SPORTS INDUSTRY: TIME TO REFOCUS? - PWC'S SPORTS SURVEY 2019
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Sports industry: time to refocus? PwC’s Sports Survey 2019
View from The state of the Transformation Direct-to-consumer: The role of sports References and
the top sports industry and innovation: engaging sports fans federations: contacts
essential for the in the digital age what next?
How to stay ahead Digital: the key driver future of sport Notes and sources
of the curve? for growth
A closer look at digital Federations on a journey
media consumption of self-improvement Contacts
The industry is waking up
06
Optimism in the face of
uncertainty (and playing catch up)
46
The race for fans’ attention Effective strategies
Innovation requires (and primary data) require focus
Highest growth prospects
for esports and football structure, but people are
key to success Rights owners’ OTT platforms: Forget esports,
are they delivering? what about gaming?
Women’s sport: from
promise to real deal? Facebook’s approach to
people and trying new A new dawn for agencies?
28
things
08 36
Innovation is about
listening to your
customers
18
This survey was conducted by our Sports Business At the time of their response, each of the Respondent profile by organisation Respondent profile by geographical sports market they know best
Advisory team between June and August 2019 respondents occupied a senior/C-level position
through an online questionnaire distributed to within their respective organisations. The analysis 1.4% Africa
sports industry leaders around the world. Because in this report is primarily based on the collective
Academia/public sector
Middle East
2.4% South America
Sports technology company 5.5%
they share our vision of establishing an independent opinion of the respondents. It is complemented by 7.5% 22.4% 6.0%
perspective on the state of the industry, a number data provided to us by IRIS (Intelligent Research in Sports federation 10.1%
8.6% Australasia
of high-profile sports executives supported us Sponsorship), as well as the team’s knowledge League/event organiser
by sharing the questionnaire with their peers. and research. 46.7%
This helped us ensure broader representation 8.1% Europe
Brand/sponsor 14.3% 15.6%
across regions and industry segments. The effort Other/consultancy
North America
was also driven by PwC and Strategy& Australia, 10.5%
China, India, Japan, Middle East, New Zealand and Broadcaster/media company
Russia. In total we received 590 responses to our 11.5% 11.6% 17.8%
Sports team/club Sports marketing agency Asia
questionnaire across 49 counties.
Source: PwC Analysis, N=590
Dear friend of the sports industry,
We are pleased to present you with the 2019 edition of our annual sports survey, which
received a record 590 responses from sports industry leaders. This represents an increase of
120 respondents relative to our 2018 respondent base. We also saw a further improvement in
the quality and seniority of the leaders we reached out to. I would like to take this opportunity to
thank each and every one of you that took the time to provide us with your views.
This year, we have complemented our assessment of overall industry growth by zoning in on
the opportunities presented to – and challenges faced by – sports organisations on an individual
level. This is reflected in the content of the report’s three deep-dive sections, all of which take an
organisational point of view.
These three section assess: (i) the importance of, and key enablers for, innovation within
established sports organisations; (ii) the key benefits and challenges of direct-to-consumer
content distribution and how commercially viable this channel is at present; and (iii) how sports
federations are performing and where they should focus their efforts and resources in the mid-
term.
In general, we see that sports organisations are playing catch-up in terms of innovation, the
initial hype around direct-to-consumer streaming seems to be dissipating, and by and large
sports federations have their work cut out to (re-)gain public confidence and ensure their
relevance in the years to come.
These findings all underline the same key point: a great number of rights owners, and in
particular sports federations, need to transform the way they do business. While different
players will be at different stages along this long journey, we hope that the insights in this
report are indicative of how you should go about effecting the changes needed for your
organisation to flourish.
Yours sincerely,
David Dellea
Head of Sports Business Advisory
4 | PwC’s Sports Survey 2019 PwC’s Sports Survey 2019 | 5
View from the top
How to stay ahead of the curve?
Future vs. past growth Top 10 sports by potential to Top three industry-wide Areas for improvement of
grow revenues opportunities and threats sports federations
1 Improved fan engagement
Transparency and good
1 Esports 6 Rugby 2 56.6%
7∙ 4%
Enhanced media offering governance
3 Improved live experience
6∙4%
Protecting athletes’ rights
Football/ and well-being
37.4%
2 soccer 7 Golf
average 1 Shift away from traditional TV consumption Developing grassroots
34.7%
growth average 3 Basketball 8 Cycling
2 Access and popularity of alternative entertainment formats participation
3 Dominance of major tech firms as gateway to content
Past 3–5 years growth
American
Next 3–5 years 4 Urban sports 9 football
5 Tennis 10 Cricket Success factors to Perception of commercial success of
enable innovation rights owners’ OTT platforms
Exceeded
Disappointing, should expectations
88.6%
be restructured
4.2%
5.4%
Top three benefits and challenges for rights 78.6% People
owners implementing OTT platforms 39.7%
Structure 20.0% Below expectations
and strategy Don’t know/ so far, but still
abstain promising
1 Access to, and commercial exploitation of, fan data
94%
2 Ability to innovate sport formats through fan insights
3 Increased global reach and viewership
30.7%
of industry leaders believe In line with expectations
that innovation is important 1 Ensuring a high quality of service
or very important for sports 2 Creating enough content to generate long-term interest
organisations
3 Developing an effective pricing strategy
6 | PwC’s Sports Survey 2019
The state
of the
Overall growth: digital is the key driver
sports industry
The overall sports market is expected to • Africa and South America are emerging
grow at a healthy annual rate of 6.4% in the and ready to catch-up. While we are still Average expected
next 3-5 years, albeit below the 7.4% seen talking about small markets in relative annual growth rate
in the past 3-5 years. In general, growth ex- terms, sports leaders expect the highest
pectations are relatively similar to last year’s growth rates relative to the past 3-5 of 4.7% (overall)
survey and remain robust. years.
