Playing the long game
What if I told you that you didn’t have to try to charge fans for content during the most challenging time for the sports industry in living memory?
Sport, like many other industries, is facing a financial deficit - the UK Government recently announced a £300m rescue package for sports in England impacted by the absence of fans due to Covid-19. Now, however, is not necessarily the time to try to plug the gap by charging for digital content.
They think it’s all over… it isn’t yet
It's heartening to see a limited number of fans returning to stadia, but the effects are likely to last for a much longer period. PwC’s recent Sports Survey 2020 projected ticketing and hospitality revenues to experience 0% growth over the next 3-5 years. The 2019 version of the survey predicted a growth rate of 3.2% over the course of five years - this means that the industry will have missed out on 17% growth in total.
Therefore, until a full return is possible sporting organisations will still need to find ways to make up the shortfall and to find new ways to communicate with fans. However, focusing on short-term revenue means that the industry may be missing out on a greater longer-term prize.
A recent example of pursuing such immediate financial goals is Sky and the Premier League charging pay-per-view fees matches not selected for standard broadcast for the first few rounds of the season. Priced at £14.95 each, the games failed to attract extensive interest; none of the first nine PPV matches generated more than 90,000 transactions, with only two games exceeding 70,000. Three of the matches attracted fewer than 10,000 paying viewers. Furthermore, the initiative sparked widespread protests, with fans of all 20 teams succeeding in #BoycottPPV trending on Twitter while their team was in action.
While there were some additional production expenses to cover (Sky and BT were paid at cost price) and although proceeds were earmarked for securing the finances of the footballing pyramid as a whole, did stakeholders ever consider the benefits of giving up financial value now in return for future engagement and long-term gain?
Building for the future
It is somewhat understandable that sport broadcasters are hooked on short-term monetisation because rights are expensive to acquire, but the absence of fans from live events was (and still is) a chance for sports organisations of all types to engage fans in a broader value exchange and to encourage new digital behaviours in audiences.
Consider the example of Formula 1’s Virtual Grand Prix series, which achieved 30 million views across TV and digital platforms during lockdown, with fans enjoying a varied programme of Virtual Grands Prix, Pro Exhibition races and #Challenge events. Making these widely available to fans will have generated a wealth of insight around, for example, consumption patterns, the demographics and communication preferences of growth audiences, and content creation in future. All of this will help F1 to understand how to engage fans in esport even when live racing action returns.
Most importantly, this approach will help F1 understand the possibilities of not monetising their esport content in future. The governing body may decide that this content should not be monetised at the point of consumption. Perhaps it can be used in a freemium role to attract growth audiences, or paid for as part of a wider subscription offering that draws in a critical mass of fans.
F1’s best route to success in this area would be to measure the effect on engagement of a fan consuming the virtual racing content, and to calculate how that might impact the revenue potential of that fan over the course of their relationship with F1: their lifetime value. To do this, a business must develop skills in three key areas:
- Customer knowledge: understanding its audience segments, their various wants and needs, and their behaviours
- Data analytics capabilities: propensity modelling, real-time decision engines, and the ability to build an engagement metric
- Conversion and retention: the ability to engage with audiences on an ongoing basis by establishing a dialogue and adapting as they change
The FT's experience
For FT Strategies, engagement is vital. The FT has an ambitious goal (our ‘North Star’) of 1.5m subscribers by 2023, but alongside it has also defined a ‘North Star metric’: reader engagement measured by RFV score (recency, frequency, volume). The business uses this to assess and compare all experiments it runs and initiatives it launches.
That’s not to say that transactional KPIs aren’t important (they clearly are) but we recognise that engagement is the glue that holds the customer lifecycle together and uplifts metrics in all other areas. Focusing on engagement can give you the confidence, supported by proven data models, to give up short term revenue in exchange for greater rewards later. That’s exactly how the FT reached over 1 million digital subscribers a year ahead of target in 2019, and how it is now aiming for 50% growth in the same metric as soon as 2023.
That’s actually very liberating.
How you measure engagement for each of your fans will differ from the approach taken by other readers of this blog, and there are a host of other considerations to take into account, such as digital workflows, governance design and data capabilities.
However, realising that you need to make engagement a central part of your way of thinking is a crucial first step, and one that we here at FT Strategies can help you build on.
About the author
Tim Part is a Manager at FT Strategies. He has over fifteen years’ experience in corporate strategy, marketing and regulatory roles, including as Senior Sports Consultant at MTM London, Strategy Manager for Ofcom and Brand Manager at ITV. He also has a BA in Russian and Czech from the University of Oxford, and is an avid cricket fan.