Accelerate Through Digital Fan Engagement

An Industry Digital Strategy Opportunity Report

Table of Contents

3 Executive Brief

4 Analyst Perspective

5 Executive Summary

31 Phase 1: Transformative Value Chains

60 Phase 2: Digitally Enabled Growth Opportunities

91 Phase 3: Transformed Fan Journeys

120 Phase 4: Digital Transformation Map

129 Report Summary

130 Additional Support

133 Bibliography

Accelerate Through Digital Fan Engagement

An Industry Digital Strategy Opportunity Report

EXECUTIVE BRIEF

Analyst Perspective

Win the fan engagement game with a digital strategy

Like many industries, COVID-19 accelerated the adoption of digital tools and technologies to accommodate a heightened reliance on online and digital interactions. A profound shift in consumer behavior has led to long-lasting expectations for digital experiences.

For the sports industry, digital technology has the potential to unlock unparalleled opportunities for growth, offering fans the ability to engage with teams in new or enhanced ways. As sports organizations brace for an evolving digital landscape, organizations have an opportunity to deliver digital experiences for fans before, during, and after a game. By leveraging technology to enhance the emotional paths of fans during each stage of a game, organizations can promote new or enhanced, long-lasting fan experiences. (St. John's University, 2020).

To thrive in this changing digital landscape, developing a digital fan engagement strategy will empower deep-rooted loyalty from your fans to your organization without exclusive reliance on winning and team performance (BIROn, 2013).

Executive Summary

Your Challenge

• Develop a digital fan engagement strategy that impacts pre, during, and post game to meet evolving fan needs and how to compete in a digital economy with other entertainment options.
• Understand the different types of fan engagement behaviors and how to create monetization through them.
• Your management lacks a framework to rethink how your organization delivers fan engagement today, which causes annual planning to become an ideation session that lacks strategic/holistic focus.

Common Obstacles

• Your IT team lacks the understanding of the fan engagement context to identify opportunities for digital transformation and enablement.
• Your organization might approach digital transformation as if we were still in 2019, not recognizing that the pandemic resulted in a major shift to an end-to-end digital economy and exposure to competing sports entertainment options.
• Developing and following a cohesive, consistent, and forward-looking roadmap to implement and go forward with the chosen strategy will be a challenge.

Info-Tech’s Approach

• Identify and leverage the following research for the organization to enhance the business model, streamline and transform processes, and make use of technologies to enhance experiences with fans increasing engagement and loyalty.
• Use digital for transforming non-routine cognitive activities and for de-risking key elements of the value chain.
• Create initiative profiles and balanced roadmaps for digitally transforming fan engagement and preparing for long-term success in a digital economy.

Info-Tech Insight

Sports entertainment organizations need to be strategically holistic and emotionally deeper with fans in order to engage them through personalized experiences.

What is Fan Engagement?

“Fan engagement is when a fan actively performs an intended behavior and moves with purpose among related activities.” (Sports Innovation Lab, 2020).

Engagement is not just behavior, it is a combination of behaviors, emotions, and learning processes as they are experienced, where different fan personas can be identified (leAD Sports, 2021).

Fan Engagement Behaviors

There are four types of fan engagement behaviors within sport: impression management, community support, sport-related behaviors, and relationship building behaviors

Impression-management behaviors Basking in reflected glory (BIRGing) Cutting off reflected failure (CORFing)		Community support behaviors Management cooperation (helping team management) Prosocial behavior (helping other fans) Self policing (helping yourself) Performance tolerance (helping a sport team)
In-role (shaped by self interest such as attending a game, watching, etc. when following a sport team)		Extra-role (behaviors that are directed toward a sport team on the basis of a consumer’s moral obligation as a fan)
Sport-related behaviors Attending sporting events Watching games on TV and other channels Purchasing team products Reading sport magazines		Relationship-building behaviors: Loyalty program participation Season ticket purchase Booster membership

How do Fan Experience and Fan Engagement Work Together?

• Fans are those who interact with sports to activate the potential experiences and create engagement.
• Fan experience within sport is part of the experience economy where services or goods can enhance consumers’ lives. Engagement with sports brands, as part of the experience economy, is multi-dimensional in nature (Karg, 2021).
• Experience leads to engagement. If the organization has multiple dynamic experiences, it will have higher engagement, which will result in repeat business. The engagement stays but experiences will change over time.

“For most sports, over 60% of their revenues are generated from their most highly engaged fans.” (Harvey, 2020)

Experiences — Ex. fantasy sports, sports betting, interactive digital signage. Behaviors, Emotions, and Learning — Sport related & relationship building behaviors, excitement, increased knowledge about team. Repeat, Loyal & Engaged Fans — Results of repeat, loyal, and engaged fans.

