According to the sixth edition of PwC’s Sports Survey, executives across the broader sports industry, including sports federations, broadcasting and marketing agencies, have become more optimistic about the sports industry’s prospects amid signs of recovery from the pandemic.
On the positive side, the survey found that after navigating a year of lockdowns and event cancellations, executives’ expectations for growth over the next three to five years stood at 4.9 percent, up from expectations of 3 percent three-to-five-year growth found in last year’s survey. PwC said the improvement reflected “the feeling that the market can stabilize and adjust to new conditions.”
PwC received 792 responses between June and August 2021 through an online questionnaire distributed to sports industry leaders worldwide. The respondents spanned across a wide range of organizations, with sports federations making up 20.1 percent; sports marketing agencies, 14.1 percent; team/club, 13.1 percent; league/event organizers, 8.3 percent; and sports technology companies, 9.9 percent. Others represented included brands/sponsors, academia/public sector and investment firms.
Of the respondents, Europe made up the largest share of respondents, representing 46.5 percent, followed by Asia, 19.3 percent, and North America, 19.2 percent.
Among the varied respondents, brands/sponsors and media companies were found to be the least optimistic, indicating that market disruption had created uncertainty for stakeholders who traditionally acquire sports rights, seemingly in contrast to the more favorable positions among rights owners. Among regions, Europe and Australasia remain the most conservative in market growth prospects. By contrast, figures for the Americas suggest a stronger rebound in confidence, possibly fueled by robust economic growth in the U.S. and the return to live events.
Also encouraging were 67.2 percent of respondents felt “optimism and hope” about the impact of key market forces, with just 10.5 percent admitting to “pessimism and concern.” PwC said this might be related to the multiple opportunities from sports products, such as the promise of new technologies to impact both the consumer and the participant experience positively.
“Validating their optimism with pragmatism, most sports leaders also believe that their organizations are prepared to respond effectively to these forces within their sphere of control,” PwC wrote in the study. “However, as sport isn’t insulated from macro events, we believe that the full recovery of the sector is directly linked to its ability to absorb the risks of an uncertain pandemic, whether through coordinated decision-making with relevant stakeholders or safer event experiences in general.”
Other insights from the report:
- Betting and fantasy continuing to grow at a fast pace:Sports betting has been boosted throughout the pandemic, and executives forecast continued growth at an annual rate of 6.4 percent. Indeed, legalization in the U.S. and new data-driven technologies converging with fan engagement solutions are likely to accelerate betting-related income in the coming years. Traditional revenue streams such as media and sponsorship rights are expected to stabilize at between 3 and 4 percent. Gate revenues are expected to see the leanest growth rate (forecast at 2.5 percent) as there’s still a huge cloud of uncertainty around future attendance of live events with the evolving pandemic.
- Shifting media landscape leading change:The accelerating transformation of the media landscape, dominated by the shift from cable to streaming and the ecosystem fragmentation fostered by digital media, is the industry’s primary change driver, according to respondents. Multiple dimensions from content access to media rights revenues are being impacted. One newer related growth vehicle cited was the rise of sports tech’s connected solutions and the booming market for home fitness equipment that are “providing sports with increasing opportunities to enhance physical practice.”
- Stakeholders driving sport’s societal change: Sports leaders generally see the risk of losing the trust of fans and participants as the main driver for investing in social and environmental sustainability. Commercial partners and funders are demanding more transparency and commitment from sports organizations’ societal policies. PwC said, “Looking ahead, we very much hope that the sector will prioritize sustainability inside-out regardless of external pressures and public relationships, rethinking its role in society as a genuine vehicle for positive change both globally and within local communities.”
- The rise of purpose-driven sponsorship: Both rights owners and brands are re-evaluating the overall narrative of sports sponsorship, seeking to incorporate a deeper sense of purpose to resonate with fans’ and public opinion’s growing concerns for environmental issues, healthy living and social equality. PwC said in the study, “This shift is driven by the evolution of behaviors and expectations of consumers, who are increasingly empowered to reconsider their purchasing habits if a brand doesn’t match their values.”
- Female athletes bringing social activism at the forefront: While, professional athletes have traditionally maintained political and social neutral stances in public, a new generation of athletes, particularly women, is now speaking out not only for their own rights and status, but also for broader community causes, using their platform to protest or advocate for issues such as racial and gender equality, mental health or child poverty. PwC stated, “While female athletes’ activism may be rooted in a heightened sensitivity to causes such as gender equality or wage discrimination, the accelerated growth of women’s sports in general has given rise to new transversal icons, who serve as both sporting and social role models.”
- Bringing gaming to sport and not the reverse: the real virtual opportunity?: As the industry has long seen gaming as a means to create new products and disciplines inspired by traditional sports, a burgeoning sports tech sector is increasingly bringing gamified solutions to physical participation. PwC wrote, “Beyond the fleeting benefits of video games, respondents seem to suggest that the greatest long-term opportunity lies in adding gamified layers to physical sport through transformative partnerships – which is also our viewpoint.”
- Gamification participation to drive team sports: Tech and gamified solutions are booming in the fan experience sector, but overlooked as tools to drive interest in team sports. PwC wrote, “Yet sports participation clearly plays a key role in creating interest and fandom, a conversion that typically occurs in adolescence and, from there, tends to stabilize. The use of gamification technologies that modernize the practice and allow younger generations to express themselves through an interactive and multi-layered experience — meet, chat, play, compare, learn, etc. — will prove key for sports organizations to renew as well as expand their fan base.”
- Rethinking sports in a gamified era: Since its inception, sports’ product has remained largely unchanged. Over the years, reforms have mainly scratched the surface (adding events, repackaging competitions, increasing the media experience) as video games become more realistic and other mediums such as movies and music have embraced technical innovations to deliver fresher experiences. PwC wrote, “As new entertainment products battling for the same attention and financial capital continue to emerge, it may not be time yet for sports’ governing bodies to make a real overhaul, but it’s high time to start thinking about it.”
The full study can be downloaded here.
Photo courtesy AAAS