25 June, 2020 | Written by: Sam Seddon
Categorized: Client Stories
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At the end of 2019, IBM and the All England Lawn Tennis Club (AELTC) signed a new multi-year contract, building on a 30-year partnership that has helped keep The Championships, Wimbledon, at the top of its game. This renewed partnership lays new ground for sports technology partnerships as the industry braces itself for a very different kind of future. You can read more about it here.
At the time the agreement was signed, the world was a very different place. There was an ever-increasing focus on sport as a form of entertainment. New competition formats were being developed in areas including golf, cricket and rugby, while non-traditional sports like surfing and climbing were due to make their first Olympic appearances in a few short months. Though long overdue, women’s sport was gaining ever more focus, bringing fresh momentum to a high-quality product and inspiring a new generation of participants.
These new opportunities, in turn, were attracting investment. While broadcast rights values were plateauing, venture capital firms were investing in sport, recognising an opportunity to reap healthy returns linked to future growth. It was an exciting and unsettling time for the sports industry, but the future looked healthy.
The big shift
Then the world and the industry changed dramatically. By March 2020, the summer of sport had effectively disappeared – Wimbledon was cancelled, and the Olympics and European Football Championships postponed to 2021. Some industry analysts predicted that a sector expecting a healthy 4.9% year-on-year growth is now looking at something closer to a 50% decline. Precarious business models were being exposed, and normally secure long-term revenue streams are now at risk. Despite all this, sport is a minor consideration next to the work being done globally to save lives, protect vital services and keep people safe.
With individuals’ daily lives radically changed, the focus on sport has taken a back seat. Like many other industries, sports businesses and governing bodies are having to adapt to changing work patterns, to reassess and refocus. While no-one can predict what position, we will be in even six months from now, when it comes to sport we can make some reasonable assumptions:
1) Next-level digital experiences will be fundamental to re-engaging fans as sports come back to life.
2) Understanding and gaining value from data while delivering these solutions will provide new opportunities to deliver better experiences and realise new revenue streams.
3) Organisations that learn from the disruption quickest and seize the opportunities to innovate rapidly with technology will move ahead of the pack.
Before COVID-19, digital platforms were already at the forefront of industry disruption. Fans’ changing viewing habits were presenting opportunities for new approaches to content distribution across both traditional media and digital platforms. In a data-driven era, digital platforms provided more opportunities to understand how to serve fans and customers better. This, in turn, presents opportunities for more segmented and more valuable rights deals, with an increasing focus on digital assets.
Impact on fan expectations
In a “new normal” these trends will only accelerate. We know from a recent YouGov survey of 2,000 UK adults that a majority (52%) of UK sports fan think that matches and events should only resume when it is safe for spectators to attend. The aspects of attending a live sporting event most missed during lockdown is the atmosphere and sound of the crowd at the stadium, something very difficult to replicate (39% among those who have attend a live sports event previously). As sports events begin to take place behind closed doors, two-thirds of UK adults (66%) think live sports should be available on free-to-air television, which would further impact sports revenues.
As professional sport starts to resume, the challenge for sports clubs and organisations is going to be how to re-engage fans. The avid sports fan will return rapidly, no doubt, missing the buzz and sense of community, however the general sports fans, who are the largest part of the sports audience, may take more convincing. In the YouGov poll 61% of adults have not kept up to date with sports news during lockdown and 65% have not tried to stay connected to sport at all.
The most concerning thing for sports businesses is just how long this situation may continue. When asked what would need to happen to make them confident in attending a live sports event in the future, just over half of adults (54%) chose “If the Coronavirus (COVID-19) was almost eradicated”.
New thinking is required on how to provide an environment within stadiums that make fans feel safe and new ways of bringing fans closer to the action if they choose to stay away, recreating as closely as possible the “live” experience.
So, the industry faces a challenge – and an opportunity. How will it respond to these changing expectations? As well as new demands from fans, there is a need to rapidly attract a return to pre Covid advertising and sponsorship revenues. Partners and sponsors will themselves have financial challenges and will be laser-focused on demanding more demonstrable returns. Organisations must differentiate in order to cut through, so investment in new digital solutions will require high levels of delivery risk assessment. This needs to be done rapidly with a focus on early benefit delivery to build momentum for fans and business revenues.
Many of the new opportunities and distribution channels such as online streaming, virtual fan experiences and data insight capabilities require robust technology platforms that can be delivered rapidly, with assurance and at scale. Implementation costs are not trivial, and while sports businesses are often big brands, outside their focus on stadiums and playing squads, they are not always blessed with large capital budgets. Those same major assets are now a drag on many balance sheets.
To ensure their future prosperity – and even survival – these businesses must walk a fine line between the current financial uncertainty, the pace of change and complexity in technology solutions, and placing the right bets. Many sports businesses do not possess the breadth and depth of skills to respond on their own, so they must contemplate new models and new delivery partners.
Innovation in the sports industry can be perplexing. Staying at the forefront of a dynamic technology environment, while not neglecting the essential “get right” solutions, is an ongoing challenge for any industry. When your internal IT capabilities may already be stretched, you need a new approach.
Across the industry, various models are emerging to address this. Sports innovation hubs are prevalent around the globe, with a thriving ecosystem here in the UK. Many new start-ups are vying for attention and investment to break through. Some major organisations run Dragons’ Den-style programmes, using their brands and fan bases to find new solutions to specific needs. However, post COVID-19 it may be some time before these areas of the industry fully recover.
An alternative view is to bring skills more in house and take increasing control of development and sourcing strategies. Sourcing the right partners that can bring the right solutions, at the rate level of quality at the right price is essential. This means having the skills internally to partner effectively in this model. Building in house skills requires forward-looking organisations to place a longer-term bet on increasing their headcount budgets during challenging financial times.
The alternative is to build a focus around a new type of technology partnership model that focuses on innovation while not neglecting the core technical platforms that new digital experiences will be built upon. IBM is proud to have struck an agreement with the AELTC that may be the future for sports technology partnerships – a hybrid model that sees both sides committing to innovation while at the same time continuing a digital transformation journey that will help Wimbledon to maintain its world-leading position.
As we continue to make our way through a myriad of unknowns but we owe it to players, fans, media and dedicated employees in every corner of the industry to keep sport moving forward.
You can find out more about details about the work and solutions behind The Greatest Championships at ibm.com/Wimbledon
All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,069 UK adults. Fieldwork was undertaken between 5th and 8th June 2020. The survey was carried out online. The figures have been weighted and are representative of all UK adults (aged 18+).