Each year, we ask a select group of industry
leaders what their perceptions are concerning In terms of regional differences, there Breaking the results down by stakeholder,
industry growth as well as the key opportunities are three groupings with different growth teams and clubs are the most optimistic,
patterns: foreseeing stronger growth in the future
and threats faced by the industry. We do this (9.1%) than in the past (8.0%). This may be
to provide you with macro insights on how our • Europe, North America and the Austral-
a reflection of their self-confidence in con-
asia region are expected to see slower
industry is likely to develop in the coming three growth rates going forward than before.
trolling a key asset in the sports industry:
the athletes and the stories surrounding
to five years. In this section, we outline the We interpret this as a sign of saturation
them that fans crave.
key takeaways and examine what they might in the sports industry, compounded by
growing competition from other enter-
mean for sports industry stakeholders. Overall,
tainment formats.
sports leaders have an optimistic outlook for
• With Asia and the Middle East having
the future, buoyed in particular by the strong
been the most promising markets over
growth expected in digital media. the last decade, growth rate expecta-
tions are stabilising but are still expected
to remain robust for the next 3-5 years.
8 | PwC’s Sports Survey 2019 PwC’s Sports Survey 2019 | 9
The state of the sports industry
Market growth outlook
Market growth outlook by respondents’ best known market In terms of revenue streams, digital media year, in this years’ edition respondents
Percentage annual growth estimates over a 3-5 year period rights are expected to be the key driver of foresee slightly lower growth rates across
overall growth, with growth rates of 9.7% all revenue streams. We interpret this as a
expected over the next 3-5 years. This sign of concern and uncertainty around the
Past 3–5 years
is underlined by the fact that much lower business impact of changing consumption
Next 3–5 years growth rates are foreseen for traditional behaviour.
7.4
6.4 revenue streams, ranging between 1.9%
and 4.1%. Interestingly, compared to last
Expected annual growth rate by revenue stream
Percentage annual growth estimates over a 3-5 year period
Overall
10.3
8.9 9.1
8.4 8.7
7.8 8.0
7.0 7.1 Sponsorship and Traditional sports Digital sports Ticketing and Licensing and
5.8 advertising media media corporate hospitality merchandising
5.6 5.7
4.7
3.9
15.0%
Europe Asia North America Australasia Middle East Africa South America
11.5%
Market growth outlook by stakeholder
Percentage annual growth estimates over a 3-5 year period
9.2% 9.7%
8.4%
Past 3–5 years 7.7% 7.8%
9.7 Next 3–5 years
7.8 7.4 5.5%
7.5
6.9
6.0 6.1
4.8%
5.9
4.8
4.5% 3.8%
3.4 3.2% 4.1%
4.3% 3.2%
Sports Broadcaster/ Sports marketing Brand/ League/event
federation media company agency sponsor organiser 1.9%
0%
-0.3% -0.3%
9.1 -1.3%
8.0 7.7
7.0 7.1
6.6 6.5
6.0
-3.8%
2018 2019 Source: PwC Analysis, N=550
Sports Sports technology Academia/ Other/
team/club company public sector consultancy Source: PwC Analysis, N=550
10 | PwC’s Sports Survey 2019 PwC’s Sports Survey 2019 | 11
The state of the sports industry
Opportunities and threats: optimism in the face of uncertainty
Looking at the opportunities and threats has the potential to make an above-average major tech firms as a gateway to content.
affecting the ability of sports organisation to or very high contribution to industry reve- We interpret this as a sign of growing
drive revenues, digital is both a friend and nues. As the sports world is still getting to (and justified) doubts as to whether sports
a foe. grips with the topic, we think this area could organisations will actually be in a position
provide a massive crossover in terms of fan to benefit from the growing opportunities
To be clear: sports leaders are fundamen- engagement, helping gamers become fans offered by digital. There seems to be a
tally optimistic. Whether it is due to psycho- and fans become gamers. pervasive concern that the massive media
logical bias or not, sports leaders attribute conglomerates that are able to control both
considerably more importance to opportu- Interestingly, respondents believe that the creation and distribution of content may
nities (70.5%) than threats (47.8%). demand from emerging markets has rela- well be stealing the party.
tively little to contribute to broader industry
When considering specific factors that growth, indicating that no quick fix is ex- Echoing the results in last year’s survey,
contribute to industry revenues, opportuni- pected by merely doing more of the same concerns around integrity may pose huge
ties related to improving the fan experience in new markets. ethical concerns, but just don’t seem to
came out on top. This applies to both the ladder their way up to the top of the agenda
broadcast and the live product: to succeed, In terms of specific factors that represent a for sports leaders in terms of perceived
sports organisations have to keep innovat- threat to industry revenues, sports leaders business impact.
ing their approach to both channels, ensur- effectively pointed to two areas of concern:
ing that they are offering more immersive, the shifting consumption behaviour of the
interactive and personalised experiences younger generation (due to digital), and the
than their competitors. resulting changing competitive dynamics of
“ The
how sports content is distributed.
Sports leaders also ranked synergies with direct relationship with fans
gaming and esports very highly, with nearly
three quarters of respondents saying this
One point that stands out is sports leaders’
concern with the growing dominance of is very interesting as it gives right
owners an opportunity to bring
them closer to their sport and
Opportunities 70.5% 47.8% Threats potentially monetise them more
Top opportunities to increase revenues in the sports industry Top threats to revenues in the sports industry effectively in the future. However,
Percentage of respondents, Top 2 box Percentage of respondents, Top 2 box
(“above average” and “very high”) (“above average” and “very high”) it is also a threat, because
Shift away from traditional
traditionally there has been an
Improved fan engagement 84.9% TV consumption
65.6%
intermediary that absorbs the
risk by acquiring rights.
