“When you go through a curve like this, the risk of underinvesting is dramatically greater than the risk of overinvesting for us. Even in scenarios where if it turns out that we are overinvesting, these are infrastructure which are widely useful for us.”
These words from Alphabet’s CEO Sundar Pichai on the company’s latest earnings call should make everyone clamouring for AI adoption stop and pause, especially those in the sports industry.
Go deeper with GlobalData
For nearly 18 months, companies across all industries have been racing to develop and adopt AI to be at the forefront of a technology that many believe will revolutionize human endeavour.
From our work lives to creative industries, we have been told that everything will be impacted by AI, so to avoid FOMO (fear of missing out) everyone has jumped on board looking to develop the next big thing.
However, as Pichai has hinted at and Mark Zuckerberg’s Meta has found out, investors and analysts are starting to be sceptical.
Meta lost almost $200 billion in value in April after Zuckerberg admitted that it will take several years for its work on AI to scale up and start making money, which in turn led to fears among investors that the huge investments in AI may not pay off at all, leading to a mass sell-off and the value of Meta falling by almost 15% the next day.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataIn essence, both leaders are telling us that while spending billions to develop AI is necessary, there is no way to monetize this technology at present.
So why should the sports industry be concerned? In the case of Meta, we already have real world examples of the failed investments in technology, namely around the hype surrounding the metaverse and non-fungible tokens (NFTs).
The emergence of NFTs during the pandemic was supposed to usher in the digital age for the sports industry. By buying a piece of digital content, fans would be able to own a digital certificate of ownership for a given asset.
However, the fad passed almost as soon as it arrived, leaving many early adopters significantly out of pocket as the price of NFTs crashed, rendering many of these pieces of digital content essentially worthless.
Following on from NFTs, the sports industry spent most of 2022 dreaming of how the metaverse would revolutionize the market, ploughing time, effort, and money into developing solutions to be at the forefront of the digital revolution.
Ideas such as virtual stadiums and fan tokens were developed but again, either those ideas did not bear fruit or simply led to adopters losing out financially.
While there is no doubt that AI will eventually become an everyday part of our lives, with generative AI likely to be able to offer translation capabilities for sports commentary and personalization opportunities for sports sponsorship activations moving forward, the likelihood is the AI industry will see a small boom period before a crash, much like the dot com boom in the early 2000s with the advent of the internet, before we see companies able to monetize the technology once practical use cases are developed.
Some of the largest companies in the world at the time were brought to their knees simply by being in the wrong place at the wrong time – AOL in essence invented community message boards which are now commonplace on nearly every article, but simply could not monetize it effectively.
The next great idea for how to effectively use AI may already be out there, but the world might not be ready. The sports industry will be better served by adopting a wait-and-see approach to AI, as opposed to rushing in.
