Industry Insights: The Current State of Sports Technology

By: Michael Proman, Managing Director, Scrum Ventures

Technology has been quietly transforming the world of sports for years with some estimates predicting the sector to reach $30 billion by 2024. While industries across the board have felt the profound impact of technology in today’s connected world, there’s a unique level of passion and love for the game fueling an unprecedented amount of innovation dedicated to modernizing and evolving the favorite pastimes of the world.

Sports have always been the ultimate unifier — transcending geographic borders, rising above partisan politics and enabling multiple audiences (and generations) to find alignment — and the little known secret behind this global unifier is technology. It influences how athletes train and compete, how fans engage and consume content and how world class venues are constructed. Thus, you could argue that sports tech startups are some of the most crucial (and under-appreciated) innovators in the world, as they connect us in ways we desperately need.

That being said, it’s terribly ironic that the sports tech industry has and continues to suffer from massive amounts of fragmentation. Whether it be by geography, industry area of focus or funding stage, sports tech startups are missing the community that it has enabled others to realize.

This is precisely why we started SPORTS TECH TOKYO (STT): a mentor-driven program that brings the global sports tech community together — from innovators and investors to corporations and sports industry professionals — in the same way top-tier athletes will be descending upon Japan in the next 12 months. We recognize that there is a historic opportunity to bring this community together, and when we do, the legacy that we create will be one of continued growth and opportunity — perpetuating the current influx of capital into the space.

My optimism for the industry is driven by the world class Mentor team we’ve built consisting of 100+ founders, investors and industry professionals ranging anywhere from the Golden State Warriors and FIFA to Nike and Comcast Ventures, and so much more. In order to better understand where the sports technology industry is headed in terms of investment, innovation and impact, we tapped these experts for our survey on the current state of sports technology. Below you’ll find the key takeaways from the findings that point to where we believe the industry is headed.

The Current State of Sports Technology: Key Takeaways

Fan Engagement Technologies, Including Live Streaming and eSports, Set to Make the Largest Impact on Sports In the Next 12 Months — Including the Upcoming 2020 Tokyo Olympics

When asked about which technologies would make the biggest impact on the sports industry in the next 12 months, an overwhelming 78%, selected fan engagement technologies, such as live streaming, eSports and content platforms compared to technologies related to athlete performance (16%) and stadium experience (6%). Respondents also believe that this will hold true for the upcoming 2020 Olympic Games in Tokyo.

“Anticipating the next fan engagement trend is critical, whether you’re a team, brand or media company,” says Tom Masterman, STT Mentor and Global Head of Publisher Sales at Genius Sports Media, a leading provider of sports data and technology solutions. “Tokyo 2020 will be a make-or-break event for startups as well as incumbent technologies.”

Having worked on two Olympics at previous digital media companies, Masterman is aware of how quickly the Games come and go. “Among the questions that will keep many of us up at night include, ‘Will fans adopt my tech? Is my sponsorship integration a good experience? Did I choose the right channel partners?’”

A quick analysis of SPORTS TECH TOKYO, including the participating startups and the successful partnerships forged through the program, reinforces this powerful trend:

1. The majority of the applications to STT, as well as a disproportional representation of the entire 159-company cohort that was selected for the program, came from the “Fan Engagement” category. This also happens to have the most sub-categories (6): live streaming; content; social engagement; AR/VR; eSports and sports gambling/fantasy.
2. Key relationships between cohort companies and Japanese program partners signed during the program within this space such as SportsCastr and SPOLABo, who has several over-the-top media platforms in Japan. Numerous additional conversations are progressing and additional partnership announcements are anticipated.

Top Three Technologies for Investment: Media and Content Related Platforms; Measurement Platforms for Data, Analytics and Biometrics; and eSports

When asked which technologies were most interesting from an investment perspective, media and content related platforms, eSports and measurements platforms for data, analytics and biometrics were among the top three. Other areas of interest include athlete tech and performance optimization, in-venue technology, gambling and gaming and recovery health and home fitness. This is a powerful indication of where venture capital funding focus is trending given more than 50% of respondents, coming from a wide array of areas in the industry, identified themselves as investors.

“As investors, we see cyclicality in every industry except Sports which has the biggest consumer ecosystem. Sports had been a very traditional industry powered by legacy tech, but now with the advent of streaming, sports content media distribution is decentralized via social media platforms. The Sports market has the opportunity to be a multi-trillion dollar ecosystem with technological advances such as 5G, digital collectible trading and the rise of e-sports, which will fuel new market and social behavior. As the infusion of deep tech continues in smart venue, gambling, performance biometrics and many more sub verticals where data is the engine, we’ll naturally see more and more deep tech investors, like myself, entering the sports investment landscape.”

