Eleven's Vicente urges sport to follow digital with traditional model under threat
By Simon Ward
Sports rights-holders have been encouraged to develop new revenue streams, with transactional and esports opportunities a prime example, given the threat to traditional income sources in the current challenging health and economic situation.
Rights-holders, broadcasters and sponsors are presently grappling with the fallout from the coronavirus pandemic which has resulted in the postponement and cancellation of major leagues, competitions and events in 2020.
As the number of Covid-19 cases falls, live sport is returning in major markets such as Europe and North America, but all it is not as before, with matches and races having to be held behind closed doors to prevent a further spread of the virus.
While this will have an impact on ticket revenue and the value of the media product, senior executives believe that it could speed up necessary changes to the sports ecosystem, and help counter the perceived overreliance on the established funding avenues of broadcasting rights and sponsorship, while providing a further shot in the arm for esports.
Speaking in a webinar organised by Eleven Sports, Luis Vicente (pictured), the chief executive of the international subscription broadcaster, said: “On one side it proves that the current business model around sport needs some fine tuning…
“Many industries around the world are now suffering problems because of the current crisis but sport I think is probably going to be one of the most affected as there are a massive amount of issues putting under threat the traditional P&L model, and understanding as well that the end user, the fan, is also facing threats in terms of available spending.”
Vicente, formerly chief digital transformation and innovation officer at Fifa, believes there will also be changes to the way rights are packaged going forward, with a greater emphasis on digital and engaging more closely with consumers.
He said: “Traditional inventory packages of sports rights holders needed to change anyway… with the exception of a few organisations where digital has started to be a much more important part of the activation strategy and the inventory package supplied.
“Many others, a big majority, were still talking about logo exposure and other stuff that probably 15 years ago was very valuable. I think data should be seated in the acquisition [of rights] and getting into the fan and trying to take advantage of the biggest thing that sport can bring to any partner, that is the unbelievable traffic and emotional commitment.
“That’s already there. Covid is only going to intensify that because let’s face it sports organisations need to become a lot better at playing the game with commercial partners, whether they are media companies, sponsors or the fan that buys a ticket every week.”
Ricardo Fort, vice-president, global sports and entertainment partnerships at Coca-Cola, is already seeing a significant shift towards digital content, and expects brands to play a full role in this, saying: “The digital inventory has become high and this is going to accelerate the process of sponsors valuing it even more. But the more sophisticated sponsors have been working on something like that, and I do think that because of what we’re living through now there’s going to be a rebalancing of costs in general for sponsorship and media packages.
“I think that sponsors are capable of helping broadcasters and rights-holders more in taking their message out, and are going to be even more important for the success of these partnerships. We, at Coke, feel very confident because this is the kind of thing we do. We create programmes together and we go and tell the event, the athlete or the club story to everyone. I think that is going to be a welcome movement in the industry in the coming months.”
While extolling the growth in branded content on its platforms this year, Peter Hutton, the director of sports partnerships at Facebook, said that rights-holders needed to make sure they were reaching younger audiences on social media given that they might not necessarily be watching sport on pay-television platforms.
Facebook revealed this week that branded content posts by English soccer’s 20 Premier League clubs on its platform increased by 41 per cent in the 30 days after the lockdown measures were enforced in the UK in March compared to the 30 days prior. Meanwhile, on Facebook-owned Instagram, branded content posts over the same period by those clubs increased by 122 per cent.
Hutton said: “You need to be where your audience is and where the audience you want is consuming content, whether that be on Twitch or Instagram or Facebook. When you look at the way the rights packages are constructed, you have to think about the future of your sport or your brand, and how you’re looking towards the next audience.
“If a young audience is only on digital free-to-air media then you have to make that part of your game. That’s one of the reasons why again I’d go back to branded content and say that’s been a really good fit for this period, and it’s just accelerating a general trend.”
Hutton also noted “how the ability to transact to buy things during the event is moving online as well.”
He pointed to the opportunities to buy merchandise via Instagram during last weekend’s first Nascar Cup Series race of the season, and the NBA marketing Chicago Bulls products around ‘The Last Dance’, the popular recent ESPN-Netflix docuseries featuring the team’s exploits in the 1990s and role of superstar Michael Jordan.
This week saw the rollout of Facebook Shops, which will enable small businesses to set up dedicated online stores on Facebook and Instagram.
Vicente agreed that the current crisis has demonstrated the importance and value of the sports event audience beyond the venue, notably online, and expects there will be greater appreciation of this going forward.
