Covid 19 has been amongst us for about a year now and has had huge impact on our lives and society. The world of sports did not escape. The new normal will be different. We discuss 10 long term effects on the world of sports.
Covid 19 will have permanent impact on our lives and on sports
Covid 19 has had an enormous impact on our lives during the last year. The pandemic has not only resulted in far too many casualties but also in many changes within all layers of our society. Industries, schools, travel, leisure, health, these are just a few sectors that have felt the impact. The world of sports did not escape. Several clubs are in financial difficulties, matches can only be viewed on TV or online, sports participation has changed and is now mainly taking place at home or outdoors. In conclusion, the sports landscape has changed.
Right, you might think, but after receiving a vaccine everything will turn back to normal, won’t it? Wrong! It won’t. Yes, things will be a whole lot better again and yes we will be able to meet again and and give each other a hug. That’s great and I can’t wait. But simultaneously things will never be the same as they used to be.
After conquering this virus our society will see some permanent changes. Some of these changes, such as for example an increased longing for sanitation, are easy to predict. Other changes are much more difficult to foresee. Whether it will be our shopping and restaurant habits, our media consumption etc, some of the changes we have witnessed are here to stay.
Also in sports we expect significant changes over the next decade. Some of these are the immediate result of Covid 19, but most of them are structural and will only be accelerated as a result of the pandemic. The sports industry has taken a heavy hit as a result of Covid 19. Study the Statista graph below, which clearly shows how the sports industry’s global revenue has taken an enormous hit.
Clearly a large part of this decline will be a one-off and hence we will see a recovery once things get back to normal. However what this graph does show is how dramatically the sporting landscape has been hit in the short term. In such dramatic times, innovation and creativity come to the fore and hence we have seen many creative solutions, of which some undoubtedly will stick around. Below we will discuss 10 of what we believe will be long term effects of Covid 19
10 major long term effects of Covid 19
1. Covid 19 will result in a permanent change of the sporting landscape
Over the last few years we have noticed significant changes in the sporting landscape as a result of the pandemic. Social interaction and team sports have been brought back to a minimum and hence in order to stay in shape, many of us have been looking for alternatives. Several trends have come to the fore.
Outdoor sports have become increasingly popular as they are relatively safe to do. Sports like cycling, golf, hiking and running have seen participation rates rising rapidly. After having experienced declining participation rates in several mature countries, golf is for example breaking all kind of new records. It is becoming increasingly difficult to book a tee teetime, whilst golf equipment sales have gone through the roof and clubs are seeing membership numbers growing again. Cycling is also a big winner. Not only are many countries investing in a cycling infrastructure, bike sales and people (re)discovering the convenience and health attributes of cycling have been catalysts for the recent boost.
As team and contact sports have been (partly) banned, individual sports have also gained in popularity as they lack interaction with other people. Simultaneously these sports are much easier to do in terms of planning around the heavy burden of working at home including taking care of kids. As the number of online apps also is ever increasing, working out at home has really taken off (see home exercise trend later in this post).
Obviously life after Covid 19 is unlikely to be the same as it used to be. Some of the fall out that we have witnessed so far may be here to stay. Undoubtedly there will be people who will remain cautious for viruses and will not immediately take on their old habits. Others will conclude that their newly discovered sports are fun and convenient to do and will refrain from taking up their old sports again. On balance team and indoor sports are likely to suffer to some extent in the longer term.
2. Covid 19 will forever change stadiums, venues and events
We all have witnessed it on television or on-line. It’s a sad view to see empty stadiums hosting a sports match or event. It’s a pity that amateur competitions have been cancelled and that sporting fields are empty. Unfortunately we have not been witnessing the Tokyo Olympics and/or Euro 2020. It’s just too big of a risk that the virus will spread. Events with large concentrations of people are considered as super-spreading events and hence not allowed.
Clearly, the fans and spectators will come back some time in the future, but their mindset no doubt will be different. There will for example be an ongoing longing for sanitation. Similarly to what 9/11 did to security measures in and around stadiums, Covid 19 will result in people being more cautious for viruses in and around those same stadiums.
