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How the pandemic is driving innovation within the sports activities enterprise

July
13, 2020

Read for 7 min

The opinions expressed by the entrepreneur's contributors are their own.

The global health crisis has turned the world upside down and affected every aspect of life. Social distancing is part of our “new normal”. It has proven to be the most effective way to limit the spread of the virus. Unfortunately, it also has negative consequences for the sports industry. It affects everyone, from fans, athletes and broadcasters to sports sponsors, arenas, retailers, universities and all providers who support them.

The pandemic is an international health emergency in which tens of thousands of people have been killed and shock waves have been sent around the world, causing the global economy to go into the worst decline of modern history.

It all started for the sports industry in the second week of March, when the 2020 NBA season was canceled due to a sudden surge in positive cases among the athletes tested. The NCAA's March Madness signature event was canceled shortly afterwards. Professional leagues followed everywhere, interrupting their season and disappointing fans around the world. Next came the one-year postponement of one of the most anticipated sports broadcasts in the world, the Tokyo Summer Olympics. And the cancellations keep coming back.

The sports industry worldwide had estimated sales of $ 471 billion in 2018, an increase of 45 percent since 2011. However, the corona virus has stopped this momentum. With so much money in this value chain, the industry had to find ways to be innovative. Anything longer than a temporary closure would prevent the leagues from meeting their financial obligations to broadcasters. The immediate impact of no games would not mean TV deals and match day income. Ultimately, no income could bankrupt the teams.

Deepening the content pool

How did the industry react strategically to this disruption, taking these factors into account? The sports industry is taking advantage of the recent surge in media consumption. In the absence of live games, broadcasters like Fox Sports and ESPN were asked to find a way to keep viewers busy. This meant deepening the pool of sports content available to fans. Everything from classic games to documentaries to archived content and esport competitions has become part of the broadcasters.

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I informed Jeff Heckman, TOPPS Global Director E-Commerce, how they geared the business to the impact of COVID-19. What is more important for sport than trading cards? "Our Topps NOW product releases are based on capturing the most important moments in sports," Heckman told me as we spoke. "After the seasons were postponed, we had to turn around to offer Topp's NOW MLB cards based on historical moments. We called it Topp's NOW Turn Back the Clock and offer one new card a day. Fortunately, we were working on one new concept called Project 2020, in which 20 top artists reinterpret 20 legendary baseball cards, 2 new Project 2020 cards are published every day on topps.com, we hoped for a big kick-off event at the start of Project 2020, but had to cancel these plans We are now focusing on creating digital content to support the 2020 project, which we publish every night on social media, after which we had a number of face-to-face sessions this spring with athletes such as Bryce Harper, Ronda Rousey and Derek Jeter Capturing content that would eventually get used to developing new map products, so we had to zoom in calls and our team was able to adjust the video creation process to continue creating compelling parts that we’re running on our digital platforms. "

Directo to Consumer scores big

Direct-to-consumer (D2C) channels like Game Pass have managed to fill the void left by traditional networks that structure their main programs according to the evening primetime schedule. For example, the NFL has made every game available on its direct-to-consumer Game Pass channel since 2009. This strategy has dramatically increased daily registrations in the past few months. Industry analysts expect the rapid adoption of D2C channels to be an important transformation trend in the sports industry, as many will stick to it once the pandemic subsides.

If consumers adapt to this “new normal” on sports broadcasting, the decline in cable television will accelerate, reducing the ability of broadcasters to generate advertising revenue and ultimately their purchasing power to acquire sports rights. As this fragmentation continues, the leagues will turn to their internal teams to conclude smaller content deals with digital players like Amazon, whose prime video service has successfully streamed the British Premier League games live.

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Esports speeds up

Esports is another strategy that has changed the sports industry, especially the NBA. According to Mark Tatum, COO and Deputy Commissioner of the NBA, sports like the NBA 2K competition have become a big draw for fans as players flock out of their homes. Not only did they broadcast classic games every night, they also used social media to host live quarantine parties with current and former NBA players – all to keep their fans busy during that time.

Millions of fans around the world are looking for content, and according to Tatum: “Our broadcasting partners really understand that and we work with them on various forms of content. It's not just the NBA, it's all live sports … "

Another NBA innovation in collaboration with Turner Sports was the removal of a paywall for League Pass, their subscription streaming service. By making payment options more flexible, their service has become attractive to a much broader fan base. MLB.TV and YouTube do the same for Major League Baseball. The traditional revenue structure for live TV shows is very different for games without a live audience, but it is important that the players are safe. One option would be to isolate entire teams and their managers in a single area. Rumor has it that MLB is doing this.

The leagues' trust in television channels and the trust of these channels in advertising revenue was revealed by COVID-19 during this era. It has made the need for different income streams clear. Some of these new revenue models could include live monetization, such as: B. Gambling and gamified viewers, where viewers pay extra for detailed statistical analysis, fan comments and other digital elements.

How and when will live sports return to a normal level before the pandemic for fans? Even after two months, there are many more questions than answers. Given the unprecedented nature of the corona virus, sports insiders have asked the experts for wisdom.

Flexibility is the strategy for success

I turned to one such expert, Jim O & Connell, President of Athletes First Partners, to comment on what his company is doing to adjust. As a new division of the primary sports agency, AFP focuses on sales and marketing for intellectual property owners and athletes. "The assets that fit strategically into partnerships have changed with the pandemic," said O & # 39; Connell. "At the moment there are certain elements of sponsorship that are not realistic. Live events, appearances such as autograph sessions or meet and greets are not useful. Social activation, including self-created content, is currently a much greater focus. The bottom line is that we have to be flexible about what we sell and strategically drive the most appropriate assets. "

Entrepreneurs and sports fans stay tuned. The innovations in the field of sports entertainment and market sports are expected to take years.

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