December 27, 2021

Marketing, Communication and Management

NBA: the success of permanent innovation

By Álvaro González.

In a Ypulse study on consumer habits in the United States after COVID-19, the results showed that basketball was the favorite sport and most followed by Generation Z and millennials. Older generations preferred the NFL, American football. Meanwhile, in what is known as the world’s second basketball center, the NBA is the most followed competition in China. Its penetration into the new generations through streaming, social networks, and local blogs is successful. Still, it is also that, according to studies of physical habits, after walking and running, basketball has become the most popular exercise across the country.

These events are neither accidental nor due to a natural evolution of the market, but rather to an organization that based the DNA of its business strategy on innovation. As Ivanka Visnjic, professor at ESADE, explains in the course at the Barça Innovation Hub, Innovation in Sports:

“Actors in the sports ecosystem constantly face new market realities (technological or business models) and new demands of consumers (digital, personalized experiences …) which involves a lot of challenges.” 

  • Ivanka Visnjic, professor at ESADE.

In this context, the case of the NBA is worthy of study because it has not only had a great adaptation to changes but has sometimes anticipated them.

The United States and China, a historic sportive relationship

Even before the NBA applied global marketing strategies in the 1980s, it had already had a major overseas emergence that had significant consequences. In the 1970s, a diplomatic meltdown related to sports occurred between the United States and China, two antagonistic countries. The historical episode was called “The diplomacy of ping-pong,” a series of table tennis matches between the two countries that ended with the meeting between Nixon and Mao in Beijing in 1972. In 1979, Deng Xiaoping attended a Harlem Globetrotters game. The Chinese leader, contradicting the dominant trend of radical conservative leftism in his country, enjoyed the basketball show. An unexpected gesture served for the NBA to land in China a few months later.

The 1978 championship ring winners, the Washington Bullets, led by Wes Unsled and coached by Dick Motta, played Chinese teams in Beijing and Shanghai. Those encounters marked the younger generations; they were an unprecedented show and a symbol of the penetration of western culture in the country. Thus, the NBA became the greatest exponent of the new airs of modernity coming to China. Up until the beginning of the 21st century, 83% of Chinese between 15 and 24 years old declared themselves NBA fans. Today, studies about Gen Z show there are twice as many basketball fans as in previous generations.

NBA’s globalization

If the NBA knew how to take advantage of the tensions of the Cold War, starting in 1984 with the period of David Stern, it adapted to globalization before this term began to become popular. The leading role was disputed with other sports, and attendance at matches was modest until then. Stern, however, took advantage of the emergence of stars like Magic Johnson, Larry Bird, and Michael Jordan and turned the NBA into an entertainment-oriented brand whose merchandise was exciting matches with the rivalry of tremendous and charismatic stars. He knew how to optimize his resources and sell them in the media, but above all, he was able to get them out of the United States.

The phenomenon was accompanied by a series of sporting goods produced by leading companies, such as Nike, which conquered global markets and an unprecedented expansion taking advantage of the development of satellite television. This allowed Stern to open offices in Paris, Geneva, London, Barcelona, Melbourne, Hong Kong, Mexico City, Taiwan, Tokyo and Toronto. In addition to being focused on marketing and international relations, his mission was aimed at expanding the coverage of the NBA. Since then, many preseason games have been played outside the United States, and, in collaboration with FIBA, the NBA organizes training camps to promote basketball around the world. All with the NBA seal.

Starting in 1990, Stern consolidated its presence in Asia with an agreement with the Chinese state broadcaster CCTV that reached 90% of households in a country of 1.2 billion people. They began broadcasting the seven final games for when, in 1995, the sports channel CCTV-5 was inaugurated, broadcasting the regular league, the play-offs, the final, and the All-Star exhibition games. But before this model could stagnate in its growth, the NBA again pioneered another phenomenon: the franchise player. The influx of foreign players had multiplied since, on April 8, 1989, FIBA eliminated the distinction between amateur and professional players so that international players signed by NBA teams did not lose the possibility of representing their country in the Olympic Games or other championships. This new situation was fully profitable in the NBA and continued expanding the popularity of basketball around the world.