It means hygiene will become more important. Ticketless entry, mobile paying systems for food and merchandise with a minimum number of interactions no doubt will gain traction. Also monitoring systems will veru likely become more important. Think of software which can detect bottlenecks at entrances, think of health checks (similar to luggage checks), think of crowd management systems, decreasing queuing times etc.
The aftermath of Covid 19 will also mean that the trend to downsizing seating capacity in present and future stadiums will accelerate. There were already many clubs that started to reduce seating capacity before the outbreak. More are to follow! Why? Short term, social distancing will remain important. Longer term, it is a trend that has everything to do with the fan and his or her requirements.
Future technology will offer the fan a wide array of new alternatives to watch a game, for example watching a game in Virtual Reality at home will be one of those alternatives. It means a stadium hence has to offer something special in order to go there. The modern future fan wants more than just a seat. He or she wants to be able to move around and enjoy different experiences. It means that more space needs to be reserved for such services. Hence, stadiums will not become smaller but will host fewer guests that will enjoy more space. Covid 19 will make stadium and venue owners be more aware of new alternatives going forward.
In my blogpost the top 10 basic features of future stadiums, I elaborate on this.
3. Covid 19 will lead to changing business models of rights holders
If one thing is clear, it is that business models of rights holders will change in the future. Right now the main sources of revenue are to be found in ticketing, sponsoring, media, and merchandising. Covid 19 has proven by now that the absence of one or more of these revenue streams has a huge impact on business and can lead to financial difficulties or even bankruptcy. The awareness of this vulnerability has made the sense of urgency to change business models a hell of a lot bigger. In order to survive rights holders need either more sources of revenue or have to be a lot more flexible in rapidly adjusting to new environments.
Going forward the four mentioned sources above will still be important pillars, but in quite a different way than they used to be. Ticketing will remain important, but as stadium capacity is likely to become smaller (see above), rights holders have to search for new ticketing related revenue resources. This may for example be done by selling virtual experiences and matches to be seen at home or maybe even by offering holographic games in the stadium (increasing the number of stadium games and hence improve utilization levels of stadiums).
The connection with the fan will be key here. Content can be offered and leveraged to connect to this fan. Fighting for new fans across the globe will be one of the ways to increase revenues, special (digital) content (statistics, information, experiences etc etc) will be the other. In any case, this source of revenue is still underdeveloped and will be one of the main ways to diversify revenues. Covid 19 has significantly increased the awareness for this potential revenue source.
Sponsoring and merchandising income will also experience huge changes with Covid 19 being again the catalyst. As in so many cases, digitisation is again the keyword here! Data gathering and digital analytics will give both clubs and sponsors more insight on what the individual fan really wants. Targeted tailormade advertising will result in a higher effectiveness of messages than the traditional ways of sponsorship offer. Also merchandising will increasingly be digital and will move even more towards on-line than traditional bricks and mortar.
The main question as far as the revenue mix is concerned, will be how media revenues will develop. No doubt it will remain very important in the mix, with an increasing number of parties on the table fighting for rights. Covid 19 will not change this.
Concluding, business models of sports organizations and rights holders will change a lot. The exploitation of the fan and the gathering and mining (and selling) of data will become far more important in the revenue mix
4. Covid 19 will accelerate digitisation
Digital transformation is the magic formula for the sports world going forward. It is an absolute must. As stated, traditional business models won’t win you the war. In order to be successful and realize growth, digitization should be an ultimately important pillar in your strategy. It should be embedded in everything from processes to people to technology.
The fan of the future is a digital one. Technology is totally embedded into the minds of GenZ and GenAlpha. Smartphones, tablets, streaming platforms and social media are the new toolkits of the future fan. It means there is a whole lot to gain here. Traditional and new types of content can be leveraged towards these new ways of communication. Digital marketing is still underdeveloped in sports but will rapidly evolve.
