Our Sporting Planet

Our Sporting Planet


Welcome to Our Sporting Planet. What I
hope we’ve convinced you of today is that the sport industry is well and
truly in the middle. Sport is bridging the gap between its digital and its
physical worlds; between its past and its present; perhaps between its head and its
heart. What I hope to speak about for the next 20 minutes or so is the idea that
on yet another level our industry finds itself in the middle. Specifically the
middle of a transition from an industry that was inherently local in nature to
one that is truly and deeply legitimately and comprehensively global
in scale and its nature. Because historically sport by definition was
local – it was a local thing we had to service and address local audiences. We
had to fill out our stadiums by selling them tickets we had to prioritise
domestic broadcast revenues because they were the backbone of our commercial
model. All this is changing. Today we address genuinely global audiences using
the media technology that’s now available to us. We do business and sell
rights to organisations all around the world – so sport is genuinely global and
it’s my conviction that as this new normal becomes increasingly embedded and
entrenched that sport and specifically sports rights owners will have the
opportunity for structural growth and genuine scale like never before. And what
the data tells us is that as global demand for leisure and sport and
entertainment go up – for reasons that I’ll talk about – and as sport sees the
uniqueness of its appeal relative to other entertainment increase what we’ll
see is a recalibration a redistribution of emphasis and value away from sporting
communities or sporting cities or sporting nations and towards something
that I think we might quite credibly call Our Sporting Planet So the first question we have to ask is
what does a globalised sport industry look like? What will it mean for sport to
exist in a globalised world? And to answer that I’d like to think first of
all about demand for leisure – the demand side of our global leisure economy of
which sport is of course one part and I think if you look here there are many
good reasons to expect and project and count on structural underlying growth
and I’d like to tell you about four of those reasons now. Firstly, there’ll be
more humans which to be fair is pretty good news for the demand side of most
markets (stick with me). The world population won’t go up forever this much
we know but in the next 10 years this decade of the new 20s will see our
number go up from the 7.7 billion we are today to some 8.4 billion by 2030. This growth won’t be uniformly distributed across
continents and across countries of course but through a combination of
fertility and immigration most countries in the world will see the number of
people living within them go up. If the current incidence of sports followership
and sports fandom is upheld and actually we have good data to believe
that it might go up but even if it remains consistent with today’s levels
what this will mean is some extra half billion sports fans in the world which
of course is great news for those of us in the business of finding and engaging
and monetising them. So there’ll be more people, those people will have more money.
There are lots of problems in the world that we’re not doing a good job of
solving but absolute poverty isn’t one of them. By historical standards we’re
doing a phenomenal job of pulling people out of destitution and into a global
middle class of sorts and unlocking the lifestyle and cultural
benefits and sensibilities that go with that The rather blunt metric of a
average global GDP per capita will go up by some twenty two percent in the period
in question not all of this will flush through in spending on leisure
but if we conservatively model what that might look like there’s good data to
suggest that the average humans leisure budget will go up by some 5% ahead of
inflation. So we have more people and more money. We’ll live closer together. By
the end of the next decade approaching two-thirds of us will live in urban
spaces of some sort. Why does that matter? Well historically cities are the world’s
hotspots for the exchange of goods and services and ideas and experiences. Physical proximity to other humans is a great arbiter of our ability and
our propensity to discover new things to try new things to adapt and indulge. So
it stands to reason that experienced industries like sport are set to be
buoyed as we create more experience interchange than ever before by living
closer together. Fourthly and perhaps most importantly we’ll have more time –
more time at our disposal. It might not feel like this to lots of us lots of the
time but each year that passes we unlock more of our waking week to invest in
things that we like doing that we enjoy doing that we care about and we reduce
the necessary investment of time into things that we have to do that we need
to do to stay alive or to maintain our current position and this will happen by
some 20% over the next decade – more leisure time. To explain this I wanted to
share a couple of stories actually the first is about a guy called Dhruv – Dhruv
is a close friend of a colleague of mine Dhruv lives in the suburbs of Mumbai in