Focus on the Pre-, During-, and Post-Game Experience

• The sports industry is no longer just competing with other content producers within the sports space. It is now in a battle with other forms of entertainment to fight for the fan's attention where live games and televised sports is not enough.
• Gensler’s 2013 US Brand Engagement Survey revealed that most fans prefer online engagement with their favorite team rather than in-person engagement (likely related to our survey respondents saying lower ticket prices would make them bigger fans).
• A 2016 study created by a sports business strategist defines four key areas where sports organizations should be looking to engage with their fans both inside and outside the venue during matchdays and non-matchdays:
  • Host fans at your stadium on non-matchdays.
  • Connect fans not at the stadium on non-matchdays.
  • Enhance the live experience for spectators on matchdays.
  • Bring fans closer to the live action when they are not at the stadium. (Accedo, n.d.)
• More recently, an NFL-focused survey reinforced the importance of engaging with fans outside the stadium walls. Respondents identified increased community involvement as one of the factors that would make them more of a fan.

“Being part of a community where a sense of belonging is present is crucial to the experience and engaging fans.” (Allan Hamilton, Founder of Fanoramas, 2021.)

1. Before the Event: Let the fans plan ahead 2. Inside the Venue: Make fans feel like VIPs 3. During the Event: Anticipate a shift in standard expectations 4. After the Event: Provide at-home excitement 5. Beyond the Venue: Extend your reach

Discover High-Value Fan Experiences

Reflect on What the Sports Organization Already Has

Despite the damage of COVID-19 pandemic, the sports technology market does not show a slow-down in the long term as the compound annual growth rate is 16.8% from 2021 to 2028. But, COVID-19 has changed what organizations are focusing on. Now they are reflecting on what they already have and focusing on how to make more of that rather than growing the audience. (Source: Stats Perform, The Fan Engagement Report, 2021)

The Process of Fan Engagement

With engagement, the notion of fan satisfaction is transformed into an elaborate process model of loyalty. The path passes through satisfaction, commitment, delight, trust, involvement, and emotional attachment from a fan to a specific sports brand.

(Source: University of Minho, 2021 & NRPA, 2014)

Info-Tech Insight

If the organization already has the capabilities and data in place to do so, pre-determining who the fans are, and their interests may prevent negative responses from occurring during the fan engagement process.

Why Transform the Business?

Covid-19 has irrefutably changed livelihoods, businesses, and the economy. During the pandemic, digital tools have acted as a lifeline helping businesses and economies survive and, in the process, have acted as a catalyst for digital transformation.

As organizations continue to safeguard business continuity and financial recovery, in the long term, recovery won’t be enough.

Although many pandemic/recession recovery periods have occurred before, this next recovery period will present two first-time challenges that no one has faced before. We must find ways to:

• Recover from the COVID-19 recession
• Compete in a digital economy

The digital economy accounted for 9.6% ($2.05 T) of US GDP (21.4 T) (Bureau of Economic Analysis, 2021)

“To grow and thrive in this post-pandemic world, organizations must provide meaningful and lasting changes to brace for a future defined by digital technologies.” (Dana Daher, Info-Tech Research Group)

Download Info-Tech’s Digital Economy Report

Digital Is Penetrating All Sectors, Especially Sports Entertainment

US consumers are accelerating adoption of digital channels — a trend seen across global regions.

Digital adoption, by industry, % of digital access

(Source: McKinsey & Company, 2020)

The sports entertainment industry is no stranger to digital adoption as 64% of fans are using digital channels.

The Digital Economy

Digital economy refers to a concept in which all economic activity is facilitated or managed through digital technologies, data, infrastructure, services, and products (OECD, 2020).

The digital economy captures decades of digital trends including the:

• Declining enterprise computing costs
• Improvements in computing power and performance, unprecedent analytic capabilities
• Rapid growth in network speeds, affordability, and geographic reach
• High adoption rates of PCs, mobile, and other computing devices

These trends, among others, have set the stage to permanently alter how buying and selling will take place within and between local, regional, national, and international economies.

The emerging digital economy concept is so compelling that the world economists, financial experts, and others are currently investigating how they must substantially re-write the rules governing how taxes, trade, tangible and intangible assets and countless other financial issues will be assessed and valued in a Digital Economy.

Signals of Change

• 89.3% Of industry leaders believe that enhanced digital media fan experience is a top opportunity to increase revenues. (PwC’s Sports Survey, 2020)
• 82.9% Of industry leaders believe that creation and monetization of digital assets is a top opportunity to increase revenues. (PwC’s Sports Survey, 2020)
• 61% Of organizations have refocused their efforts when it comes to fan engagement. (Stats Perform, The Fan Engagement Report, 2021)
• 72% Of organizations expect to invest in new technologies that deliver new experiences this year. (Stats Perform, The Fan Engagement Report, 2021.)

