The opportunity for community driven business models in sport
In the past few months the idea of “community” based companies driving value seems to have caught the imagination of various investors and commentators, not just in sport but in the wider economy. It is an area that we have always been bullish on, calling out “technologies that can bring people together around their shared sports and media passions” as one of our key focus areas at Sports Loft.
The buzz around “community” has also been re-enforced by the performance of companies such as Zoom, where revenues have leaped 355% in Q2 compared to last year, articles such as this one by Sarah Drinkwater from Atomico (shared recently by both Mike Broughton of Acceleration Equity and James Emmett at Leaders) and the excitement is furthered by tweets such as this from D’Arcy Coolican, an investment partner at VC firm Andreesen Horowitz.
However, the notion of building successful products and businesses around community is not new. I was working at Reuters in the late ‘90s, and the company had already built a very significant business around providing trading terminals to foreign exchange traders at the different investment banks. No-one would cancel because they were too scared of missing out on the best deals, the ultimate retention mechanism of a community based business. In 2007, I was at Nike when Nike+ was launched, initially billed as “running with music” (which led us to mistakenly position bands all around the course at the Great North Run- whoops!) the real power came when different groups would compete against each other, creating mini-communities that individual runners were part of. Then look at the likes of Ebay, Facebook, WhatsApp, Twitter and Etsy – all of which are highly successful and fundamentally based on ‘community”. Add to that companies such as Uber and Airbnb who use the ratings of other people in the community as a way to police their services.
So, why now and why sports? Why now? There’s a natural reaction to value things that we are deprived of – ie if you can’t see your friends, work in person with other people or go to events during lockdown (all of which are clear examples of “community” behaviour), then you are going to value those things even more. But whilst COVID has reminded people how much they value community experiences, there was already a powerful trend developing towards more authentic communities that revolve around very specific ideas, personalities or common interests. For example, look at the communities that have developed around email newsletters such as Morning Brew (and pretty well any subject matter will have their own equivalents), the way that virtual event platforms such as hopin have grown as a result of the pandemic, how apps such as Upstream (an invite only networking app) have attracted early adopters or the communities of subscribers that are building around specific writers on platforms such as Substack. Now, whilst these communities might be small in comparison to the big social platforms, they are very authentic – and their strength lies in their authenticity. They need to remain small in order to maintain their authenticity. If Upstream got too big then the quality of the interactions would surely fall.
Why sports? As an industry, sport should be inherently community driven. For example, communities form around the shared identity of supporting a particular football club, they form around playing for a team or taking part in a specific fitness class. However, community driven business models have been more readily adopted in areas such as individual participation sports and fan content as opposed to the highly commercial areas of professional sport which have retained much more linear models. For example, in cycling, communities of riders have developed around specific routes on Strava and, on products such as Team Snap or Pitchero, communities immediately form around the team you play in or your role at the club. Equally, you can see how clear communities based on strong fandom have developed around unofficial fan related content such as the community that exists around things such as Arsenal Fan TV or the “Stoolies” that come together around specific personalities on Barstool. Despite this, most elite sports leagues and teams have stuck to a broadcast one-to-many model of communication with fans, perhaps driven by their reliance on the TV rights fees. This has left communities to form on other platforms like Whatsapp or fan blogs that they can’t monetise.
I also think that broader technology trends are set to open up new community driven opportunities in sport. We’ve been repeatedly pitched the idea of “Facebook for sport” or “twitter for sport” and my response has always been “we have Facebook or Twitter for that”, but is there more of an opportunity now, given the shifts towards authentic micro communities in other industries, for highly authentic and engaged communities around specific teams or sports? Twitch has shown the way around building and serving communities in gaming and the widespread launch of their Watch Parties functionality could have a significant impact in building micro-communities around content - including specific sports teams and matches.
Hence why at Sports Loft, we’re so positive about the community driven model in sport – the opportunity is largely untapped and the broader technology trends are only moving one way. At the participation level the industry has still barely scratched the surface and the fan content model is still developing (what if you combined models such as Substack with really strong fan writing?). At the supporter level, the pandemic showed how fans can be brought together virtually to watch games and I don’t think that use case is going to go away now that fans have experienced it (even if the user experience can still be improved considerably - back to Twitch again). Equally, what if you started to inject genuine community models in the way that clubs and teams interact with their fans, whether in terms of ticketing, fan engagement and soccer schools? And, what if you could apply community tools to elite training and you could 'gamify' drills and practices amongst highly competitive athletes - whether in schools, colleges or professional teams? Whether football, rugby, cricket, baseball and the list goes on, the data already exists to do it, then it becomes a question of developing the right user experience and how the data is delivered in the best way to the athletes.
At Sports Loft, a number of our member companies have very strong community principles and thinking built into their products. For example, in making group ticketing easier and rewarding the people who organise their friends, Fevo is the epitome of using social connections in the ticketing process. Spalk is bringing fans together around specific commentary feeds – whether they are based upon language or the personalities of individual commentators. Greenfly is helping teams and leagues create and distribute content via their communities of players and fans. Formalytics is helping players build their own “player card” so that their performance can be compared with their friends and teammates. PumpJack is helping clubs identify unifying traits (whether they be demographic, interest based or purchase related) amongst sub-communities of their fanbase.
We’re always looking for companies that can “bring people together around their shared sports passions”, so if you work at such a company, or you know of one, then please do get in touch.