Top trends in sports, media and entertainment to watch in 2023
It’s once again time to look ahead and think about what we expect to see across the sports and media industry in the coming year. At Sports Loft, we do this because it helps us to spot opportunities that our member companies can capitalise on, and to identify new members who are addressing customer needs in areas that we believe are set to grow rapidly.
We write this at the end of a year that has seen significant investment enter the sports market. Just about every week in 2022 saw a private equity firm announcing its acquisition of a new sports property – in some cases as part of a global network of teams (kudos to 777 Partners for building a group of clubs in less time than Bruno Lage lasted as Wolves manager!). Such investment brings heightened expectations around revenue growth – both in terms of on-field performance and from commercial activities. Innovative tech has a key role to play in achieving those numbers, providing it solves clear industry needs (or creates new opportunities) and, in terms of multi-club groups, can be easily scaled.
At a macro level, we’ve seen the number of digital first consumers continue to increase, the rising power of AI, and the “streaming wars” of Netflix vs Amazon vs Disney vs Apple driving an overload of content – that’s before we even consider Youtube, Meta, TikTok or Twitter. Sport is not isolated from the disruption in the broader media and consumer industries, and in many ways will be an important component in how the changes play out.
Despite broader economic uncertainty, we expect to see continued investment and significant growth potential in tech companies who can help sports and media organisations build, engage and monetise their audiences, or indeed are building audiences themselves.
With that, let’s dive in!
Sports will get smarter on data
We see 2023 as the year when sports organisations stop simply talking about collecting first party data and actually start using it – particularly given its value to potential sponsors.
Every brand interested in sports sponsorship has seen their fair share of hand-picked rosy metrics in sales decks, but sponsors are getting smarter in interrogating the performance of their partnership assets – particularly as many activations are digital and therefore more easily measurable. We expect to see more demand for these analytics tools in the year ahead.
As more sports organisations go D2C with their content, we expect to see an increasing number of teams, leagues and content owners get a stronger grip on their data. Teams need the right technology to not only bring fan data together in one place, but then actually leverage the insights to, for example, push OTT subscriptions to potential subscribers, premium seating to big spenders and personalised merch to fans of particular athletes. We’re excited to see companies that can help content owners offer increased levels of personalisation but also tools to build durable subscriber bases - ie driving signups and minimise audience churn.
We also expect teams to get a better sense of the value of their fan data. For example, we could feasibly see the value of fan databases – derived from a combination of the quantity of fans in the CRM and the depth of information that a team knows about them – regularly listed on teams’ balance sheets. Capturing this data in the first place is going to become ever more vital, but understanding the value of the data, who is prepared to pay for it and how it will be used (in a privacy compliant way) to talk to subsets of a team’s audience is going to be a theme for the coming year.
“We are a content business” will become a reality
In 2022, senior sports execs queued up to declare that: “we are a premium content business.” With a media industry in a state of flux, 2023 will be the year that we see what being a content business actually means for how sports organisations operate, and which ones are really successful at it.
Being a content business will require both a consistent volume and quality of output. The pandemic showed that remote production techniques utilising cloud-based technologies could admirably cope with the demand – but it also showed that content could be produced at lower cost, with fewer people and to a high standard. This provides an opportunity for sports organisations to produce and distribute content at a scale and quality that was previously the reserve of the biggest broadcasters, enabling them to drive their own revenues from their own content, often on their own D2C platforms – as we pointed to on our recent podcast.
With an increased volume of content, great storytelling will become more important if your content is going to “cut-through”. Partly this means working with new formats and continually aiming to be more creative, but it also means utilising on-pitch data to tell better stories, bringing the conversations from different channels (e.g. social) into the content, and providing behind-the-scenes access that was not previously possible.
As sports organisations have begun to operate as content businesses, we have seen them start to hire people who bring in very different skillsets. The need to find more high-calibre people with the skills and creativity to work across multiple channels, who are able to use data to understand their audiences and have experience of the commercial realities of building and monetising fanbases will only increase and this will be a challenge for many organisations. We think that platforms and tools to find these people will prove to be important.