Info-Tech Insight

The entire sports ecosystem is undoubtedly undergoing a period of change where how sports organizations will make their lost money and return to a stable financial position is in the hands of a digital economy.

The Need for Digital in Sports Entertainment

• Not digitally transforming to follow this trend will hinder the organization’s success with both repeat and new fans as competing entertainment options adapt.
• 75% of people using digital channels for the first time have indicated that they will continue to use them post COVID-19. Organizations must be prepared to have their digital channels on par with or better than other entertainment sources.
(Source: McKinsey & Company, 2020)

“The global sports industry is worth between US $400-$500 billion dollars a year, and in the five years leading up to the pandemic had been growing at an annual rate of 14%.” (Harvest Portfolios Group, 2021)

The Sports Timeline

We are amid the third Industrial Revolution where the emergence of technologies like AI, VR, IoT, are increasingly blurring the boundaries between physical and digital worlds, transforming the way in which we attract, entertain, and engage fans.

The Generational Shift in Sports Fandom

• Studies show that there has been a generational decline in sports engagement due to the lack of motivation.
• Almost 50% of Generation Z (Age 13-23) say they don’t even consider themselves sports fans – Morning Consult, n.d. (Ghosh, 2021).
• This is because sports are not used to competing with other forms of entertainment such as streaming, video games, esports, etc. The Maru Group, a leading analytical firm, reports in their Sports’ New TV Formula that the era of the sports fan is changing, with long-term issues for televised sports games (Ghosh, 2021).

(Source: Ghosh, 2021)

It is important to note that Gen Z as a whole is less likely to be an avid fan.

Gen Z females are 20% less likely to be fans than males.

The Significance of a Digital Fan Engagement Strategy

A digital fan engagement strategy is a way to unify digital possibilities with the fan experience to trigger fan engagement through cross-functional participation from senior management across different areas of the organization. It is a way of embracing technology in a way that challenges existing operational and value assumptions. It serves as an essential mechanism to determine the direction of a business in a digital-first world.

“Fan experience and operations synced together equal better efficiency for creating engagement.” (Zack Klima, Waitime, CEO, 2021.)

A digital fan engagement strategy serves four primary functions:

1. Continuous innovation: develop new products, services or new business models
2. New customer frontiers: unify digital possibilities with fan experiences
3. Resilient operations: automate and digitize ineffective tasks, processes, and procedures
4. Workforce of the future: recode organizational DNA to thrive in a digital first world

A digital fan engagement strategy is an essential means to support entry into a digital economy.

Info-Tech Insight

Digital is so much more than fan-facing touchpoints. It is about delivering seamless digital experiences that are personalized and relevant to fans, where sports organizations that are digitally mature have transformed their business to do so.

A Digital Fan Engagement Strategy Starts by Transforming How Value Is Delivered Today

Since digital transformation is an effort to transform how value is delivered today, it is important to understand the different value-generating activities that deliver an outcome for and from the fans.

We do this by looking at value streams, which refer to the specific sets of activities an industry player undertakes to create and capture value for and from the end consumer (fan). So, the question to ask is, how does the organization make money?

This approach helps digitally transform those value streams that generate the most value for an organization.

Visit Sports Entertainment Reference Architecture

Overarching Business Risks

A digital fan engagement strategy can create high engagement levels with fans, while increasing revenues, but there are still risks and barriers to implementation that an organization must be aware of:

Prioritization:

• The sports organization must critically think and be selective in what projects to undertake, as COVID-19 has affected the overall business and IT budgets.
• Gaining the expected return on investment (ROI) from a digital strategy in the sports organization.

The difficulty is investing in research and development as it is a key factor that influences an organizations transformative potential. Moreover, the organization must invest in the right processes that will create increasing value overtime.

Persuasion:

• The sports organization must work together with other departments (e.g. marketing) of their organization to get a digital strategy started where buy in and/or agreement may be difficult.
• Executives are reluctant to invest in digital technology and procedures due to unprecedented times.

In the end, the pain is justifying the strategy to gain support. As a CIO, operate IT as a business enabler by building business acumen and using terminology your key stakeholders will understand, which in turn will help you gain trust for future transformation.

“The economic impact of the COVID-19 pandemic across the world’s sporting organizations describes losses of $13 US billion dollars in the US sporting leagues, $28.6 US billion dollars in wages and earnings, and nearly 1.5 million jobs lost in the US alone, while revenue losses exceeded 1 billion euros among some of Europe’s biggest football clubs (Drape et al., 2020).” (Taylor and Francis Online, 2021)

Professional sports teams and their competitive leagues drained their cash in the absence of revenues tied to fans due to COVID-19 restrictions where most teams were impacted by billions of dollars. (Taylor and Francis Online, 2021)