”
Enhanced media offering (e.g. tech Access and popularity of
82.4% 59.5%
firms, OTT platforms, interactivity) alternative entertainment formats
Dominance of major tech firms
Improved live event experience 74.9% 55.2%
as gateway to content
Murray Barnett
Sports content saturation in
Synergies with gaming/esports 72.9% 47.7%
developed markets Head of Global Sponsorship and Commercial
Enhanced sponsorship offering Partnerships at F1
69.4% Decreasing loyalty of fans 40.3%
(e.g. flexibility, personalisation)
New or revised competition formats 64.9% Piracy/illegal streaming 40.1%
Lack of trust in sports
Demand from emerging markets 63.8% governing bodies
39.1%
Amateur sports participation Integrity issues
and tourism 50.5% (e.g. anti-doping, match-fixing) 34.8%
12 | PwC’s Sports Survey 2019 Source: PwC Analysis, N=590 PwC’s Sports Survey 2019 | 13
The state of the sports industry
Growth by sport: esports and football lead the way
For the second year running, esports example, will take on a life of its own and Another trend that stands out this year is the Ranking of top 10 sports by potential to grow revenues
ranks first in terms of its potential to grow mobilise fans beyond the gaming commu- gap that is forming between the top-ranked Percentage of respondents, Top 2 box (“above average” and “very high”)
revenues by sports discipline, and does so nity. sports and the rest of the field. This is a
across all regions. It seems that sports lead- stark reminder that the fight for relevance
ers do not expect the excitement surround- As truly global sports, football and basket- between sports may get tougher as the
Flat-out Perennial Breakaway group Front of the peloton
ing esports to die down any time soon. ball lead the way once more in terms of gap between the peloton and the pack gets
sprinting powerhouses
potential to grow revenues among traditional bigger. This poses the question whether the
This year, we have split esports into two sports. Boasting leading properties that are diverse sports environment we have enjoyed
categories: esports related to action, fantasy cementing their position as the creators of in recent decades will be able to continue to 88.4%
or shooter games (e.g. League of Legends, leading premium content, both sports seem thrive in this changing environment, where 86.7%
CS:GO) and esports related to simulated poised to continue their growth trajectory the “middle class” is struggling to keep up
sports (e.g. FIFA, NBA2K). These came out across multiple markets. the pace. 80.2%
first and second respectively. Contrary to
shooter games, simulated sports face fierce An interesting change in this year’s ranking
competition for fan followership from the real is the appearance of urban sports, which
version of the sport. Fuelled by the growing we added to the list and immediately made 66.7%
visibility of the FIFA eWorld Cup, the FIFA it into the top 10. This is testament to the
eNations Cup and the newly launched UEFA growing crossover between sports and
eEuro 2020, the jury is out if eFootball, for lifestyle.
53.3%
45.4%
38.6%
35.6%
32.6%
29.4% 28.4%
Esports Esports Football/ Urban American
action/fanta- simulated Basketball Tennis Rugby Golf Cycling Cricket
sy/shooter sports soccer sports football
Source: PwC Analysis, N = 563
14 | PwC’s Sports Survey 2019 PwC’s Sports Survey 2019 | 15
The state of the sports industry
Women’s sport:
From promise to real deal?
With women representing 70-80%
of the consumer market – through a
combination of their buying power and
influence – there is huge untapped potential in
the female audiences of
women’s sports
While certain sporting disciplines have ance records were broken, including the nounced they will become the title sponsor sporting assets. The FIFA Women’s World Broadcast Union, for example, 68% of the Overall, there has been a professionalisation
done better than others in terms of world record when 60,739 fans attended an of the Women’s Super League in England, Cup in France is a great example, with users that tuned into their online platform of the women’s sporting ecosystem, one
commercialising the female editions of Atletico Madrid vs. Barcelona match at the with the reported deal understood to be Nike releasing a commercial minutes after football.eurovisionsport.tv to watch match- that is increasingly being served by women
their sports, women’s sport, and women Wanda Metropolitano in Madrid. The FIFA worth in excess of GBP 10 million. This USWNT’s victory in the final. es were men. As the popularity of women’s themselves, in large part due greater
in sport, seem to have wind in their sails. Women’s World Cup 2019 also marked ultimately boils down to the fact that female sport grows, such figures indicate a broad know-how among women in and around
We see women’s sport being powered several new viewership records, especially editions of various sporting disciplines are This makes perfect sense, of course. Fan enough appeal of women’s sport for spon- professional female sports.
by gale force winds rather than intermit- in teams’ home countries. For example, the improving as entertainment products, which targeting through digital has unlocked un- sors and advertisers to successfully engage
tent gusts going forward, with accelerat- match between England’s Lionesses and inevitably bolsters their commercial appeal. precedented marketing opportunities, and with both genders through it. All of these factors bode well for the inevi-
ing momentum into 2020. the US women’s national team clocked a with women representing 70-80% of the table commercial growth that lies ahead for
peak audience of 11.7 million, accounting Beyond football, women’s sports at large is consumer market – through a combination The greater attention brands and adver- women’s sport.
There are multiple reasons behind this for over 50% of the available audience on the rise. While traditionally strong sports of their buying power and influence – there tisers are paying to women’s sport is also
belief. share and displacing Line of Duty as the such as tennis continue to lead the way, is huge untapped potential in the female demonstrated in the greater respect given
UK’s most watched TV programme. less known formats such as the Rugby’s audiences of women’s sports. to women in sport. Women are increasingly
Firstly, in terms of basic demand for the Women’s Six Nations tournament are start- active in sports broadcasting for both men
product, 2019 has proven to be a re- From a purely commercial perspective, the ing to appear on the radar of big brands. If the FIFA Women’s World Cup 2019 is and women’s sports, be it in the studio,
cord-breaking year for women’s sport. sponsorship deals we are seeing for female anything to go by, however, women’s sport on the side of the field of play or on social
Between March and April of this year, for athletes, teams and properties are increas- This positive trend is reflected in the way we is also a great medium through which to media.
example, various women’s football attend- ing in value. This spring, Barclays an- are seeing brands activate around women’s reach men. According to the European
16 | PwC’s Sports Survey 2019 PwC’s Sports Survey 2019 | 17
Transformation and innovation
The sports industry is waking up.
Now it’s time to catch up.
With digital disruption accelerating across Silver recently put it: “We recognise that
the board, pressure on traditional sports is we’re competing against every other possi-
increasing. Our data shows that in Europe ble form of entertainment, nice weather or
sports leaders are less optimistic about fu- anything else we could be doing instead of
ture growth. They are also more aware than watching our games.”
ever of rising threats such as the shift away
from traditional TV consumption and access There is no doubt that sports leaders are
to new entertainment formats. The writing fully aware of the imperative of innovation,
is on the wall: sports organisations need to with nearly 94% considering the ability of
Transformation innovate in order to address changing con-
sumer behaviour and compete against new
forms of entertainment and (any) other form
of leisure. As NBA Commissioner Adam
a sports organisation to innovate as either
important (15%) or very important (79%).
and innovation
Essential to the future of sport
How important is the ability to transform
and innovate for a sports organisation?