AI will complement (not replace) content creators
The public launch of ChatGPT looks set to make AI everyone’s hot topic for 2023. Covered nicely in our latest Sports Loft podcast by Greenfly’s Daniel Kirschner and Pumpjack’s Nick Goggans, ChatGPT shows the potential for the role of AI in the content creation process. That doesn’t necessarily mean entire articles being written by AI (Nick’s description of one its answers as “a vapid stream of platitudes” was a particular highlight), but allowing AI to have a run at a first draft (after a back and forth to train it) can provide food for thought, if not the finished work.
We’re viewing the slightly less heralded release of Dall.E 2 (also courtesy of Open.AI) in a similar way. It’s easy to see how a creative team might use Dall.E to provide inspiration for social media content, or for animators to use it to develop new animated characters, before letting the humans take it from there. Right now, we see AI as the creative aide, not the artist.
More broadly, we are already seeing AI being used in the sports industry to free people up to focus on higher value tasks and to operate at a scale that would not be possible by a human workforce. We expect the adoption to go further in 2023, with the potential for sponsors to use AI to mimic a contracted athlete’s voice and facial movements for content in multiple languages, for content owners to serve video clips based upon accurately understanding a fan’s request, or for the automated tagging at scale of people, locations, actions and brands in content archives.
Memberships will be re-imagined
Last year we wrote that “sports NFTs will need to offer community and utility”, with an eye on sports teams launching NFT-based membership programmes. It’s fair to say that for all the talk of involvement in decision making and unique rewards, a lot of activations have been sub-par, leaving some fans who’d shelled-out on an NFT or fan token wondering why they’d done so.
However, whilst NFTs might have underwhelmed so far, that doesn’t mean that there aren’t important learnings about building community and what “value” looks like in a membership programme. From talking to a number of clubs and leagues, we expect to see some serious re-thinking of sports organisation’s membership propositions, moving away from the traditional “pen, certificate and access to tickets” to more content and experience driven programmes, often involving a heavy dose of gamification.
There’s an obvious opportunity to bundle digital products into the membership proposition, as telecoms companies currently do – whether that’s a club’s OTT subscription or a partner product (e.g. a Spotify subscription if you are a Barca fan). This could also include access to online experiences that can be delivered at scale – think player “meet and greets” or club organised FIFA tournaments. We also see lots of potential for “junior memberships” to involve greater engagement with younger fans – for example, creating training platforms and content that use the team’s coaches and athletes as a way to build fandom at an early age.
In the coming year, we expect to see the launch of the next generation of sports memberships that effectively gamify being a fan – using the same UX best practice that’s kept you hooked on Candy Crush for years. The core of a membership product will involve fans earning XP and climbing the rankings – but we think earning rewards will be more about engaging with a club's products or experiences. At a basic level this might mean rewards for following and engaging across social media, but it should really span a team’s entire digital offering (from OTT products all the way to Roblox activations) and those of its partners. While scratching the same itch as popular mobile games, this gamification allows supporters to prove their fandom, in a way that directs them to explore all of a club’s content offering.
Going into 2023, this re-thinking of membership propositions opens up lots of opportunity for tech companies who can build engaging membership platforms, enable easy communication between clubs and their members, or develop content and experiences that can operate at scale.
For now, the Metaverse is multiplayer online games – that people actually play!
In 2022 we heard a lot of sports properties saying how they “must do something in the metaverse”. Despite Decentraland’s limited user base, The Sandbox being in alpha, and stories of metaverse parties with only five attendees, we still expect lots of organisations across sports, media and entertainment to have a continued appetite to engage in this area.
However, in practical terms for 2023, sports teams and brands will likely follow the mantra of “fish where the fish are”. That should mean activations in online games where there are already large-scale audiences – such as Roblox (200m monthly active users) for those targeting 6-12 year olds, or Fortnite activations for a slightly older audience (250m monthly active users). In many cases, the objectives will be to capture new fans, with clubs well aware that kids often choose their sporting allegiances at an early age.
Of course, sports games themselves are also a huge market, and teams and leagues will continue to get more sophisticated as they lean into these games. With this, we expect the crossover between sports and gaming culture to continue, especially with brands looking to leverage gaming influencers, and athletes often having very significant numbers of gaming-focused followers themselves. We also see a real opportunity in backing founders who are creating the next generation of sports games on multiple different forms of hardware.
For sports teams, engaging with gaming will be viewed in a similar manner to being active on TikTok or other social media platforms. If there’s a platform hosting fans that you (or your partners) are trying to reach, you should probably be doing something in it. We’ll see you there. 😉