India and Dhruv is part of the first generation in his family that can afford
a washing machine I’ve spoken to Dhruv a few times this
year he estimates that that fact alone just the washing machine gives him some
10 hours a week more disposable leisure time than his parents would have had at
the equivalent point in their lives and that’s just the washing machine that’s
before we even think about a car or a refrigerator or eventually a smart phone
or home assistant as you can see Dhruv’s a big cricket fan he
spends a healthy chunk of that extra ten hours a week watching and consuming
sport and creating extra value for the sponsors broadcasters and ultimately the
rights owners in the Indian sports industry. This is not just a developing
world thing though on the other side of the planet I wanted to introduce you to
a guy called Mike. I met Mike at a conference this year last calendar year
in fact the last 12 months. Mike’s 64 he lives near San Francisco and he told
me an anecdote that crystallized in my mind this idea that with each year
that passes we’re uncovering more of our waking week to invest in the things we
care about Mike proudly told me the story of how
he’d synced up his Alexa home device home assistant to his Amazon go account
and he started tentatively at first ordering groceries from the comfort of
his sofa in his home. That extra one, two, three hours a week that he saves by
virtue of not having to go to the supermarket clearly not on the scale of
the leisure time that Dhruv’s unlocking or someone like him but to a busy person
in a Western economy an extra couple of hours a week can feel like a hell of a
lot and Mike told me that he spent a lot of that extra time during the football
season watching the NFL online and as you can see this is a photo of him
playing senior softball which he’s taken up and now plays with his coworkers. So
all around the world we have these vignettes we have more people we have
more money we have more time and therefore more attention and we have
higher propensity to exchange ideas and experiences – demand for leisure in
the world will go up because it can’t not. It will structurally go up. So you
might be sitting there wondering why sports specifically? Surely everything
I’ve mentioned so far relates equally to movies and to music and to TV and to
literature and art and theatre and you’d be right.
Everything I’ve mentioned does relate to those things but there are a number of
quite fundamental reasons that I’m convinced and we at Two Circles are
convinced that as all this extra value is pumped in
to the global leisure economy sport is disproportionately well-placed to
realise the upside. So I thought I’d share a couple of those reasons with you
now Firstly sport thrives through
unpredictability while other media thrives through homogeneity. What do I
mean by that well most forms of entertainment in the world – commercial
entertainment – are trending over time towards sameness they’re getting
narrower they’re becoming more repetitive and more formulaic repetitive
expressions of the same handful of creative ideas. These were the top 50
highest grossing films at the global box office last year 42 of them were
prequels, sequels, remakes, adaptations or spin-offs or franchise entries: 42 of the
top 50. I like film as much as the next guy but it does seem there’s a dearth of
original creativity at the very top of our global movie industry. There’s some
fascinating publicly available data incidentally about the repetitive nature
of commercially successful music – over time commercially successful top 40
music is getting more repetitive in its lyrics and in its backing tracks. Sport
of course is cyclical there’s no denying that but with each year that passes we
see new heroes emerge, we see new formats of our games, new types of experience, new types of attendance experience, new demographics. So it seems to me that as
other forms of media and other forms of entertainment trend more and more
towards satisficing that part of the brain that craves familiarity and
certainty and predictability – sport has this unique opportunity to be our
outlet for uncertainty to service our deep biological desire to be surprised;
for diversity for new things and I think sport’s increasingly unique in its
ability to do that. Secondly sport I would argue more than other forms of
leisure and entertainment alleviates many of the problems that go along with
modern living so one of the great ironies of living in a world that is
developing and urbanising and economically modernising
is that some of humanity’s worst problem get worse as we do so say things like
obesity and anxiety and social detachment. It’s clear to me that on
almost every one of those markers sport is a direct force for good rather than a
force for neutrality or for bad that’s not something I’m convinced you can
say for all forms of leisure. The obvious physical benefits of sport aside, sport
is proven time and time again study after study to improve our mental
health both in and of itself and through our cooperation and relationships with
others. Sport also, I think, enriches our cultures it brings our societies and