We surveyed sports leaders on their perceived Percentage of respondents
importance of the ability of established sports
organisations to transform and innovate, the extent to
which they have related strategies in place, and the
factors and initiatives they view as key to enabling and 4.4% 1.5%
Moderately
implementing these phenomena. Our findings show that important
Slightly important
sports organisations are largely playing catch-up and
that their ability to harness the potential of their human 15.0%
Important
capital – and listen to customers and fans – will be
determinative of their success or failure in the future. 79.0%
Very important
18 | PwC’s Sports Survey 2019 Source: PwC Analysis, N = 540 PwC’s Sports Survey 2019 | 19Transformation and innovation
Innovation requires structure, but people
While 94% are key to success “Collaboration
means playing one
recognise the importance
of innovation, only
Developing the ability to innovate effectively “people” (talent, culture and leadership) and game, with unique
is arguably one of the toughest challenges three factors related to “structure” (strategy,
skills.”
46% are currently
an organisation can face, irrespective of the
industry. The examples of Nokia or Kodak
organisation and collaborations). Interest-
ingly, all the factors were rated as being Kasper Rorsted
implementing a concrete struggling to evolve their products in line either important or very important to enable CEO, Adidas
innovation strategy with changing customer behaviour is a stark innovation. However, one key message
reminder of how even established compa- clearly emerges: beyond having a strong
nies can stumble in terms of innovation. foundation in place, with an actionable
strategy and clear KPIs, success will only
We asked sports leaders to tell us what come if structure is followed by a modern,
they think are the key factors enabling assertive “people” strategy.
innovation. We listed three factors related to
After years of slow progress, sports organ- Beyond such leading examples, what is In other words, while nearly the entire Success factors to enable innovation and transformation
isation are now fully aware of the need to the industry at large doing to harness the industry is aware of the need for sports Percentage of respondents, Top 2 box (“important” and “very important”)
keep pace with technological and social benefits of innovation? According to the organisations to transform and innovate,
developments. Indeed, their very relevance sports leaders we consulted, a lot more most protagonists still seem to
depends on it – both on and off the pitch. needs to be done: while 94% recognise be playing catch up.
the importance of innovation, only 46% are
On the pitch, football is a good example of
a very traditional sport that is purposefully
currently implementing a concrete innova-
tion strategy.
Structure and strategy 78.6% 88.6% People
adapting certain aspects of the game. While
many sports have reflected technological
advances in the rules of the game, football
has long been shy in this regard. In recent
Does your organisation have a clear strategy on how to drive innovation and transformation?
Percentage of respondents
1 1
2 2
Actionable Diverse, skilled
years, matters have accelerated: goal line No, we don’t one:
0.6%Don’t strategy with and talented
technology, VAR and the use of iPads on
the bench for performance analytics – while
at times controversial – are examples that
we are fine as we are
No, there is a
long way to go 3.8%
know/
abstain
Organisational
structure, tools
clear KPIs
3
External
Corporate culture
incentivising
staff
3
Top-down
are reflective of this development. 5.3% and processes
around innovation
collaborations innovation
leadership and
and partnerships vision
Not yet, but there are
Off the pitch, innovation is arguably even encouraging signs
more important. In North America, the 7.7% Source: PwC Analysis, N = 537
industry has long understood that revenue We are thinking about
potential lies not only in the exploitation of it, but don’t know
rights related to their own competitions. A what direction to take 8.1% Yes, we have concrete Our experience with clients is consistent Why is this the case? There is no single rea- from a company headed towards failure to
great example is MLBAM. Created in 2002
46.0% plans and are with these results. Indeed, the majority of son. However, one of the main complicating the most valuable company in the world.
implementing them the work we do as sports practice involves factors in sports is the regular prevalence of Asked about his opinion on leadership, he
as a limited partnership between MLB
(re)designing operating models for organi- politics, which is a big drain on innovation. broke it down to three principles:
clubs as holders of digital rights, it quickly
sations active in sports. As part of this, our Political motivations tend to preserve the
thrived as a best-in-class case of innova- • Bringing clarity to a situation where
clients make tremendous efforts to ensure status quo and push leaders to manage
tion. Having developed leading solutions for 29.8% alignment between strategy and organi- “upwards” towards the broader stake-
none exists
baseball, the company took over all of the We are developing
sational structure, using partnerships and holders of the organisation, as opposed to • Creating positive energy
NHL’s digital properties in 2015 including a strategy
collaborations as a way to boost their core focussing on empowering the talent they
its website, mobile apps, operations and • Delivering success in challenging times
capabilities. This is indeed key to laying a have to work and collaborate at their best in
distribution of its digital streaming service in
robust foundation for success. Neverthe- the face of growing market uncertainties.
a USD 600 million deal. BAMTech, a tech- While easier said than done, Nadella’s prin-
less, many organisations ultimately struggle
nological subsidiary of MLBAM in which ciples are powerful ones that many sport
to make the most of the main asset they Satya Nadella, CEO of Microsoft, is a great
the NHL was also a shareholder, was taken organisations could benefit from bringing to
have: the skills of their employees, both example of an excellent leader in a complex
over in 2017 by Disney, which reportedly the fore.
hard and soft. corporation. In less than five years, he man-
invested USD 2.58 billion for a 75% stake
in 2017.
