Russell Karp, VP, Media and Entertainment at technology consultancy DataArt, on how sports betting operators are affected during big events.
“Just play. Have fun. Enjoy the game.” — Michael Jordan, professional basketball player.
It requires an extraordinary amount of human will and endurance to achieve being on the biggest sports stage. Yes, some luck does play into reaching the highest of goals but as many smart people have said, “You make your own luck.” These achievements should not be viewed as flukes, rather the culmination of a lifetime of hard work. The more fortunate ones make it to the top multiple times, and it becomes more difficult with each successive triumph.
The Super Bowl, the Olympic Games, the NBA Finals, the U.S. Open Tennis Tournament, the World Cup, the Kentucky Derby — even if you are not a sports fan or a professional athlete, you can hardly escape the buzz around these and other major sporting events. While the highly anticipated matches and games give supporters a comforting feeling of sharing a bond with their favorite teams and other fans, the sports industry is looking to entice fans to watch and immerse themselves in games while driving more profit.
Traditionally, ticket sales, media rights, and branded merchandise sales account for most of the league’s and team’s revenue. The ever-changing technological environment and growing fan expectations, force leagues and teams to extend their staff far beyond coaches and medical professionals. Marketing teams, legal departments, mass media, sponsorships, business development specialists, technical experts — they all play a vital role in boosting the entertainment value for fans and non-fans alike. This approach has yielded revenue growth from media rights and new industries such as legalized sports betting. The increased interest and demand for big sports events reveals the success and fails of all the players involved.
The Tiger Woods vs. Phil Mickelson match in Las Vegas last November was promoted as a high-stakes, winner-takes-all event, offering the sports industry and fans the anticipation of the thrill of an ultra-competitive showdown. There was also a new sprinkle thrown into the mix for this event — sports betting. With MGM as one of the key sponsors, sports betting was included as part of the advertising packages and promotions leading up to the event. During actual play, the broadcaster partner, TNT, referenced multiple possible bets for each hole and for each shot Tiger and Phil took. That was an unprecedented visual display and promotion of sports betting the likes of the viewing public has never witnessed before. Even though the event itself was underwhelming, a large number of people were exposed to what the future could look like for sporting events, both large and small.
From Hollywood talent agency executives and producers to leaders from the worlds of TV, sports management, and the PGA Tour, the number of players rallying to control a piece of the action may have resulted in restrictions that the initial concepts were scattered and partially lost. Fortunately, the event was still successful, but the idea that the wide range of interested parties may have caused complications that constrained creativity and execution is certainly a concern.
What sports and entertainment companies are cooking up
Passionate fans are the most valuable commodity for sports-related businesses. Sports fanatics are willing to spend considerably to show their love and support for their favorite teams and athletes; as evidenced by consistently increasing merchandise sales. For example, sources say that an average fan spends up to $90 on Super Bowl related activities and purchases. This year Atlanta hosted more than 500,000 people for the Super Bowl and associated events. CNBC’s Megan Leonhardt roughly estimated that each visitor was likely to spend from $4,000 up to $18,000.
However, sports fans can be fickle; especially those living in cities without a major sports team. It is not unusual for sports fans to have multiple favorite teams across sports. Furthermore, as some studies show, over 22% of fans are ready to switch their favorite team, and many of them have already done so in the past. That is further proof that establishing audience loyalty is a critical factor that helps sports organizations find better partnership opportunities with media, sponsors, and advertisers.
Since the gladiator games, people have been driven to sports events to be entertained and to support their team/athlete with other fans. Facing fierce competition, sports businesses have to invest in new solutions to reach out to their audience and keep them constantly involved. Simultaneously, tremendous investments are being made to support alliances between sports, technology, and media.
Whether it is a league, club or a media entity, these organizations have to excel in digital innovation if they want to satisfy today’s fans. Various applications for fan engagement, athlete health tracking, smart ticketing, sponsorship and license management, software, and solutions for the player and team analytics are now must-have tools to fuel the sports business and stay competitive.