our communities closer together we share in the narratives around sport we share
in the cultural meaning of sport I don’t think all leisure pursuits
achieve quite the same outcomes. And thirdly and perhaps most importantly
sport has an increasing monopoly of live attention. So what you’re looking at here
are the top hundred most viewed US broadcast events in 2011. Blue represents
live sports event coverage and grey is non sport. 49 of the top 100 US broadcast
events that year related to live sport It’s already a pretty healthy market
share fast-forward to last year that number
had gone up to 92 – 92 percent of the most watched live broadcast experiences
were sport. Sport has a growing and tightening monopoly over live attention
live consumption I think this matters for lots of reasons: there are commercial
implications obviously – this is pretty good news for sponsors and advertisers
and broadcasters that go around sport and ultimately for the rights owners who
provide the content. But I think there are other less commercial
implications of this or at least less overtly commercial implications that are
just as important. Think about what it means to experience something live – by
definition to consume something live is to share an experience with another
human being in space or in time – so sport has this increasingly monopolistic
relationship with live consumption what sports basically doing is developing a
controlling share in our ability to form shared resonant cherished experiences
and memories with other people. Who among us doesn’t have a cherished memory of
watching a tense penalty shootout in our living room with our family; of watching
a tense set point in the pub with our friends. These moments, these memories
define us to help us figure out who we are and who our friends are they shape
us over time. This to my mind at least is the most significant thing that sets
sport apart from other forms of leisure as we will see extra demand come into
the market in the next 10 years. I wanted to share another story this is a woman
called Abena who we met via an online focus group this year she was
comfortable that I share some of her story with you today
Abena lives in Ghana near Accra the capital and Ghana’s a part of the world
that’s seen rapid increase in access to broadband in recent years
household broadband and as such Abena and women like her people like her are
experiencing for the first time a genuinely globalised media ecosystem so
speaking to Abena she told us that in recent years she’d discovered Scandi
noir crime drama and British sitcoms and Hollywood blockbusters and importantly a
renewed breadth and depth of Western sport and what was really interesting
was that when probed about which of those things she was most pleased to
have discovered or which she would miss the most if it were taken away sport was
the unequivocal answer and in particular for her basketball.
Why? Because sport and basketball in this case was the only thing that Abena
and her family sat down to watch together. Everything else all those other
things she’s discovered they watch in their own time on demand on disparate
devices in different rooms in the house at different times of day. Sport has this
centralising and unifying quality that brings us back together in a media
landscape that seems on a lot of fronts to be nudging us apart
consume things separately in our own time. I think sport’s ability to do that
and the value that that creates can’t be underestimated
so a good question to ask at this point is what role will the internet play?
Since we start to see with stories like Abena it’s changing what we consume
as well as how we consume. It’s worth thinking at this point about where
Internet adoption is today. As of 2019 global Internet penetration stands at
some fifty six percent of all individuals in the world we pass fifty
percent a few years ago and we will surpass 60 percent in the next few. My
contention is that sixty percent will represent a more important threshold
than 50 percent for reasons that I’ll explain in a moment
What I think is interesting to reflect upon though is that in the next decade
by the time we reach 2030 we will all but finished of connecting the world’s
population almost every human being on the planet will be wired into this
global interchange of ideas and experiences that’s a world that none of
us have lived in yet and I think it’s interesting to reflect on what a world
like that might look like. My fourth story today is about a woman called
Ying. Ying did voluntary work with a good friend of mine a few years ago and
they’ve stayed in touch and I was lucky to get to know Ying a little bit this
year. Ying was born in Taiwan had a fairly traditional Taiwanese upbringing
interacted with Taiwanese culture Taiwanese pastimes and pursuits
but a few years ago she spent some time abroad and discovered the pastime of
bodybuilding – a deeply non traditional Taiwanese pastime – since she’s been home
she’s been deepening her affinity and knowledge of this pursuit through the
internet predominantly Wikipedia and Facebook and Google and as you can see
she’s now crafting really quite a strong sporting identity for herself through
something that even a few years ago she would never have had the chance to do.