Sports organizations are rapidly realizing that the digital transformation of fans offer them a unique incremental revenue source not to be missed. In fact Covid 19 makes them realize how important the (remote) fan is for their business model. Without attendances, it has become more difficult to communicate with the fan. Hence more time and focus is and will be spend on digitization. Loyalty and customer relationship management will become major spearpoints in future digital marketing strategies offering the potential to immere fans through innovative and customized experiences. To capitalize on this opportunity, however, digital will need to be embedded in every vein of a sports organization.
But that’s not all! Digitization will also provide different stakeholders with a wealth of data, which should be seen as the new gold. The data of fans will provide better knowledge of his habits, preferences and demographics, which will translate into new product opportunities. These data will not only be useful for sports organisations themselves but also to numerous other parties such as sponsors, advertisers, manufacturers, media conglomerates etc. Partnering and sharing as well as selling data will therefore become very valuable assets and generate new revenues.
5. Covid 19 will change the way we watch sport: more at home
Covid 19 has prevented many of us to visit matches. Instead we are watching from our homes, seeing games with artificial noise from non existent audiences. We are slowly becoming used to it. Obviously many of us can’t wait to return to the real thing and this will happen. However, there also will be a group, which won’t return and will avoid large crowds.
Moreover, Covid 19 has also created a mindset that in case the viewing experience at home will further improve and is getting closer to a real match experience, a whole bunch of people will be prepared to choose for this option. If you can choose your own viewing angles, have VR ( explained below) or AR opportunities at your fingertips and access to a load of add-on info and statistics, this definitely will become a viable alternative. Expect partnerships between media companies, rights holders and technology companies to flourish as far as home viewing is concerned.
6. Covid 19 will accelerate trend to watch sports in a virtual environment
As I already explained earlier, business models of rightsholders have to change in order to compensate for lost revenues. Advertising revenues might for example decline as viewers are increasingly cut the cord. Ticket revenues might also decline as there undoubtedly there will be groups of people that fear large gatherings. Covid 19 is clearly acting as a catalyst in this perspective.
One of the ways to compensate for these lost revenues is to offer fans an immersive experience at home. What? Ok, imagine yourself the following situation. You are planning to visit a game live, but you are lacking time to go over there or the tickets are too expensive or you do not want to sit to close to other fans.
Well now, there might be a solution! You can have a similar experience at home! Imagine yourself sitting at your couch in Amsterdam with a drink at your sight and your Virtual Reality headgear on. You have a great view at the game and even can adjust your angle. You are looking to your left and what the hell, that’s your best buddy who is watching from LA! It’s like in the stadium, you can interact with each other!
Above described experience is no utopia. Actually there are already plenty of companies experimenting with this concept. It is one of the reasons why for example NextVR has been bought by Apple. For fans it would be great news as it would be more convenient, safer and possibly cheaper! Covid 19 has definitely been an accelerator in this perspective as rights-holders are looking to expand or compensate for lost revenues. Watch the videos below in which this concept is explained in more detail.
7. Covid 19 will catapult E-sports even more
One sport that did not really suffer from Covid 19 is E-sports. For many it has filled in the gap of live sports as people look for alternative entertainment. Although total revenues of Esports have declined in 2020, this is mainly due to the lack of professional live events. Online gaming itself is as popular as ever as it is a way to connect and compete with each other at home in these difficult times.
But e-sports fanatics are not only playing and competing in e-sports, they are also watching gaming content. Virtual competitions have become increasingly popular in the absence of live sports. For GenZ and GenAlpha it is quite normal to watch their heroes playing games and this won’t go away. In fact online viewing platforms like Twitch and Youtube have witnessed phenomenal growth in viewership, which bodes very well for the future. Increasingly people consider e-sports as a viable alternative to mainstream sports.