75.8% 20.2% aged to turn Microsoft’s fortunes around
Pretty much so Not really
20 | PwC’s Sports Survey 2019 Source: PwC Analysis, N = 540 PwC’s Sports Survey 2019 | 21Transformation and innovation
An executive
point of
view
Jim Chaplin
from
Q&A Peter Hutton
CEO, SRI with Facebook’s approach to people and trying new things
“ Change is now firmly the status quo for
sport and entertainment businesses global-
ly. The pressures and complexities faced by
organisations have increased exponentially, To get a better sense of how sports organisations can improve their
forcing business leaders to evolve fast or
approach to innovation, we sat down with Peter Hutton, Director,
risk being left behind. To maintain relevance
in a technology-driven world requires confi- Global Live Sports Partnerships and Programming at Facebook, and
dence in self disruption and a mindset open asked him to share Facebook’s ‘secret sauce’ in this regard.
to innovation, often alongside the introduc-
tion of new skills.
In response to change, more organisations
1. You have seen many different sports 3. When looking to hire new employees, 5. Concretely, what can traditional sports
are seeking leaders from beyond their tradi-
organisations from the inside. What are are there any particular characteristics organisations learn from Facebook,
tional domain. This trend towards a broader
the main differences you have noticed you look for at Facebook? particularly in terms of innovation?
view of leadership is encouraging for the
since your time at Facebook? The hiring process is very different from I really like the fact that staff are encour-
development of the industry as a whole,
and for the creation of more diverse senior First of all, at Facebook we have a very what I’ve experienced in the past. In order aged to speak up in meetings regardless
management teams. However, the risk of small team dedicated to sport worldwide, to find the person that fits best, we conduct of their experience, and that diversity is
‘organ rejection’ for out-of-sector hires rises which means we have to prioritise work numerous interviews. It was new for me actively promoted throughout the company.
relative to the scale of change for both the that has a real impact. Nevertheless, we are that not only HR and potential manag- I’ve often been asked by people in sports
candidate and their new employer. A move integrated in a very large organisation that ers conducted these interviews, but also organisations to share opinions with their
to the equivalent role in a direct competitor is constantly changing. This is very exciting co-workers. The clear goal is always to find own top management, as they feel they are
is well understood; a move across indus- as we get to work with people who not only the right personality fit and to harness a di- unable to do this themselves. Furthermore,
tries to a different role in a distinctly different have a sports background but also broad versity of views and experience. Finding the here at Facebook you really feel that the or-
cultural environment is a road less well skillsets. Combined with our knowhow, this right people really is a top priority around ganisation is continuously evolving. We set
travelled. enables us continually to come up with new here and we put a great deal of effort into it. our goals every six months and adapt our
solutions. structure accordingly without losing sight of
4. How is Facebook learning from its the essential elements of our business.
Today, the success with which leadership
teams assimilate new and different skills 2. How does Facebook empower its customers and partners? How are you
typically increases when the hiring company employees to innovate? integrating data in the decision-making
and the appointed candidate have a deep The culture of the company is very different process?
understanding of their respective mindsets, from any of the organisations I’ve worked I’ve been at a lot of companies where inter-
behaviours and – crucially – cultural fit. The at before. Overall, we have a culture that nal gut instinct normally wins the day. Face-
risks can therefore be mitigated by meas- is clearly driven by encouragement of the book is different; we try to learn from case
uring candidates’ expectations, developing product teams to innovate and try new studies and experience and are continually
a comprehensive onboarding programme things. We are dedicated to giving everyone looking to improve. A concrete example
and agreeing a vision for scale and pace of enough space to trial and error on ideas is our football council. Once every three
change, within the context of the operation- while not losing focus on daily business. months we sit together with the European
”
al realities of the organisation. The organisation is in general very transpar- clubs that have the largest Facebook fan
ent and self-critical. There is a real desire base to learn from each other and develop
to empower everyone to work on projects new solutions based on their needs.
they find stimulating and speak up when
they have concerns or ideas. We have, for
example, a weekly digital Q&A with Mark
Zuckerberg where any employee can ask
questions.
22 | PwC’s Sports Survey 2019 PwC’s Sports Survey 2019 | 23Transformation and innovation
“It is
essential for
Delivering innovation is about listening to your sports organisations to
customers, partners and staff understand the consumer
through quantitative and qual-
To better understand how to deliver itative insights and by building a
innovation effectively, we also asked leaders
consumer-centric culture inside
to rate certain concrete initiatives.
the organisation.”
F1 launched F1fanvoice, an official online
Initiatives to implement innovation and transformation community for fans to contribute to the
Claudio Borges
Percentage of respondents, Top 2 box (“important” and “very important”) sport via surveys, polls and forums. The in-
Global Director Digital
itiative allowed F1 to tap into fans’ ideas, all Planning, Adidas
while fostering a strong sense of community Working with sponsors provides an
and vested interest in the sport. unrivalled platform to drive innovation.
Involve customers and fans in
product development 75.8% Examples are countless, with the likes of
FIFA also provided a great example by Microsoft, IBM, SAP or Alibaba taking on
Collaborate with external partners (e.g. innovation launching a GitHub competition asking important roles as sponsors and innovation
75.7%
hub, investment in start-ups, partnerships) football-passionate developers around partners.
the world to think about solutions relat-
Regular brainstorming Engage and
72.9% ed to voice recognition technology. The Working with partners does not neces-
sessions with staff listen
NBA, Man City or Bayern Munich are sarily mean sponsors, however. There is a
other organisations that regularly organise growing number of organisations collabo-
hackathons and similar events, inviting and rating with starts-up or innovation hubs. For
incentivising experts to think about their example, UEFA recently launched a start-up
Create an internal innovation department 38.2%
challenges and develop suitable solutions. competition, gathering international start-
ups to share experiences and help UEFA
Spin off a separate business tasked
with innovation
33.3% Something that is recognised by sports address and try to solve some of its current
leaders as well, working with external business needs. In the United States, the
Appoint an innovation manager in Structure and partners is another essential channel to NBA, which has a strong track record in
31.7%
each department organise implement innovation and transformation this space, has teamed up with Warner Lab
(75.7% rated this aspect as either important to develop new digital content solutions for
Source: PwC Analysis, N = 538 or very important). basketball and beyond.