This starts to talk to the importance of the Internet this is one of the things
the internet does it tears down the historical and social and cultural
boundaries that might have kept someone like Ying from something like
bodybuilding The internet will rewire the world in
other ways as well. I mentioned a moment ago that 60% Internet
penetration will represent a more important threshold than 50% I hope this
chart will help me explain why. What you’re looking at here is the year 2002
and a selection of countries in the world scaled for population size over
here and plotted vertically on the y-axis we have Internet penetration in
each market so how many people what proportion of that population are using
the Internet and horizontally in that market per capita
what do brands spend on digital media Okay, so in 2002 internet penetration was
low under 60% in almost all parts of the world and accordingly as you’d expect
investment in digital media was low as well so keep your eye on the slide and
as I roll this forward, what you’ll see is that every time a community of
human beings a nation has passed 60% Internet penetration investment by
brands and digital media has gone up exponentially. 60 percent seems to have
this inherent profound quality to it it’s the point at which brands invest in
digital like never before and as we’ve heard today as the trust and
transparency and efficacy maybe of platforms like Facebook and Google are
increasingly called into question it seems likely to me that the
organisations who stand to benefit from a shift like this are those who have
direct engaged relationships with audiences in brand safe environments
like sports rights holders. What does this look like on the ground. A story
I wanted to share was that of Nico Nico’s 20 and lives in Zurich he filled
in a survey for us this year, again he was comfortable that I share some
of his details with you. As a 20 year old Nico spends a lot of his time on
YouTube so we asked him some questions around what he watches and what ads he
sees and what does that do to his psychology. We asked Nico some questions
about which categories he felt had most aggressively followed him around
the internet Which ad did he most frequently
see – you know the five-second skippable pre-rolls that you get on YouTube – and he
had this vague sense that it was banks Banks had been aggressively trying to
sell him a student account, all the banks that are active in Switzerland. He was
vaguely aware of some of their names but it didn’t seem like the adverts had
particularly resonated with him I don’t think he’d mind me saying that
he certainly wasn’t considering taking out an account with any of them anytime
soon but where things got really interesting for me was when we started
to ask Nico about why he was on YouTube in the first place. He was there
among other things to watch some content some highlights and behind the scenes
coverage of the Swiss national football team who of course have a
banking partner Credit Suisse. And when you probe the impact that that content’s
had on him and the uplift that that’s delivered in his awareness and
consideration and purchase intent around that brand those metrics outperformed
all of those associated with the other brands that had been targeting him with
pre-rolls. This is what sport sponsorship’s correction looks like on
the ground: sponsorship dollars outperforming media dollars. Which brings
me to my final question of today and I guess in some sense is the most
important one which is how will rights owners grow their revenue in this next
period. How do the new behaviours of people like Dhruv and Ying and Mike and
Abena and Nico how do they change the way that sports rights owners can
make their money and of course historically we as rights owners have
made our money three main ways: media rights, sponsorship rights, and event day
rights and there’s very little evidence that that fact in itself will change in
the next 10 years but I think what will change will be the models and the
mechanics by which we commercialise each of those revenue lines so what I’d like
to do for the last five minutes or so is is offer to you a sketch – a data-driven
sketch – of what each of these revenue lines might look like
and how it might change in the years ahead, starting with media rights. So
for a typical sports rights owner today a media rights business might look
something like this We have lots of media businesses in the
world but actually we only have formal commercial direct relationships with a
fairly small number and we call these businesses our broadcast partners. Our
relationships with them centre around almost overwhelmingly live event
coverage that’s the core asset that we sell to these businesses. Outside of that
relatively small tier of broadcast partners we have this whole ecosystem
this multitude of other media platforms and publishers and businesses who write
about us they create content about us they deliver reach for us and our
partners. Many of them carry our content if we offer it to them but they’re non
fee paying media businesses. We have few mechanisms to capture value from them.