He said: “The community that sometime sports rights holders have been looking at is actually very narrow. There’s a much bigger community out there. When you look at the essence of a football match, and there are 47,000 people in a stadium of 50,000, then you tend to forget the millions of people connecting online, and trying to engage with that game on different social media networks, the massive amount of people seeing it on TV, and the people who will create their own content about it.”
On the potential online revenue sources, he said: “People sometimes complain about the lack of new forms of monetisation but that’s a solution immediately. I think the big change that this crisis brings is that the sports ecosystem, whether it’s the rights-holders or the commercial partners, have to think much more deeply about this to find the solution.
“We know that next year potentially is going to be a very tough year for traditional rights-holders because some revenue streams might be in danger looking at what is happening with ticketing and hospitality at events if this situation proceeds and people cannot go in big numbers to the stadiums, and what might happen with media rights [falling in value]. It’s important that once and for all the industry works together to try and get a digital play that is almost as good as or even better than the real thing.”
Hutton added: “I think that's the real plus out of this that there’s a chance for people to use their imaginations and reinvent revenue streams, because the old streams are not as reliable anymore.
“One of the issues with the sports industry has been that reliance on broadcasting income or on big sponsor income which was almost money that fell out of the sky, in that it just came every few years. And three years later, it would go up by a certain percentage, and everyone would be happy.
“Now the trend has got to be far more, ‘How do you activate? How do you take control of your customer? How do you make them more engaged with your content? And how do you monetise them ultimately?’ I think that perception shift is really important.”
The resilience of esports Many of the above learnings have come from the gaming and esports sector, which, while lately unable to host the live events that have become a feature of the calendar in recent years, has benefited from being able to run major competitions online during the pandemic.
Vicente said: “There has been massive interest in virtualisation, including of course esports. I think esports has made a massive step, in terms of robustness and maturity, and I’m really sure that the community will still be there [afterwards] and grow in a more accelerated way going forward.”
Vicente pointed out that Eleven Sports has shown more than 200 esports events over the last few months, including 60 in Portugal where it has attracted 2.5 million views across its platforms.
Moreover, in the absence of live sport, traditional rights-holders have developed concepts in this field, a notable example being the F1 Esports Virtual Grand Prix series, in which Formula 1 drivers have competed against other leading names from the world of sport and entertainment in simulated online races based on the official video game.
Vicente said: “I think that with traditional sports, unfortunately esports has not been treated with full respect and the full strategic priority it deserves. Of course you’ve seen now, over the last weeks and months, suddenly the traditional sports organisations have woken up to esports in a cataclysmic and earthquake-like way.”
Ralf Reichert, the co-founder and co-chief executive of leading esports promoter ESL, claims that the sector enjoys some advantages over traditional sports in that it can stage events online as well as offline, and produces its own media content for digital platforms so can control the narrative.
He said: “When all this [the pandemic] happened we went back to where we started from, and moved all of our competitions [online]… We’re obviously incredibly lucky and have produced more content in the last few months than we were originally planning as nothing has been cancelled, it has been moved.”
Reichert added: “I think we’ve actually been a bit ahead of the curve with esports. There’s one big difference between traditional sports and esports, in that most esports organisers, and we’re at the forefront there, create their own main signal. That means the broadcast that goes out about our tournaments is not Sky-produced, or someone else-produced, it’s ESL-produced. That means the stories that are told on the main content stream are the stories about the players, the fans and the partners.”
ESL, which is owned by Sweden’s Modern Times Group, recently extended a deal with Twitch, under which the Amazon-owned platform will be the exclusive English-language digital live streaming home of its competitions and those of stable-mate DreamHack in 2021 and 2022.
On the benefits it offers sponsors, Reichert said: “[For a partner] we would tell their story as part of the content, as part of the event, as part of the tournament, and not as a 30-second advertisement somewhere in between. There will be a story with influencers being told as part of the sports story.
“I think that is a unique opportunity that sports overall have… It is much more authentic, and authentic is what this digital generation is so much closer to than any of the older generations. We grew up in a walled garden, they didn’t. So telling that story first-hand and being interactive with the audience just creates much more value than anything we know from the past, and that’s really accelerating right now.
“Most of the things that Covid has brought about are just acceleration. There's very few things that are truly new and truly innovative and truly different. It's all just faster. Things probably most of us knew would happen are happening now without the usual delay with society.”