Welcome back to your regularly scheduled Chatting SportsTech with Charles programming. This edition will go deep on The Power of Community in Sports. Unlike Edition 1.5 – I’ll avoid confusion and use integers only going forward – this format will more closely follow Edition 1. I’m going to start at the macro level to understand why an increased emphasis is being placed on building digital communities, talk about applications in the sports world including how to use communities to drive revenue growth and end with a deeper discussion of some emerging sports tech companies.
Jump to the last section if you’re only interested in reading about the sports tech companies.
Let’s dive in…
Why talk about community building now? Hasn’t the human race been forming communities since the dawn of time?
You aren’t wrong about that last point. What has changed though is the vast library of available tools and technology allowing community formation previously constrained by physical geography.
What really drove me down this rabbit hole was this Andreesen Horowitz article. For those of you unaware, Andreesen Horowitz is one of Silicon Valley’s most prestigious VC funds with ambitions to become a major force in media.* The author uses the terminology ‘Social+’ to describe companies that build a social experience around a single category, like music or gaming. This graphic gives examples of the categories moving to social:
While I disagree with Peloton’s classification (there is a strong social component) and recognize the author has an agenda to promote Andreesen Horowitz portfolio companies, I agree with the inherent benefits to a social+ company. A social+ company ensures faster feedback loops and helps drive customer retention, creating a defensible moat.
Before proceeding, it’s important to highlight the large difference between an audience and a community. You have an audience if you’re lecturing from your soapbox or pushing notifications to a group of followers. That’s why Andreesen considers ESPN a ‘non-social’ company. You have a community when there’s consistent interaction not just between you and your followers, but between members of that follower group. Humans are social beings; we crave the interaction that keeps us coming back.
That makes a lot of sense. Tell me more how this all fits in with the world of sports.
In my opinion, the sense of community with sports is the number one reason why people invest so much of their time and effort following a team, players and / or a league. It’s why grown adults wear the jerseys of much younger adults to display their loyalty to a team. It’s how two complete strangers can immediately bond by sharing experiences from a common fanhood. It’s why I spent $2,000+ as a recent college graduate to watch Notre Dame battle Alabama live at the 2013 BCS Title Game (let’s not rehash what happened during that game).
The lack of a community is what has made 2020 and beyond so challenging. The pandemic stripped us of all the joys of serendipitous gatherings at a bar for the big game. Without the traditional gameday experience, fans are missing that emotional attachment to a team. In most places, television is all we have, since fans aren’t allowed in stadiums or arenas.
With the rise of mobile, the ‘second screen’ experience has been the natural evolution for fans feeling connected to a larger population while watching the game from home**. Essentially, viewers have sports on television while simultaneously playing on their phone (or computer). I’ve heard Twitter, my platform of choice, described as the World’s Greatest Sports Bar for its ability to facilitate interaction between people from across the globe as it relates to live sports contests.
As technology has advanced and the pandemic introduced barriers to in-person interaction, social watch party technology has emerged as the next frontier. The rapid rise of video game streaming on Twitch and other free platforms has shown a tremendous appetite for social viewing. Sports had been slower to evolve given the complications of media rights ownership. However, multiple new companies are tackling social watching in the sports space to replicate the community aspect. I’ll touch on some of the vendors in the sports tech section below.
So I understand the trends but how does building a community help a sports organization generate more revenue?
The Harvard Business Review published a good article titled, “Want More Loyal Customers? Offer a Community, Not Rewards.” My favorite line: “In the modern aspiration economy, people develop true brand affinity only when it gives them a sense of community.”
This concept links directly to the pareto principle pareto principle, which says the 20% of your most loyal customers contribute 80% of your company’s revenue. Customers who have true brand loyalty are usually ingrained in that company’s community. By identifying those top 20% loyal customers, you can concentrate marketing efforts on this segment to increase sales of tickets, merchandise, digital products, etc.