— Gayatri Sarkar, Managing Partner, Hype Capital

Once again, these findings are reflected via STT in the following ways:

Our Mentor Team: While the holistic group is a diverse representation of the industry, we’re fortunate to have deep expertise in these top investment areas. In particular, the STT cohort has had numerous opportunities to engage with our mentors and program advisors, including:

• Data & Analytics: Neda Tabatabaie (VP, Business Intelligence at the San Jose Sharks); Sezin Askoy (SVP, Global Data Strategy & Analytics at AEG/AXS)
• Media & Content Related Platforms: Max Barnett (Head of Digital at Nielsen); Daniel Brusilovsky (Digital Lead at the Golden State Warriors); Tom Masterman (Global Head of Media at Genius Sports); Andrea Marini (President of North America at Deltatre)
• eSports: Jana Werner (Head of Content & Programming at Twitch); Chris Chaney (Founder of Infinite Sports); Chase Payne (Founder, Game Point Labs); Michael Cotton (Director, Zone Startups)

Weekly Webinars with Leading Investors: over a 10 week period, cohort companies have acquired actionable insights from members of the sports tech venture community (noted below) — validating these areas of interest:

• Kim Frisch (Head of Corporate Development & Venture Investing at WWE)
• Michael Shapiro (Director of Innovation & Venture Investing at MLB)
• Keith Bank (Founder & Chairman of KB Partners)
• Kai Bond (Principal at Comcast Ventures)
• Gayatri Sarkar (Managing Partner, Hype Capital)
• Akif Malik (Managing Partner at Podium VC)

World Demo Day — Investor Representation: the culminating event of STT, World Demo Day, will include over 40 venture capital firms and investors — many of whom have made multiple investments in these spaces in recent months, including Sapphire Ventures, KB Partners, WISE Ventures and Greycroft.

Basketball and eSports Are at the Forefront of Technology

While eSports is a likely leader in the use of technology, with 79% of respondents placing it in the top three category, Basketball remains the top pick with 87% placing the traditional sport at the forefront of innovation.

As a former NBA-er, this comes as no big surprise. The League has always been known as a thought-leader in technology and innovation, and their dominance is what is driving the sport’s tech-savvy DNA on a global level.

“The Sacramento Kings and Golden 1 Center are dedicated to leading the way in innovation and technology. Golden 1 Center is one of the most technologically advanced and connected indoor arenas in the world, and serves as our 21st Century communal fireplace. We’ve been at the forefront of leveraging technologies such as AI, AR, blockchain, and eSports (Kings Guard Gaming/NBA 2K) to deepen connections to our brands while customizing and personalizing frictionless fan experiences remains core to our mission.”

— Tom Hunt, EVP, Business Operations, Sacramento Kings

That being said, and based on the diverse STT company cohort, I’d make a bet that baseball-related technology will catch up very quickly. More than three dozen STT companies are currently working with baseball clubs — enhancing everything from a player’s cognitive reactions to the ways in which your food is delivered to you at ballparks.

What’s Holding Sports Tech Adoption Back? Unqualified Decision Makers, Risk Aversion and Cost

When asked about the main factors that are holding sports technology adoption back, the top three reasons, similar to many non-traditional technology sectors, included unqualified decision makers, risk aversion and cost.

While there’s plenty of blame to go around (and everyone can assume a degree of responsibility), a large percentage of the STT cohort offers a potential solution: validate your business model outside of a core sports stakeholder. Over half of STT companies realize revenue from more than just sports teams, leagues and properties — organizations that have historically reinforced the leading responses to this question. More importantly, relationships with these audiences require long sales cycles and traditionally represent “cents on the dollar” in comparison to partnerships with other industry (e.g., brands) and non-industry (e.g., military, retail, airline, etc.) opportunities.

Conclusion

In less than a year, SPORTS TECH TOKYO has reinvented the accelerator model; we’ve created a community of best-in-class sports tech startups that are perpetuating the notion that sports are truly the ultimate unifier.

In addition to the 159 stage-agnostic companies that make up the cohort, we’re fortunate to be surrounded by program partners, advisors and mentors that are not only innovators and thought-leaders, but also advocates and connectors.

If the industry is a representation of STT (something I strongly believe), then I’m bullish on what awaits in 2020 and beyond.

About Michael Proman, Managing Director, Scrum Ventures

Scrum Ventures is an early-stage venture capital firm that invests in a wide range of industries. Scrum Studios, launched in 2018, enables start-ups and corporations to co-create and innovate together.

Michael Proman is a Managing Director at Scrum Ventures where he oversees the development and execution of SPORTS TECH TOKYO, a global, mentor-driven Studio program aimed at connecting cutting-edge sports technology start-ups of all stages to revenue-generating opportunities. In partnership with Dentsu, the program places a particular and immediate emphasis on Japan — ahead of world-class events coming to the market — while strategically helping start-ups identify and realize broader opportunities throughout Asia. To learn more, please visit, https://sportstech.tokyo/