Initiatives related to engagement came out clearly Looking outside of sports, there are no shortage 5 steps of design thinking
ahead of initiatives related to changing organisa- of examples of companies that have successfully The innovation journey starts and ends with your customer
tional structures. This confirms that sports organi- integrated customer feedback as part of their
sations need to bolster their ability to engage and product development and design process. 5. Test 1. Empathise
actively listen to stakeholders if they are to master Get feedback for your Develop a deep understanding
innovation. To be able to do so requires agility Perhaps one of the most inspiring cases is LEGO. prototype and engage in a of the challenge and your
and the maturity to accept (temporary) failure as a After averting bankruptcy in 2003, it redefined its short-cycle innovation process customers’ needs
necessary a step towards success. path to success by doing something very simple: to continuously improve it
taking time to engage with and listen to its cus-
This is best exemplified by the tenets of design tomer base. Through The Future Lab, LEGO de-
thinking, which is anchored in the ability to open
up the innovation process by incorporating and
veloped low-risk, low-cost innovation techniques
that led to the rapid creation of minimum viable Design
thinking
acting on external input with agility. prototypes. Expanding on that, LEGO Ideas was
launched, an online crowd-sourcing platform that 4. Prototype 2. Define
Among the options we presented to them, sports allows customers to share and vote for ideas they Transform your idea into a Clearly articulate the
prototype so that you can problem you want to tackle
leaders think that involving customers and fans in would like to see added to the product line.
test all parts of your solution
product development is the number one initia-
tive to implement innovation and transformation The sports industry also features strong examples
(75.8% rated this aspect as either important or of fans actively involved in the innovation process.
very important). 3. Ideate
Come up with multiple
innovative solutions and select
the most promising one
24 | PwC’s Sports Survey 2019 Source: Design Thinking model, by the Hasso-Plattner Institute of Design at Stanford (d.school) PwC’s Sports Survey 2019 | 25Transformation and innovation
PwC Global Innovation 1000
The six characteristics of
superior innovators
1. Aligning innovation and business strategies
Employees need to be very clear in purpose as to why and
what they are innovating. Resources should be funnelled into
research and development that will have the most impact on
future success, not things that will divert attention away from
achieving relevant business goals.
2. Company-wide cultural support for innovation
Overall company culture plays an essential part enabling
successful innovation. An innovation mindset needs to be
proactively integrated into both mission and organisational
structure.
3. Top leadership is all in
Executive input and support plays a large part in creating an
innovative culture. Leadership provides vision to align the
overall direction of R&D efforts, and importantly, is often the
only thing able to overturn older methods of management and
red tape that get in the way of innovation.
4. A customer-first approach
Deeper, continuous and iterative customer insights are an
absolute key capability in coming up with innovative ideas and
have to be handled as critical to the success of the innovation
process.
5. Choice of the right projects
As demonstrated in this section,
‘Fail fast and fail often’ goes Silicon Valley’s mantra. While innovation does not happen by accident. It
innovation may go through multiple stages, it is the decision is the result of deliberate actions to create
making on which projects to ‘green light’ at the front end that enabling structures and populate these
are most important drivers of long term success or failure.
with people that possess the talent and
6. A holistic approach to innovation skills to make it happen. It is an iterative
Simply throwing money at research and development will not process that embraces collaboration,
result in success, and indeed, when done poorly, is likely to customer feedback, “fast failure” and
push companies towards negative outcomes. Successful
learning from mistakes. It requires
innovator must exemplify all five of the above characteristics,
not just one or the other. courage and a sense of overall purpose.
For established sports organisations, the
stakes for this purpose couldn’t be higher:
remaining relevant in an increasingly
competitive and disrupted industry.
Source: PwC Strategy&, 2018 Global Innovation 1000,
What the Top Innovators Get Right
26 | PwC’s Sports Survey 2019 PwC’s Sports Survey 2019 | 27Direct-to-consumer
Digital media consumption: a closer look
It is now universally accepted that the future This raises important questions for sports
of sports consumption will (ultimately) be rights owners on how they approach their
digital. While traditional linear TV will contin- own digital media distribution strategy and
ue to play a fundamental role in the years to the possible use of OTT platforms, which
come, with older generations continuing to we will address in this section in more
Direct-to-consumer: spend a significant amount of time watch-
ing “the old way”, the trend towards digital
is clear – and so is its growth potential.
detail.
To set the stage for the debate, we asked
IRIS Intelligent Research in Sponsorship
Engaging sports fans in the digital age Across the entertainment and media to share a snippet of their latest consumer
sector, content owners and media distrib- research on digital media consumption.
utors are focused on the big prize: market Their study covers samples in the US,
dominance “at scale” across digital media Europe and China of consumers that have
consumption. access to the internet and have expressed
an interest in sports (top 2 box).
Consumption of TV sports content through streaming
Percentage of respondents, Top 2 box
2018
In the sports media space, we considered China Europe USA 2019
recent trends in digital media consumption,
the many paths rights owners are using to 72.0%
68.0%
distribute content through digital platforms, 58.8%
53.6%
and the merits and challenges of doing so 46.0% 48.0%
39.6%
direct-to-consumer. Sports leaders tell us that 31.8%
36.0% 38.2%
successful OTT distribution is by no means a
walk in the park and has been commercially 10.0% 12.0%
underwhelming to date. We see OTT as a Millennials Non-millennials Millennials Non-millennials Millennials Non-millennials
(18-34) (35+) (18-34) (35+) (18-34) (35+)
potentially impactful, albeit non-essential part
of understanding your audience through a Source: IRIS Intelligence | 01/2019, CAWI, N=1021 internet users interested in sports (Top 2 box).
Europe includes France, Germany, Italy, Spain and United Kingdom.
holistic fan engagement strategy.
