Preparing for the 'Second Wave' of Digital Disruption
The second wave of digital disruption – driven by the same forces of technological innovation, new demographics and globalisation – could be far more disruptive to traditional sports competitions, teams and federations. Mark Oliver, founder and Chairman of Oliver & Ohlbaum Associates, and formally the BBC’s first head of strategy investigates the forces behind this new wave and its impact on the future of sport business.
If you think you know what the digital age will do to the global sports industry - think again. We ain’t seen nothing yet.
The 'second wave' is coming, so be prepared. Digital age disruption of sports is well in progress and is driven by three forces:
- Technological innovation - the ability to connect directly to the fan and know who the fan is;
- The arrival of new demographics and the rising importance of their tastes – specifically millennials and women;
- The globalisation of interest – most notably the rising importance of China and India, but also Africa, South East Asia, the Middle East and Latin America.
The first wave of change has been significant but will be largely completed in the next three to five years. It has been marked by six actions. First, experimentation with OTT web-based delivery of audio visual coverage to a variety of platforms - often as a complement to traditional TV coverage - and as a way to tempt Silicon Valley into the sports rights market.
Second, the potential enhancement of sponsorship ROI through direct engagement with fans via social media and OTT delivery and the use of data profiling. Third, investment in building global fan bases to existing teams and competitions via tours and special fixtures and adoption of high-profile foreign players. Fourth, the development of new national and regional competitions in emerging markets, such as the IPL, or the Chinese basketball league or the Asian Football Confederation.
Fifth, experimentation with innovative new formats in addition to traditional ones – from T20 and then the 100 in cricket, to tennis tie break tens, golf sixes, the hammer cycle series, rugby sevens, Formula E motor racing etc – largely to attract a younger and/or more family demographic. And last, traditional teams and leagues entering the eSports market to help reach those millennials not that into sports.
Many of these first wave developments have been challenging but so far, by and large, they have been additions to the existing sports competitions and largely administered by the traditional sports bodies.
Any sport worth its salt is: starting to experiment with OTT; has sponsor activation and data specialists on its team or advising it; has organised fixtures for well-known teams in new markets; has one eye on global popularity when pulling its squad or competitions together; has a new, often shorter, more action-packed format being rolled out; and/or its own eSports teams and women’s teams.
The second wave of disruption – driven by the same forces of technological innovation, new demographics and globalisation – could be far more disruptive to traditional sports competitions, teams and federations. It is likely to bring significant changes to many of sports' traditional tournaments and formats, the rules that apply, how they are organised, and even who organises them. It will bring new challenges to sporting integrity and governance structures – many invented in the early 20th century.
The first signs of this second wave are already appearing with the $25 billion minimum guarantee offer to Fifa for two new global competitions – a proper World Club Cup competition and a Nations’ League – from an investment consortium led from Japan, the Middle East and USA.
This is already leading to significant tensions between Uefa and Fifa and the major leagues in Europe, and anyone who thinks this will have no impact on the future of the Fifa World Cup, Uefa Champions League, the AFC, MLS, La Liga or the English Premier League is kidding themselves.
But this will go beyond soccer, and no sport is likely to go unchallenged. In cricket, for instance, what began with the T20, and the rise of the Indian IPL, is likely to end with a global franchise-based T20 tournament, significant changes to test matches – e.g. moving to four-day, day-night games, with pitch preparation overseen by an independent body to give the visiting teams, less used to the conditions, more of a chance.
Similarly, world cycling will have to migrate to a proper World Road Tour, with the UK, USA and China having grand tours alongside France, Spain and Italy – with perhaps some smaller nations losing out.
And what of Formula 1 in a world of all electric cars in a car industry increasingly dominated by Silicon Valley?
Existing sports bodies, leagues and clubs can manage their way through these coming changes successfully if they face up to the challenges and pre-empt them. If not, many formats, competitions and organisations invented in the 19th and 20th centuries might not make it into the second half of the 21st century.
There is a real danger that if sports don’t get ahead of the current changes, the next 10 to 20 years will be remembered for messy civil wars between players, teams, leagues and federations that will make Packer’s Cricket Circus and the Wimbledon players' strike of 1973 look like mere friendly skirmishes.
The second wave of digital disruption is coming, with big money behind it - are you prepared for it?