Mobile applications are one of the simplest ways to maintain and increase contact points with a sports audience. These days, it’s difficult to imagine a league or team without an app that provides their fans with the latest news, game schedules, and access to original content. Moreover, applications dedicated to specific events have become essential to the fan experience. With that in mind, the NFL has launched two applications for users to get closer to the Super Bowl LIII experience. Of course, events such as Wimbledon and The Open provide fully engrossing experiences for their fans via their mobile apps with features such as real-time scores, the latest highlights, and even food delivery for those attending in person. Sports media companies covering major events provide news feeds, scores, and a means for fans to stay connected and never miss a part of game action.
AR/VR and other immersive technologies have already changed how we experience live sports and offer fans a next-level experience. For example, NBC offered the first virtual reality coverage for The Winter Olympics last year and made it available live on a wide range of platforms and devices for fans based in the United States. The NBA made matches available in virtual reality through their League Pass subscription streaming service, and the Los Angeles Clippers introduced CourtVision.
Big Games Bring Big Data
Sports organizations have invested a great deal of money and resources to provide enhanced experiences for fans. However, there are other motivations (positive ones) in play other than delivering a high-quality entertainment experience. Sports organizations and sports media companies are extremely interested in collecting data focused on viewing habits and preferences to better understand fan behavior. The analysis of these data points will pave the way for a superior, personalized level of engagement with the audience and, simultaneously, expands advertising and sponsorship opportunities.
Data is also an invaluable asset to the emerging sports betting environment. Sports organizations, together with techies, have been developing tools and platforms for collecting and analyzing big data and building analytical systems that are revolutionizing athletes training, helping boost performance and simplifying player recruitment. In terms of legalized sports betting, the question about leagues providing their official data to gambling operators during games has become a hot topic of conversation in the sports business community.
The NBA already shares official league data with MGM Resorts International, The Start Group and FanDuel. MGM sportsbooks are also authorized to utilize MLB and NHL official statistics. Official data enables US gaming operators to boost in-game betting, which is gaining popularity and is maximized by the mobile experience. For example, Station Casinos offered up to 20 ways to bet in-play via their mobile app during the recent AFC playoff game between New England and the Los Angeles Chargers. Gamblers are constantly looking for action and, this year in Nevada, New Jersey and Mississippi, legal bets on the Super Bowl exceeded $185.5 million.
The upward trajectory of sports betting in the U.S. is bringing in new players and innovation into the industry at a rapid pace. Provided that a solid technological foundation is established and comprehensively managed, wagering on sports in the U.S. will grow exponentially, expanding this exhilarating industry throughout the country in the coming years.
Big Events = Big Risks
The lucrative world of professional sports attracts a wide range of interested parties. From startups to conglomerates, companies from different industries are trying to get into the game (apologies for the pun). However, there is substantial risk involved.
Although the Phil Mickelson vs. Tiger Woods match was proudly billed as the first pay-per-view broadcast in golf, technology problems were severe. These issues resulted in the broadcast partner, Turner, making the event available for free to everyone and forgoing the fee they intended to charge. People who paid were offered refunds from several providers, such as DISH and Sling TV which provided credits, as well as AT&T — which owns DirectTV — and Comcast who offered refunds of the $19.95 fee. These technical problems were severe enough to become big news as they affected a large number of viewers. With golf, tennis, Formula One, and other sports, attempting to create interest and engagement with younger audiences is essential for broadcasters to adequately architect and deliver stable technologies to avoid issues during events.
Broadcasters and media companies are not alone when it comes to technical glitches when delivering content. Betting operators, such as FanDuel and DraftKings, have had their fair share of technical issues. FanDuel was working hard to ensure platform stability for the Super Bowl since their sportsbook volume was expected to be extremely high for the game. They were successful in avoiding a controversy like the one they encountered last September. DraftKings did the same to avoid the problem they recently faced in the DraftKings Sports Betting National Championship. There are plenty of other examples of technical fails, but the main point is that essential preparedness steps should be taken and a Plan B is a must have!
The Super Bowl was a big test of scalability and reliability for both FanDuel, DraftKings, and other operators. Even though New Jersey sportsbooks took a loss for the Super Bowl, more importantly, they proved their reliability handling a large betting volume.
By Russell Karp,
Vice President of Media and Entertainment Practice at DataArt