What I would suggest is likely to happen in the years ahead
is that a media rights business for a sports rights owner might evolve in this
manner. Notice the differences it seems reasonable that rights owners will find
ways to better commercialise different types of content diversified away from
simply just live event coverage we’ll be able to grow our media rights revenues
through other content assets: behind the scenes, documentaries, feature films, clips,
near live, shoulder content, widgets and games all of these things have the
opportunity to drive growth into our media rights businesses. Accordingly we’ll
have more media partners if that comes to be true because we have more media
assets at our disposal to sell to them Average package value may stay static, it
may go down, but we’ll grow through a greater number of partners a greater
number of media partners stratified across more levels because we’ll
have different levels of inventory. We’ll service our most premium media partners
with our most premium inventory and create a hierarchy from there to reflect
the different levels of value that each of our content assets delivers to those
businesses in question. In this way media rights businesses can grow because of
fragmentation not despite it, because of it, because
consumers have an appetite to consume all these different executions of sport
not just the live event anymore we can diversify the types of media rights we
sell and grow through fragmentation. Of course in parallel we’d expect every
rights owner in the world to bolster out their direct-to-consumer
proposition. Many of us have direct-to-consumer propositions already
we just call them our websites. Today they tend to operate mostly as editorial
platforms with some e-commerce. Over the next 10 years we’d expect most sports
rights owners and most sports content owners to turn those into genuine
premium content destinations so that as we’re growing our media rights models we
have a strategic hedge and a strategic outlet to build more direct
relationships with more fans around the world capture, data around them and use
that data to grow other revenue lines. The picture I’m painting here’s good
news for rights owners for sure but I think it’s also good for consumers
as well. The penultimate story I wanted to share today was about Brent. Brent
went to primary school with a colleague of ours at Two Circles and despite the
picture, Brent spent a lot of his life disliking golf – actively disliking golf.
He found the traditional broadcast presentation of golf to be a little bit
fusty, a little bit inaccessible, a little bit dry but a few years ago a clip
rights package started finding its way into his Facebook feed
and this clip based execution of golf this clip based expression of golf was a
little bit more irreverent, a bit more cheeky, a bit more humorous and it made
Brent smile. For the first time golf had made Brent smile. So over time he
started to be a little bit more receptive every time he saw it in his
feed. He ultimately started seeking it out, he in parallel downloaded a game –
a smartphone game owned by an Australian golf rights rights owner – culminating two
years ago his affinity for the sport led him to buy a set of golf clubs for
the first time And now Brent is actually what I
would classify as a fairly traditional golf player, golf consumer. This is him on
the links golf course at the New South Wales Sydney Golf Club. So in this way
this new diversification of our media assets is going to create new ways for
us to talk to fans and hopefully recruit more fans into relationships with our
businesses. Secondly our sponsorship rights models. Today many of you might
recognise your own sponsorship model to look something like this: a
fairly rigid hierarchy of commercial partners with a top tier in fairly
clearly defined categories, perhaps a secondary or tertiary tier with
contras and VIKs and things and clearly defined categories serviced with fairly
templated boiler plated rights packages I believe that sponsorship rights
businesses will have the opportunity to grow through their adaptability, their
ability to break this structured strictured hierarchical model and to
service brands with more bespoke and more agile rights packages so if Brand A
comes to me as a rights owner and says I want to reach a wide audience at shallow
depth I have the rights and the inventory and the audience relationships
to be able to service that but if Brand B comes to me and says I
want to service or reach a niche audience with greater depth with a more
direct response focused campaign I’m able to service that as well.
So in this way sponsorship rights businesses can grow through flexibility.
