Initially, the sport’s leading source of revenue was the sale of tickets for live events. Thanks to the technology development, when the television revolution began, broadcasting rights exponentially increased the profitability of these shows. However, the product remained in the same unaltered way.
Advertising at sports events
This opened a new business revenue stream with advertising and sponsors. Originally, within the stadium itself, on the fences surrounding the field or on the scoreboards. They later became video scoreboards and broadcast television spots. Subsequently, brands advertised on the T-shirts. These were, in turn, from sportswear brands which the teams wore exclusively. The next generation of advertising already appeared in broadcasts in front of audiences of several million and for the last fifteen years, with social media, the business has multiplied again due to the audience reach achieved with these tools. Major clubs can have hundreds of millions of followers. This impact opens a wide range of possibilities for innovation.
We find several examples in the module explaining how we can bring innovation from sports organisations into the market. Some of them are in the course led by the Barça Innovation Hub, Innovation in Sports, with Albert Mundet, director of BIHub, IvankaVisnjic, professor at ESADE, and Steve Gera, BIHub ambassador to the US and CEO of Gains Group. In the case of FC Barcelona, the Barça Innovation Hub itself is a paradigmatic example of the intersection of multiple disciplines, vocation of service and adaptation to the new environment.
Since 2017, the BIHub has combined innovation within the club with research projects, such as its leading studies in data analysis, with an academic offer for an international public. FC Barcelona is a century-old organisation and one of the elites of today’s sport. In other words, it has the entire experience in all areas of its multi-sports activity, including Esports, and is a pioneer in creating women’s teams. At one point, the club realised that they could commercialise all this knowledge. This is done through this institution with a programme offer, masters, and an international meeting where experts from all over the world share their knowledge, experiences, or research results.
Another example of the intersection of different fields was conducting collaborative research with other organisations in its research role. In 2019, a sleep study of the club’s athletes was carried out together with Allianz. At the same time, the club has adapted its traditional facets to the new era of digitization. For example, if it was previously financed through club members, generally from Barcelona or Catalonia, since the summer of 2020, Barça Studios launched the subscription “Culers”, for fans from all over the world.
New business models
The roles’ redefinition in an established market like this one, can primarily be identified in new companies. In the mentioned course, Ivanka Visnjic discusses the Fortnite case.
“A clear example of a multimillion-dollar empire built with a free product.”. Ivanka Visnjic, teacher at ESADE, about Fortnite.
The video game was launched in 2017 and has already accumulated almost three hundred million registered users. As entertainment, the bet of its creators was for maximum playability for all audiences. That is, you cannot buy upgrades or accessories that allow those who spend more to play better. However, it does allow you to pay for skins, the appearance or customisation of a character. It is estimated that more than seventy percent of users pay for these products or other similar ones.
The success of this community of players has reached to such a point that in some details it is already at the margins of the medium’s growth. Recently, they have organised concerts and album releases within the game. They included presentations that were experienced by all those logged in at that time. This is already an immersive experience case, as Fortnite was born with the premise of being reproduced in any format, mobiles, tablets, or computers.
Another example shown is DAZN. This platform began its journey in Germany, Austria, Switzerland, and Japan to spread to Canada, Italy, Spain, the United States, and Brazil. DAZN’s positioning in the market, like the previous examples, also changed all standards. They specialised in broadcasting combat sports, mainly boxing and MMA. They made millionaire investments, such as signing a contract with the boxer Raúl Canelo Álvarez for 365 million dollars for eleven fights, the biggest contract in sports history. HBO, a traditional broadcaster of boxing’s greatest nights for decades, withdrew from the business.
The same happened with the rest of the sports modalities. DAZN continued to grow its portfolio by buying broadcasting rights. However, at the same time, it offered them to the user at a price typical for OTT platforms, no more than ten euros per month, much less than the Movistar Package in Spain, for example, which is more than 100 euros. With this positioning, DAZN has earned Netflix’s fame in sports, but its success remains to be seen.
According to Visnjic, we will know in the coming years if that million-dollar investment in rights and the dependence on maintaining a huge user base will be profitable. For now, DAZN has an innovation and development margin of its business in its users. When logged in to the platform, they know what, when, and how they see it through the shared data. The challenge is to retain an audience that, as explained in the course, is still looking for free broadcasting of sports events and which, at most, pays for one specific broadcast. A high rotation of subscribers is aggravated by the problems derived from the pandemic, which interrupted all competitions. For now, we can only reflect on their situation. It is obvious that their business model will be the one that will be established in the future, but they may have tried it too soon, in the near future we will come out of doubt.
Nike and innovation testing
However, despite the uncertainty inherent to new business models and disruptive strategies, there are multiple tools to conduct innovation testing in search of user empathy. Among the cases covered in the course, there’s the one of Bill Bowerman, at Nike, who conducted individual interviews with athletes testing his shoe prototypes. Over time, he established questionnaires with the same questions that gave him all the metrics he needed to know where to take his models in a qualitative sense. At the same time, he collected quantitative information by timing their workouts or measuring how the soles were wearing out. Also, at Nike, Tinker Hatfield, meanwhile, used focus groups. He was more interested in the perceptions and feelings his sneakers provoked. He wanted the models to be talked about and discussed seeing if any modifications were necessary.
While it is essential that innovation processes employ multidisciplinary teams and put the user at the center, collecting and analyzing qualitative data on users is a highly complex process. When the opinions and experiences of users are taken into account, even in small groups gathered specifically for this purpose, large volumes of information are generated and need to be sifted and analyzed effectively.
How to manage the information?
Multiple tools are available to manage this information. From a face-to-face interview of about an hour with a user to a day-long follow-up of the participants to record all their routines. In both cases, the important thing is also to have available the data on how they arrived at the study and their relationship with the project, as well as detailed personal or professional profiles of each one. In the meetings, it is very important that the atmosphere be one of maximum trust so that everyone can express themselves sincerely. Fixed questionnaires can also be prepared, as Bowerman did, for everyone to fill out, or questioning techniques can be used, such as the five whys, designed to get to the heart of the problem.
When it is the organization’s teams that work on generating new ideas, the techniques imply asking questions with different approaches: How could we…? or What if…? These are procedures for addressing concrete solutions. If what is needed is to change the framework or the general approach, brainstorming can be done in which there are no rules and any kind of ideas are encouraged, no matter how impossible their feasibility may be. In the end, every project will also have to be validated by users. Feedback and observations will define the final product because you cannot access users without having learned something from them beforehand.
CATEGORY: MARKETING, COMMUNICATION AND MANAGEMENT
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