Sports organizations face a significant problem though. For the longest time, community building was outsourced to the existing social media platforms. For example, Facebook fan groups made sense since people already spent a large portion of their time on Facebook. But Facebook was the sole beneficiary of these allegiances, improving their individual consumer profiles and optimizing their advertising algorithms. Meanwhile, sports organizations received no visibility into who their fans really were, passing up valuable data and sacrificing the ability to drive better conversion rates. The good news is that organizations are quickly recognizing the value of first party data, while more sports tech companies are popping up with solutions to address this data capture.
That’s a great segue. Give me some sports tech companies who are set up to thrive.
I’ll explore two different segments: 1) Capturing first party data and 2) Watch party technologies.
Let’s start with sports tech companies focused on building or mining communities to capture first party data. There’s been a significant shift over the past decade from team-centric news apps to a more robust gameday app experience complete with mobile ticketing, mobile ordering, social media and other gamification integrations. Professional teams and leagues have led the charge – see YinzCam as the official partner of the NFL – and I expect colleges to start following the trend (shameless plug – we’re helping several D1 institutions evaluate options. If you’re reading this and are in the market to revamp your digital strategy, feel free to get in touch with EngageMint Partners. The app providers who will win in the long term understand the value of backend data analytics and the ability to segment and / or personalize fan experiences within the app.
TopFan is a company whose value proposition revolves around the premise that customer data is organizational gold. A white-label mobile platform allowing organizations or influencers to build direct relationships with fans, TopFan has created a mobile community for the Denver Broncos separate from their gameday app. With TopFan, organizations or influencers have six-figure plus revenue upside by selling subscriptions to exclusive content, merchandise using exclusive drops and sponsorship inventory throughout. Initial results have more than doubled industry benchmarks, with average customer session length on the app exceeding 15 minutes (vs. 6 minutes for comparison).
Then there are companies like Pico that take a different approach to resolving an organization’s lack of first party data. Pico uses gamification and other digital activations across existing social media platforms to identify fans and collect data that can then be migrated to an organization’s CRM. Using Pico’s tools, an organization can have much lower customer acquisition costs versus other methods like Facebook ads while creating new sales channels for tickets and merchandise.
Pivoting to watch party technologies, companies that have emerged include Bleachr, Sceenic, Hot Mic and Maestro. All four have different value propositions and target customers:
- Bleachr introduced a new CrowdView Live platform several months back aimed at providing a more interactive watch party. Sports organizations choose events to host through the platform and invite fans to share the experience.
- Hot Mic is aiming to be the Twitch for Live Sports. Brands or sports organizations can tap a host to create and facilitate a new watch party, while all the viewers can watch a game altogether.
- Maestro offers a white-label turnkey platform to clients for interactive video channels, fan-driven draft parties and virtual tailgates. Fans are able to create breakout rooms and watch together.
- Sceenic targets more media companies and leagues but like Maestro, provides a white-label software solution for friends and family to watch programming together.
I fully expect watch party technology to continuously evolve given that most of these products emerged as a Covid response. There’s a possibility that AR / VR type technologies become the dominant social watch technology in the future, but in the meantime, social watch parties represent a powerful tool for potential sponsorship activation. The organizations able to use the tools most creatively (i.e., having a popular analyst or influencer host) can generate significant fan interest and truly enhance loyalty within their existing communities.
Let’s wrap there since you’ve probably had enough sports tech talk to last the week.
Until next time,
Next week, I’ll release an analysis of the recently launched Fan Controlled Football League, since a lot of the league’s strategy fits in with this Building a Community theme. Think of that as a mini-edition. The next full edition in two weeks will explore the Future of Ticketing.
*Investment platforms creating their own media outlets is another major trend: Cutting out the middlemen and controlling your own narrative. I’ll explore this as part of a larger DTC edition in the future.
**We’ll dive into some of the metrics behind second screen experience and the overall trend in more detail in a later edition.
Disclaimer – EngageMint Partners does not have existing financial relationships with any of the sports tech companies discussed. However, as part of our day to day, we have frequent conversations with companies to better understand their business models on behalf of our clients. If you’re interested in further insights on specific companies and sectors, do not hesitate to reach out.