Franchise players and digital content

In the new scenario, again with their sights set on Asia, the Houston Rockets in 2002 signed Yao Ming from Shanghai, creating a new attraction for fans and serving as a strategy to expand the Chinese fan base. In 2011, a market study indicated that almost 40% of Chinese NBA fans had started watching games because of Yao’s arrival, but there was even better data: only 9.5% would stop watching games if Yao retired. The franchise player phenomenon gave us data such as the audience of the confrontation between Yao’s Rockets against the Milwaukee Bucks of his compatriot Yi Jianlian. Two hundred million Chinese watched the game; it was one of the most-watched games in NBA history. The old format, exciting matches with rivalries between charismatic players, now served the enormous Chinese audience without leaving the NBA. A perfect adaptation to the world of the 21st century.

In addressing the new digital paradigms, the NBA also developed a successful marketing strategy. It soon created its exclusive, quality content on for fans worldwide. In addition, on social networks, the league has one hundred million followers between Instagram, Twitter, and Facebook, and the teams that dispute it have around 325 million together, a figure close to the entire American population. In 2018, for example, there were 100 million tweets about the NBA. It was the most mentioned league on Twitter, while LeBron James was the most talked-about athlete and the Cleveland Cavaliers, the most cited team. The NBA was top in all the scores of the great asset of the new century, attention.

New business models

For a few years, the new lines of action have been aimed at selling a show in Virtual Reality and Augmented Reality. However, all sports globally are looking for ways to reach their followers and fans through technology better and improving broadcasts. The NBA made a difference again in taking its competition to the field of video games. When Adam Silver made this decision, the League of Legends video game finals had already begun to rival and even surpass the NBA’s in audience metrics. Therefore, the disruptive step for the NBA was to quickly understand that the concepts of “athlete” and “sport” are being redefined as esports and its competitions are increasingly popular.

Although the NBA already had a consolidated presence in the Asian market, as explained before, it has managed to go even further with video games because it is estimated that more than 40% of esports followers worldwide come from the Asian market. However, the NBA’s advantage is that it brings a traditional sport to video games. This is also an attraction for the old fan, who was already a video game consumer on their favorite sport and can become a basketball esports spectator more easily.

The new competition is called NBA 2K League since 2018. It works similarly to the traditional sports league, with a regular season and a few play-offs. In Twitch, the audience has grown year after year by 70% since it was launched. The results are already palpable; they have more sponsors and are more diverse in this new format. There are video game and technology brands, yes, but also courier companies or manufacturers of souvenirs. A client’s portfolio indicates that fears that only one market niche may gather around video games are entirely unfounded.

The NBA 2K League president stated in Forbes that he did not consider this strategy risky, but that it was riskier not to enter esports. When the pandemic arrived, he found, in his own words, that participation in esports was “through the roof.” Not only was the NBA able to take the impact of the limitations of the pandemic in an advantageous condition, but it also allowed them to innovate even more. One idea was the creation of Three for All, a championship that allowed fans to play against basketball professionals. New forms of entertainment that can stay there forever.

As Visnjic explains in the Innovation in Sports course, the emergence of COVID-19 highlighted the need for sports organizations to maintain long-term strategies.

“The loss of revenue from ticket sales coupled with the impact on sponsorships and advertising involved a massive challenge for professional sports. The sports ecosystem must generate innovations to create new sources of income and keep fans entertained. Sports organizations have had to rethink the fan experience and rebuild relationships with partners, seek new goals and content strategies, become more accustomed to the digital world, and create more resilience for the future.” 

  • Ivanka Visnjic, professor at ESADE.

In all this process, which would be the ideal one, the NBA was ahead.





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