Digital Transformation in Sports and Entertainment

Accelerating transformation to leverage the opportunities of digital technologies

On December 7, 1963, a 29-year-old television director premiered a new invention during the Army vs. Navy football game that he called the instant replay. Whether he anticipated its impact on the entire sports experience for everyone from players to audiences to owners, or simply thought he was lessening the referees’ workload, is unclear. Today, instant replay technology has evolved to be a standard practice of sports entertainment, and with it, the emphasis on “how” you play the game has gone from motivational cliche invoked by coaches in the locker room to mission-critical detail that decides championships.

The embrace of technology by the sports and entertainment industries, though dramatically significant, is hardly unique. As business owners in 2017, we’ve witnessed digital technology’s inevitable infiltration of industries across the spectrum, even those once thought relatively immune. The opportunity to influence consumers, widening of the playing field for nimble, technology-loving upstart competition, and unprecedented power of branding and personalized consumer experience are just a few examples of phenomenons presented by the new digital landscape that have taken digital strategy from a line item to an ongoing, daily topic of discussion.

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Media and entertainment have been among the leaders in transforming operations and products to satisfy a digital appetite. UK-based technology market research firm Vanson Bourne, in partnership with Dell Technologies, conducted an evaluation of 4,000 business leaders from 16 countries across 12 distinct industries. Designed to uncover the effects and timelines of digital disruption, the results show 73% of respondents agree that a “centralized technology strategy needs to be a priority for their business.” Successful organizations focus on adopting diverse platforms to attract larger audiences, utilizing technology and branding across assets to drive results, and implementing solutions backed by data collection and analysis.

New Platforms, New Audiences

According to the same Dell survey, “72% of respondents [are] expanding their software development capabilities.” Even the heaviest of hitters in digital media are reaching to new areas. In 2016, Facebook launched Facebook Sports Stadium, an interactive hub for fans to interact with games, teams, and players more intimately. In 2017, Amazon outbid Facebook, YouTube, and former rights holder Twitter, for the streaming rights to Thursday Night Football, a one-year deal worth a reported $50M.1 With introduction through the football, Amazon gathers a myriad of data points on customers and understands the potential for drawing a sports audience that will further explore Amazon’s expanding Prime Video service. Media and entertainment businesses are making monumental pushes to diversify their digital capabilities and push their brands further into the mainstream.

More than collecting valuable data on fan behavior, such as peak times for food ordering and parking habits, Levi’s Stadium and the 49ers accrued an additional $2M in revenues by digitizing the fan experience when inside the stadium doors.

The Power of Branding

A business plan with a significant digital strategy has proven to have greater opportunities for worldwide recognition. “Digital media companies are by definition global and there is an opportunity to do deals with them in 200 countries around the world where basketball is followed,” said NBA commissioner Adam Silver.4 Social media’s reach of a worldwide audience has allowed more authentic access into a player’s personality. Just as personal, relatable branding campaigns consistently see greater returns, utilizing personable, relatable athletes as branding opportunities has proven a lucrative approach for brand strategy.

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“Three years ago, we were in 100 million pay-TV homes…[w]e now have 200 million smartphones that did not exist five years ago,” said Silver. “We need to work through this transition with our television partners. But my view is that this will be net strongly positive when everyone is carrying a TV in their pocket . . . We will truly make it up in volume.”

Dynamic Pricing Models

More than enhancing the experience for fans and players, a sold-out stadium means maximum ticket sales, heightened concession and merchandise sales, and a more desirable product for television audiences. Although, the structure of ticket sales has laid dormant for decades. Today, employing digital databases and analytics, franchises can use a dynamic approach to adjust ticket prices and fill empty seats leading up to game time. In Major League Baseball, the St. Louis Cardinals have a system capable of pinpointing optimal prices for sales by comparing data based on ticket demand, team performance, pitching matchups, and weather. According to professors at the Wharton School at the University of Pennsylvania, this ebb and flow of ticket prices can result in a 14.3% increase in revenue.1

Digitizing the Experience

A side effect of today’s digital revolution includes changes in service industries. Before a game, fans can order food delivery through apps like Postmates or DoorDash, buy e-tickets through Stubhub or SeatGeek, and secure transportation to the stadium through Lyft or Uber. The only remaining experience yet to be digitized? The in-game experience. When Levi’s Stadium opened its doors to 49ers fans in San Francisco, attendees could use the official stadium app as their game ticket and parking pass, get GPS aid finding their seats, check instant replay, and order food delivery directly to their seats. More than collecting valuable data on fan behavior, such as peak times for food ordering and parking habits, Levi’s Stadium and the 49ers accrued an additional $2M in revenues by digitizing the fan experience when inside the stadium doors.3

Instant replay is now a classic example of filling a void we didn’t realize existed but, once filled, its use becomes ubiquitous and its absence would never again be tolerated. Newly discoverable “voids” and their subsequent technological solutions constantly emerge in a busy digital landscape. A coach is still wise to urge his players to focus on the game over winning or losing. But now in business, thanks to technology, we can identify exactly how to play the game to return a win every time.

2 Wall Street Journal

4 Financial Times