Sports have always been the ultimate unifier — transcending geographic borders, rising above partisan politics and enabling multiple audiences (and generations) to find alignment — the little-known secret behind this global unifier? Technology.
Technology influences how athletes train and compete, how fans engage and consume content and how world-class venues are constructed. Technology has been quietly transforming the world of sports for years, with investment in areas like esports continuing to rise, surpassing a total of $2.5 billion in VC funding in 2018 — and some estimates predicting the sports tech sector will reach $30 billion by 2024.
With the 2020 Tokyo Olympics less than a year away, a massive amount of investment and innovation are pouring into the sports technology industry ahead of this globally unifying event. But which technologies are making the biggest impact? Where are investors placing their bets? Which sports are at the forefront of the technology revolution and which factors are holding the industry back?
In an attempt to pull the curtain back on the sports tech industry, we conducted a survey, The Current State of Sports Technology, of industry experts, including investors, founders and professionals from teams, leagues and media properties, to answer these very questions. Below you’ll find some key takeaways from our findings, pointing to the areas we believe the industry is headed in the year to come.
Fan engagement technologies, including live streaming and esports, are set to make the largest impact on sports in the next 12 months
When asked about which technologies would make the biggest impact on the sports industry in the next 12 months, an overwhelming 78% selected fan engagement technologies, such as live streaming, esports and content platforms, compared to technologies related to athlete performance (16%) and stadium experience (6%). Respondents also believe that this will hold true for the upcoming 2020 Olympic Games in Tokyo.
“Anticipating the next fan engagement trend is critical, whether you’re a team, brand or media company,” says Tom Masterman, global head of Publisher Sales at Genius Sports Media, a leading provider of sports data and technology solutions. “Tokyo 2020 will be a make-or-break event for startups as well as incumbent technologies.”
Having worked on two Olympics at previous digital media companies, Masterman is aware of how quickly the Games come and go. “Among the questions that will keep many of us up at night include, ‘Will fans adopt my tech? Is my sponsorship integration a good experience? Did I choose the right channel partners?’ ”
Top three technologies for investment: Media and content-related platforms; measurement platforms for data, analytics and biometrics; and esports
From an investment perspective, media and content-related platforms, esports and measurement platforms for data, analytics and biometrics were among the top three areas of interest. Other notable areas include athlete tech and performance optimization, in-venue technology, gambling and gaming and recovery health and home fitness. This is a powerful indication of where venture capital funding focus is trending, given that more than 50% of respondents, coming from a wide array of areas in the industry, identified themselves as investors.
“As investors, we see cyclicality in every industry except sports, which has the biggest consumer ecosystem. Sports had been a very traditional industry powered by legacy tech, but now with the advent of streaming, sports content media distribution is decentralized via social media platforms,” says Gayatri Sarkar, managing partner at Hype Capital, who offered her take on this investment trend. “The sports market has the opportunity to be a multitrillion-dollar ecosystem with technological advances such as 5G, digital collectible trading and the rise of esports, which will fuel new market and social behavior. As the infusion of deep tech continues in smart venue, gambling, performance biometrics and many more sub verticals where data is the engine, we’ll naturally see more and more deep tech investors entering the sports investment landscape.”
Basketball and esports are at the forefront of technology
While esports is a likely leader in the use of technology, with 79% of respondents placing it in the top three category, basketball remains the top pick, with 87% placing the traditional sport at the forefront of innovation.
As a former NBA-er*, this comes as no big surprise. The league has always been known as a thought-leader in technology and innovation, and their dominance is what is driving the sport’s tech-savvy DNA on a global level.
When talking to Tom Hunt, EVP, Business Operations at the Sacramento Kings about his take on innovation in the NBA, he placed technology as a top priority. “Golden 1 Center is one of the most technologically advanced and connected indoor arenas in the world, and serves as our 21st Century communal fireplace,” said Hunt. “We’ve been at the forefront of leveraging technologies such as AI, AR, blockchain and esports (Kings Guard Gaming/NBA 2K) to deepen connections to our brands while customizing and personalizing frictionless fan experiences remains core to our mission.”
That being said, I’d make a bet that baseball-related technology will catch up very quickly. We’ve seen several startups currently working with baseball clubs — enhancing everything from a player’s cognitive reactions to the ways in which your food is delivered to you at ballparks.
What’s holding back sports tech adoption?
Respondents cited several factors holding back sports technology adoption, with the top three reasons, similar to many non-traditional technology sectors, being unqualified decision makers, risk aversion and cost.
While there’s plenty of blame to go around (and everyone can assume a degree of responsibility), startups in the space need to validate their business model outside of a core sports stakeholder. They need to realize revenue from more than just sports teams, leagues and properties — organizations that have historically reinforced the leading responses to this question. More importantly, relationships with these audiences require long sales cycles and traditionally represent “cents on the dollar” in comparison to partnerships with other industry (e.g. brands) and non-industry (e.g. military, retail, airline, etc.) opportunities.
The sports tech industry has and continues to suffer from massive amounts of fragmentation. Whether it be by geography, industry area of focus or funding stage, sports tech startups are missing the community that it has enabled others to realize.
There is a historic opportunity to bring this community together, and when we do, the legacy that we create will be one of continued growth and opportunity — perpetuating the current influx of capital into the space and reinforcing the notion that sports are truly the ultimate unifier.
*I worked for the NBA for more than four years in Global Business Development.