are over-indexing on one or more and under-indexing on several others.
Your chart will not only tell you where you are but will also identify opportunity areas for you to focus on with any and all new sponsorable assets or fan experience enhancements. The audit and the resulting chart then form the basis for productive ideation sessions where you can begin to identify concrete ways to pay off these value exchanges at a higher level. With the ideas formed you can now factor in your specific real-life circumstances and create a product roadmap detailing how and when you will add them. Then it’s only a matter of time before you enjoy the benefits.
So get started
As Bain and Company noted, the winning companies understand how they stack up against competitors and have methodically chosen new elements to deliver over time. Which value exchanges you should focus on developing and in which order will depend on your unique situation. But for the new experiences to resonate enough with your fans, to capture and keep their attention, they must have clear value for them.
This ability to identify, develop, and deploy added value for your fans successfully and consistently in the form of new features and services will be a critical capability for rights holders for the foreseeable future. This is where the competition for your fans’ attention and loyalty will be won or lost.
So, as one might say, “let the games begin!”
This article forms part of a daily series of exclusive insights from some of the foremost organisations and thinkers in sports tech, released in the lead-up to Ignition, SportsPro’s new home for the sports industry’s technological transformation. Find out more at Ignition.sport.