28 | PwC’s Sports Survey 2019 PwC’s Sports Survey 2019 | 29Direct-to-consumer
In general, the online streaming of sports ested millennials, only 38% stream sports Most importantly, however, the Chinese
content has continued to increase over the online compared with 72% in China and have an unrivalled affinity for online solu-
past year, with percentage point increases 59% in Europe. The difference is even more tions, which inevitably extends to media
of between 2% and 8%. A big driver has striking among non-millennials, with only consumption.
been the growing number of traditional TV 12% streaming sports online compared
providers making their content available with 48% in China and 40% in Europe. For its part, Europe has experienced a
on digital platforms, along with a greater significant disruption of local markets,
amount of sports content distributed digital- In turn, China’s strong numbers could be with OTT providers enjoying an increase in
ly by rights owners and pure OTT providers. the result of the more modest number of popularity and consistently adding to their
linear sports channels available to Chi- respective sports rights portfolios. Although
Interestingly, however, the share of US nese consumers. This has offered greater each market has experienced differing
consumers watching sports through digital opportunities for OTT providers, which have development, the trend towards digital
channels is relatively small, which reflects duly entered the Chinese market, mobilis- consumption is ubiquitous, with nearly 60%
the resilience of the domestic TV market ing nearly three quarters of mainly urban, (and counting) of sports-interested millenni-
and the wealth of linear channels with
sports programming. Among sport-inter-
sports-interested millennials to consume
sports content online.
als consuming sports content online. The race for fans’ attention
(and primary data)
Willingness to pay for the top four sports in the relevant country as part of streaming service
As the ‘attention economy’ takes over, These partnerships beg the question:
Percentage of respondents, Top 2 box
sports leaders are clear that the ability to should rights owners be placing all their
2018 engage fans effectively is the number one eggs in the basket of intermediaries?
China Europe USA 2019 opportunity to grow revenues, with 84.9% Beyond the attractiveness of tapping into
of respondents stating so. Succeeding or their expertise and reach, the current fluidity
failing at this will be determinative in deliv- in the media sector coupled with the limited
ering sponsors that additional edge, while data shared by such intermediaries are
59.0%
56.3%
52.7% 50.8% 50.9% 51.4% 53.0% 52.8% offering fans additional options to consume cause for concern.
50.1%
43.7% 42.5% 43.5% content according to their preferences.
Disney’s bundling of ESPN into their newly
In order to do so, rights owners have launched OTT Platform Disney+ is a stark
naturally teamed up with media and tech reminder that the media space is consoli-
companies to reach and monetise fans with dating and going forward just a few players
Millennials Non-millennials Millennials Non-millennials Millennials Non-millennials
impactful digital content. The examples are will be calling the shots – and sports con-
(18-34) (35+) (18-34) (35+) (18-34) (35+)
countless: tent is no exception.
Source: IRIS Intelligence | 01/2019, CAWI, N=1021 internet users interested in sports (Top 2 box). • Leading platforms such as Facebook,
Europe includes France, Germany, Italy, Spain and United Kingdom. Netflix and Amazon have released
original content with properties such as “Data must be at the heart
Formula 1, the NFL and football teams of all growth strategies.
or athletes such as Tom Brady.
As part of the analysis, IRIS also provided rent pay TV subscriptions and adding new Possibly for the same reasons, Europe
This goes beyond CRM
• Emerging short-form mobile video plat- by including device ID’s,
data with regard to consumers’ willingness paid OTT services. and China also feature significant varia-
form TikTok has also entered the scene
to pay for the top four sports in the relevant tions between sports, although millennials
with high-profile partnerships such as
cookies, brower information,
country to be part of a streaming service. Looking at regional differences, willing- generally showed a greater willingness
to pay compared with 2018. A possible
the one with Borussia Dortmund. content mapping etc. to
ness to pay has remained flat in the US
The first clear takeaway here is that and even decreased among millennials. interpretation could be that millennials’ • DAZN has continued its relentless develop a detailed picture
consumers are generally willing to pay to Interestingly, this trend is not observable consumption behaviour, contrary to that international development through the of fans. It is the only way to
access content, with over 50% of respond- across all sports: more detailed analysis of non-millennials, is less related to top acquisition of premium content, mirrored start understanding more
ents across most regions and age groups suggests that millennials’ willingness to pay events or a particular team’s performance. by niche players like mycujoo for long-
stating their willingness to do so. Year-on- for football and basketball has grown, while This is exemplified by the stark decrease in tail content. about how to sustain a high-
year growth is particularly strong for millen- for American football and fighting sports it the willingness of non-millennials to pay for
• Most interestingly, rights owners are also
performance D2C strategy.”
nials, while older generations seem to have has declined. This would demonstrate that sports that recently staged a world cham-
pionship, compared to that of millennials, partnering with hybrid organisations like Sanjit Atwal
plateaued. This could suggest a dilemma willingness to pay to stream sports is no
which is much more stable. 433 or COPA90, which blend agency CEO, Halfspace
on the part of older generations – one that longer a general question, but rather a con-
and content production work with an im-
is not faced by cord-cutting or cord-never crete reflection of rights owners’ and event
pressive following on mainstream social
millennials – of choosing between their cur- organisers’ ability to engage effectively.
media channels.
30 | PwC’s Sports Survey 2019 PwC’s Sports Survey 2019 | 31Direct-to-consumer
Our respondents recognised this point, cal capabilities in place to make the most
with 55.2% identifying the dominance of of this opportunity. In all too many cases, “Key to succeed in D2C
major tech firms as a gateway to content rights owners are not yet in the position to is to start nimble and
as a major threat to industry revenues. As a use fan data to their benefit, having long develop a strategy with
result, rights owners across the board have neglected its importance while succeeding
been compelled to consider distributing through the sale of traditional rights. As un- the right partners, invest in
content direct-to-consumer, thereby further derstanding data is the key to success in a data and digital marketing
developing direct fan relationships and the world where content is primarily consumed capabilities, and involve Rights owners’ OTT platforms:
potential benefits this brings. Obviously, not through digital channels, rights owners that
every rights owner has the core capabil- feel unprepared should act now to avoid
fans and athletes in the are they delivering?