Of course those of you in Katie’s session today will have already heard
we’d expect average sponsorship rights package values to go up as we as a
community get better at understanding and measuring and articulating the value
of digital media as well as broadcast media exposure and we’ll redraw
the categories different types of brand will be active in the sponsorship
marketplace. Instead of a CPG brand maybe I’ll have a relationship with a direct-to-
consumer subscription razorblade brand But here the growth in sponsorship will
come through average package value not in
number of partners as it did in media Finally our event day businesses – event
day businesses are inherently about the interface between customers and
experiences we have a customer base and we service it with the experiences that
we have within our portfolio within our business and represented in the room
today of course we have a fantastic cross-section of the British and
European rights holder community with fantastic customer bases with growing
diversity – we’re getting better with each year that passes at retaining them and
addressing them and we service them with an increasingly diverse portfolio of
experiences: new formats, new ways of consuming, new ways of attending. But
what I think will define the next 10 years of our sporting planet is
diversification at a scale that we maybe today can’t even fathom or imagine. We’ll
have larger customer bases as we start to design for and service and monetise
segments that we’ve historically maybe under serviced. Our audiences will get
bigger through diversity and we’ll diversify the types of experience that
we service them with, not just through new tournaments and new formats of our
games but also by changing what it means to experience something live. By merging
physical and digital together and changing what it means to be at a sports
event and consume it in the moment. Which brings me to my final story that I
wanted to share with you today – this is a woman called Lucy. Lucy is 30 and lives
in East London and I know Lucy quite well because she’s my sister. She’s not
the most tech-savvy person in the world nor is she the biggest sports fan
– certainly by the standards of today or of this room – but I wanted to tell you
about her because a few weeks ago Lucy took part in a closed beta trial run by
an organisation developing hardware to augment and enrich live entertainment
experiences through digital, through wearables and phones and headsets – sport
among them. And she phoned me up afterwards
and she told me that she’d had her eyes opened. It had changed her perception of
sport, she couldn’t believe how real it felt, how rich it felt, how exciting it
felt. Sports that she historically has had very low affinity for, very low
engagement with, suddenly were all she wanted to talk about. Knowing that I work
in sport she actually phoned me up to ask if I could get her any free tickets
for sport this summer so if anyone can help me out there that would be
appreciated (joke). So I was listening to her and I heard this story on two
levels I heard it at the level of Lucy herself and again I was encouraged and
optimistic that the technology and the way sports changing is finding new ways
to talk to people who historically maybe haven’t engaged with our properties
quite so much but I heard it on another level as well which was on the level of
Lucy’s son my eleven month old nephew Frankie who’s going to grow up in a
world where this stuff is just normal he’ll grow up in a world where he won’t be
able to tell the difference between the physical and the digital, he’ll be
surrounded by screens and devices but he might not know what a device is because
it’ll be everything. We will have rewired what it means to consume live sport and
I’m convinced and optimistic that it’s for the better, which was what led me to
include that anecdote for you today. So where does this leave us? Sports rights
owners have opportunity for structural growth underlying systemic growth like
never before because of structural changes happening
in the world as well as the increase in sports uniqueness and its appeal
relative to other forms of entertainment The media rights parts of our businesses
will grow through fragmentation or at least will have the opportunity to grow
through fragmentation. As we develop more media relationships, more commercial
media relationships, capture more of the value in the media ecosystem that goes
around us and our properties, sponsorship models will have the opportunity for
growth through flexibility to service brands in
different ways to break out of the historic boiler plated sponsorship
packages that we’ve historically been shackled to and event day rights business
we’ll grow through diversification of both customers and of the experiences
that we give them. And that’s largely where I wanted to leave you today I’ve
shared a bunch of data and seven or eight stories. I hope I’ve found a middle
that worked for you somewhere between the micro day-to-day truisms of what
sport feels like today and the macro data sets – one of the biggest sports
consumption data sets ever assembled – that drove much of
the data that I’ve shared with you today A final thought for you that this
sporting planet, if I’ve convinced you that’s what it is, is ours and for now at
least it’s the only one we’ve got But it is ours, it’s ours to look after
and ours to enjoy and ours to shape together.
I appreciate your time thank you very much

2 thoughts on “Our Sporting Planet”

Leave a Reply

Your email address will not be published. Required fields are marked *