At the risk of sounding cheesy: We live in unprecedented times. And nope, this time we are not talking about the C-word. COVID-19 reinforced the trends the sports industry was facing, but it didn’t create them.
The sports industry has several pillars, among which are tradition, sportsmanship and cash money in broadcast deals. This hasn’t been reviewed since the introduction of sports broadcasting when the rights became more valuable than the in-stadium cash flow.
This model, in operation for decades, is still in place now. And it still (kind of) works. The broadcast revenues contribute a large chunk of any sports business operations. Even though there is a trend of short-form videos. According to the sports marketing agency Two Circles, the value of the short-form will more than double in the next four years. This is huge compared to the 18.7% forecasted growth for live rights. However, the numbers are still on the live rights side, estimated to be worth $49.1B in 2024 versus the $3.2B valuation of short-form videos.
If we dig deeper, the broadcast and sponsorship revenues depend on fan engagement. This is how much influence does the sports organization have over their fans, how dedicated those fans are, how deep their loyalty is.
The aforementioned unprecedented times refer to that. The future is now in the hands of the generation that started swiping before they wiped. Gen Z and every generation that follows are considerably different from previous generations, even not-so-distant Millenials. Gen Z’ers were born with a smartphone in their hands. They know their attention is a currency. And they spend it wisely.
This means that the current fan engagement models, that create the foundation of the sports industry, are now being questioned. There is an entire generation of people, who are now entering their financially independent years, who the sports industry struggles to engage. This is why sports media pays so much attention to Gen Z: if the traditional model doesn’t work now, it probably won’t magically start working again. This fundamental shift may lead to permanent damage to the sports industry.
Despite the common misconception, Gen Z does enjoy sports. However, digitally friendly pastimes compete for their attention. They make a conscious choice whether they spend 90 mins watching a Big Game, binging Netflix, or being in Fortnite (yes, not just playing). According to research, sports consistently rank behind entertainment (music, movies, and TV) and pop culture (celebrity news and trends).
Gen Z doesn’t fit into the traditional sense of being a fan. The fan engagement framework that most rights holders use creates a box, that this generation simply doesn’t fit. The fandom model relies on getting into sports early in life and re-enforcing the connection over the years. Being a fan is often part of the family relationships, it is a tradition passed from one generation to the next. Family time with the Big Game on TV used to be the start of that journey. But Gen Z have smartphones in their hands and any form of entertainment available effortlessly around the clock. This makes the Big Game much much smaller in their heads.
Some say Gen Z has an attention deficit, as numbers show shorter engagement times and switching between different options often. But anyone who’s seen a teenager spending hours in Fortnite would question that. It is definitely not the attention deficit that stops them from engaging with sports media.
The challenge isn’t about finding Gen Z. It is about attracting and keeping their attention. They spend hours in Fortnite because they have everything they need there. It’s interesting, engaging, and diverse. They can socialize, play games and attend live events without leaving the platform.
One of the reasons millions have been drawn to sports is the idea of belonging, connecting to others, and creating interaction points, whether at the water cooler in the office or online. Gen Z is much the same, they crave attention and connection, belonging to a group. But they need it in a very different form.
They’re globally conscious and care about diversity, equality, and inclusion. They get their news from Instagram and YouTube, not a newspaper or cable news network. And they want unique, authentic experiences — even better if it’s something they can then share on their social networks.
Sports media need to address content quality and form. This includes combining sports with other entertainment and providing a glimpse behind the curtain. However, inside the sports media, there is a resistance to change, as the business model of change is unclear.
One of the things to consider here is virtual production and Mixed Reality. Both allow for new form creation while fitting perfectly within the traditional sports media & fan engagement frameworks. It is an evolution of sports media that we are going through, not the revolution.
Mixed Reality, in particular, looks promising as it connects the LIVE sports with digitally native forms of content. Just like Gen Z likes it. With Mixed Reality rights holders can give their audience all the insights, include personalization, and make their traditional content look cool for all the viewers, Gen Z included. Mixed Reality digitizes live sports, enhancing the real-timeness of it and integrating second-screen needs right into the broadcast feed.
This is particularly interesting for sports outside of the top tier. Virtual production and real-time Mixed Reality, like OSAI, allow to attract, engage and retain audiences without spending the production budget of the NFL.