The End of the Beginning…

“This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” Winston Churchill

From Digitalisation to Digital and beyond.

In recent weeks I’ve been delighted to return to the real world, attend conferences, shake hands, and have coffee with smart friends, new connections, and some that I have only ever known over Zoom.?For everyone, it’s been a brutal 18 months.

Sports have faced something truly unprecedented.?As an investor in sports for over 10 years, one of the things you could always point to was how Sports was an industry that even in hard times found a way to grow as people needed their escape.

During the Pandemic Sports remained open.?Even with no crowds, reduced sponsorship, and broadcast fees. In most cases, their main costs remained the same.?The vast majority of the cost base is on the athletes, and they had to be paid.?

The closest thing to this was wartime – but in most of those instances sports stopped so the cost base fell away when revenues did.?Now we had high costs and low income – not a great scenario.

There are few silver linings to be had in that, but Sports have found some.

The flood gates on technology were opened.?

Necessity is the mother of invention and in this case that was technology and the need to continue to work, even whilst we never went to work.?From coaching players to engaging fans and keeping staff informed.?What once had to be done the old-fashioned way needed to be re-invented.

In the Beginning

The first step is digitalization.?This is the process of taking your business and making it work in a digital format.?So, the media and content houses that sprung up in the past five years suddenly were being managed from home.?This requires better software, Digital Asset Management tools, workflows such as Trello, and other necessary tools to be in place to continue production.

I imagine a lot of your companies went from using Windows to Windows 365 during the pandemic and jumped on to Teams to share in real-time.?This has been possible for a while and was long ignored but necessity required this ‘invention’.

This is not however a digital business; it is purely a prerequisite. A tool, a technology, to enable a digital mindset.

Take ticketing for example.?This was a business that was quick to embrace digitization.?The phone enabled us to have a mobile ticket or to download and print at home, but we were effectively running the same business model as before. The upfront, commissions, distribution, and pricing all remained much the same.?The ‘Admit One' simple came in a digital format rather than sent via post in print (though that too still happens).

One of my favourite examples is Pearson Education.?They digitized all their books and teaching materials but couldn’t understand why no one was using them.?The lesson they had to learn was that students didn’t want a digital copy of a book, they wanted/needed digital learning tools.?So whilst ‘digitizing’ the books and material was a necessary task it's not the end it's just the beginning.?Now teaching tools have transformed into a digital native world and Pearson Education is seeing growth.

It has been great to see quality companies such as Greenfly take off during the pandemic.?It's been doing well for a few years but is rocketing now.?The understanding of how a technology like this takes what digital infrastructure has been put in place and gives fuel to the content consumption model has been missing until now.?What a few years ago sounded confusing is now simply accepted and embraced.?

That first step of digitalization is therefore coming to a close.

Content and Data

These are two of the other prerequisites in our industry.?The pandemic has seen a great deal of focus on these two areas and it's wonderful to see.?Many had long been on the journey but now we see that this is becoming ubiquitous.?This is an enormous positive for our space.?

This is an age where we are not competing within our sport or with other sports but with consumer expectations.

Customers want everything at the speed of Amazon, the accuracy of a google search, the ease of uber, the low prices of Tesco, the availability of an Alibaba – and it doesn’t matter if they want it in form of buying a new fridge or accessing an event and out content. (Credit to Erich Joachimstahaler, I just changed some names to fit UK market!)

To do that we must become more digital.?This, however, cannot just be in the process and format of our infrastructure but must come in the form of a mindset change too.

A bit like the first step that Pearson Education made we are moving in the right direction.?If you try most sports OTT solutions you realise that we are only at the first step in the process.?You are effectively watching via a smart screen what you watched on TV. Certainly, my experience has been almost entirely the same with zero personalization.?Content is served up the same way and the viewing experience is the same plus a twenty-second time lag for streaming!

We are seeing some exciting first steps such as the Nickelodeon NFL experience.?This was interesting to view and can see some of the appeal.?Supponor has long existed and for well over eight years has been changing perimeter adverts regionally – though the capability to do it individually also exists.?We are yet to see the full use of tools like this to make the viewing experience personal.

The next stage?

What excites me about the future is this. The foundations are being built.?The tech infrastructure is being invested in to enable a digital future – people never realise just how many cables are needed to create a wireless environment!?Content houses are in place or popping up, Data is understood as a requirement and people are being hired who really understand these elements.

The questions are also now being asked – what do we now do? The infrastructure is coming together so how do sports build on that to create more revenue?

What this will enable is a digital native world where we accept that we need to think about Business Strategy, not Digital Transformation.???Technology is a requirement but it's not an end goal its an enabler for us to rethink our business model and adapt to the modern consumer.

It's not just the young who expect the ease of an iPhone and the speed of Amazon.?The reality is that Gen X and the Baby Boomers have very similar expectations.?If a delivery doesn’t arrive the next day, it’s not just millennials that complain.

Where do we go to next?

There are a host of C-Suite executives now in place who are rethinking their organisations and asking difficult questions.?They are realising that OTT is not a Direct-to-Consumer strategy, but a component in a larger business framework.?They understand they need more data and information to make good decisions.

What comes next is that we start to see the emergence of truly digital businesses, and an interactive business model not previously envisaged.?Take the rapid acceleration around blockchain companies in the industry.?We may not yet have the result or a perfect iteration, but these are digital native business models that have a very different value chain attached to them.?Involvement and interaction become core to their success.?Content and data are drivers and key components of their emergence but it’s the integration of multiple stakeholders into the same model that makes them so interesting.

There are links back to the analogue world, but RealFevr, Sorare and Socios are versions of where the fan is as important as the rightsholder.?The fan is the driver of increasing value, not just the athlete or the IP owner.?This interactions and digital ownership model starts to bring to life what a truly digital world will be, whilst still keeping us rooted to what has made sports so successful – heroes and storytelling.

The end of the beginning is close, now we can get started on the rest of the journey!