ities or resources to get such a strategy falling behind. initiatives. Build your offering
off the ground successfully. That said, we with the fans in mind,
are of the view that in today’s environment Another top aspect mentioned by our Armed with the confidence that younger Perception of commercial success of rights owners’ OTT platforms
every rights owner should have a direct fan
enlarging the view on what generations are willing to both consume Percentage of respondents
respondents is the ability to increase global
engagement strategy together with a clear reach and viewership, considered by 70.1% they really like beyond the and pay for premium digital content, and
vision as to whether or not a streaming of respondents as either important or very core sports content: think with a clear view of the benefits of distribut- Exceeded
platform should for a part of that. important. Indeed, rights owners that have ing content direct-to-consumer, a growing Disappointing, should expectations
entertainment.” number of rights owners have taken the be restructured
been savvy in structuring their (digital) 4.2%
To add some colour to the debate, we media rights deals have had the opportunity Carlo De Marchis step of launching their own OTT platforms. 5.4%
asked sports leaders what they think are to ensure broader coverage. An interesting Chief Product & Marketing Officer These have varying degrees of maturity and
the main benefits for rights owners of imple- case of a sport having implemented a long- at deltatre have experienced different levels of success
menting their own OTT platforms. term – and so far successful – multi-plat- to date, with few rights owners having had
form strategy is the NFL’s entry into the the courage (or contractual ability) to offer 39.7%
Access to fan data came out on top, either German market. While selected games are access to premium content. Many of these 20.0% Below expectations so far,
available free-to-air, all games are also avail- platforms have become outlets for on-de- Don’t know/abstain but still promising
for commercial purposes (80.1% of re-
spondents) or to generate insights enabling able on the streaming platform DAZN with mand original content or second-tier live
product improvement (70.4% of respond- German and English commentary as well content, or are used as “back-up” chan-
ents). Access is only the beginning, though: as via the league’s official streaming service, nels for streaming premium live content in
many players lack the infrastructure and the NFL Game Pass. After having barely markets that were not covered by traditional
know-how to derive commercial value and any awareness a couple of years ago, last media partners.
insight from the data at their disposal. A lot year’s Super Bowl had a viewership share
of them are still scrambling to get legacy of 40% on German TV. Given the mixed results to date, we thought
systems to talk to each other, let alone have it would be a good time to examine the 30.7%
In line with expectations Source: PwC Analysis, N = 516
the necessary CRM systems and analyti- commercial success of rights owners’
streaming platforms to date. How have
things worked out so far?
Benefits for rights owners of implementing an OTT platform
The responses of the sports leaders we Challenges faced by rights owners in implementing an OTT platform
Percentage of respondents, Top 2 box (“important” and “very important”)
consulted indicate that the hype around Percentage of respondents, Top 2 box (“important” and “very important”)
OTT platforms as the commercial silver
Access to, and commercial bullet for rights owners is over, with 45% of
exploitation of fan data
80.1%
respondents viewing results so far as below Ensuring a high quality of service 76.8%
Ability to innovate sport formats expectations or disappointing. Only 4.2%
70.4%
through fan insights Creating enough content to generate
think results so far have exceeded expecta- 75.1%
long-term interest
Increased global reach and tions, and just under a third view them as in
70.1%
viewership Developing an effective pricing strategy
line with expectations. 68.5%
(e.g. freemium, subscription options)
Additional sponsorship/
63.0%
advertising revenues Identifying suitable implementation
In attempting to understand the reasons for 66.2%
partner(s)
Complement offering of linear
broadcasters 61.7% this, we asked respondents to outline what
they felt were the greatest challenges faced Cost of technology and implementation 63.9%
Additional subscription revenues 58.5% by rights owners in implementing such
Competing interests with companies
platforms. buying media rights
62.2%
Source: PwC Analysis, N = 513 Managing entrepreneurial risk 44.5%
Source: PwC Analysis, N = 514
32 | PwC’s Sports Survey 2019 PwC’s Sports Survey 2019 | 33Direct-to-consumer
Play
According to 76.8% of respondents, the demonstrated by numerous studies, there off fee or plenty of in-game transactions
main reason has been the challenge of is no doubt that people’s willingness to pay that upgrade the experience.
ensuring a high-quality service, followed for digital sports content is on the rise, as
closely by challenges in creating sufficient consumers appreciate the value of access- What does the future look like in terms of
content to generate long-term interest ing engaging and personalised content. sports media pricing models? It is clear that
(75.1%). Rights owners face a big problem The difficulty lies in finding the right balance the paradigm of exclusivity and free-to-air
in keeping pace with huge content produc- between free and paid content, and in vs. paid content has its days numbered. We
tion and distribution machines like Netflix, ensuring an effective funnelling of fans’ believe rights owners will have to provide
Amazon or DAZN that are competing for attention from free content to platforms that an effective entry-point to consume content
the same entertainment budget. Especially allow for direct (or indirect) monetisation. that is free of charge, non-exclusive and
smaller sports with less high-end compe- broadly accessible. From there, they will
titions have issues keeping fans on their Looking outside of sports, gaming may have to develop an effective product and
platforms. Unfortunately, simply shifting a provide an interesting example of suc- pricing strategy to funnel consumers in line
linear TV feed onto a digital platform does cessful “freemium” models. Virtually any with their evolving preferences and needs.
not make it more exciting or engaging for game has a free-to-play version that drives This will be painful in the short term as it
the digital-first generation, which has more initial engagement. A price-sensitive – or will likely cannibalise traditional media rights
and more demanding expectations of the uncommitted – gamer may continue on that revenues. Long term, however, it may be
features live sports streaming should offer. basis. This provides only little monetisation the only way to maintain the appeal of
potential, and yet expands the reach and sports content for generation Z.
“
Developing an effective pricing strategy also popularity of the content. From there on,
ranked high on the list of challenges, with consumers are funnelled into a full spec- Sports federations should carefully
68.5% of respondents naming it as either
an important or very important concern. As
trum of value propositions with varying
monetisation models: a subscription, a one-
reflect if future OTT income will
balance out with reduced revenues
from traditional media due to reduced
exclusivity, as well as the costs
In summary, there is no single way to engage need to have the sophistication of digital
fans effectively. All distribution channels, advertisers to attract partners, the winners of to develop, maintain and run an
be they direct or intermediated, should be tomorrow will be the players who are able to OTT solution with the same quality
”
considered based on their respective merits build direct fan relationships and develop an
(and challenges). In a world where media and intimate understanding of their audience, be it
standard.
sponsorship are converging and rights owners through streaming or other means. Stefan Kürten
Executive Director, Eurovision Sport
34 | PwC’s Sports Survey 2019 PwC’s Sports Survey 2019 | 35You can also read