With so many screenagers interested in playing and watching e-sports, it is likely that these sports will also become mainstream. Covid 19 has increased its popularity and no doubt investors, commercial parties and media will poor in in order to jump on this bandwagon. Don’t underestimate it, esports is no longer niche, it is here to stay! Current predictions amount to annual turnover levels of at least 1.8 bln USD by 2023! That’s almost double the revenues of 2020 in only 3 years time. Just read this article and you know what I mean.
8. Covid 19 will result in ongoing popularity of sporting at home
Something that has become very popular during the Covid 19 crisis is exercising at home. Organized sports have come to a standstill as a result of the Corona virus. Social distancing and in some countries even a total lockdown, limit our possibilities to stay in shape. However, simultaneously most of us realize that it remains extremely important to keep fit and maintain or improve our resistance levels. Creativity has come to the rescue here and has resulted in great new initiatives centering sports and exercising at home.
One of the magic words has been streaming. Streaming video with exercise classes of your local fitness club, yoga and meditation platforms, fitness platforms, challenges, you name it! There are loads of opportunities online! But there is more than just streaming! What to think of smart exercise mirrors or what about your own personal Augmented Or Virtual Reality trainer. You don’t need your personal instructor any longer. A virtual hologram will do the trick!
But what about the competitive aspect, you may wonder. No sweat! There are plenty of new online global gamification platforms where you can compete with others. Think of the Zwift platform where you can compete with other cyclists or what about the new tennis platform called tennisesports where you can hit a few balls in your living room with your buddy who is living in Australia. If this is too expensive for you, there are still loads of apps which you can download for free and which will provide you with a game experience. Think of the Strava’s of this world.
In any case we have discovered that it is not that difficult to do sports at or near our homes. It saves time and is in many cases more convenient. Ofcourse this will change again as soon as this crisis will come to an end, but no doubt as a result of rapid innovation, exercising at home will be here to stay and will have gained market share where it concerns participation levels.
9. Covid 19 will lead to increased athlete engagement
It is clear that during the Covid 19 crisis sports teams, athletes, leagues and brands have looked for different ways to connect with their fans. With social distancing protocols in place on the one hand and an increased social media appetite amongst fans on the other hand, many have increased their presence on wellknown platforms such as Instagram, TikTok and Twitter in order to connect. The ones that have been doing so have seen engagement levels growing very rapidly. Obviously this directly translates into higher brand value. Athletes are realising this and hence I would not be surprised if many of them will continue their efforts once Covid 19 is out of the way again.
The role of the athlete as an influencer is here to stay and will become more prominent going forward. In fact GenZ and GenAlpha feel more connected with a superstar than with a team. It could well mean that brands are shifting away from team related marketing more to individual athlete centric marketing. Covid 19 has accelerated this trend. For athletes being active as an influencer this is extremely important. It gives them not only an opportunity to interact with their fans and to show them their identity (think of charity ambassadors etc), it also will offer them yet another possibility to monetize their careers.
You can read more on the activities of the modern athlete off the field in my blogpost the evolving modern athlete.
10. Covid 19 will accelerate shift towards online sports retailing
Did you visit the High Street or any malls recently? Maybe you have noticed! Vacancies, a lot of them! They have clearly been on the rise as a result of Covid 19. This is logical given the dramatic fall in traffic. The sports retailing landscape is facing massive challenges. Revenues on online platforms have been surging, whilst bricks-and-mortar sales have come down. As you can read in my blogpost 10 important future trends in sports retailing it is essential for retailers to have a good e-commerce strategy in order to survive. The convenience of home delivery, the availability of extensive product information and the ability to shop 24/7 are key catalysts.
Covid 19 has accelerated the trend from bricks to clicks. Aggregators such Adidas, Nike, Under Armour have hugely benefitted, whilst smaller and medium-sized companies still have a lot of work to do. Digitisation is also in this subsector of sports the name of the game!
Covid 19 has changed our lives and our society. Sports is one of the sectors which has witnessed huge changes. Some of these changes will be permanent and some will act as catalysts for longer term existing trends within the world of sports. No doubt there is more to say about this subject. Please share your opinion or drop me a mail.