Ronaldinho Coin: Soccer player launches e-sports strategy to go with cryptocurrency Watch Now

Video: Ronaldinho Coin: Soccer player launches e-sports strategy to go with cryptocurrency

In my last post, I took some of the major tech vendors to task (remember, Microsoft, Tableau, and Marketo?) for their lack of support for an industry that at least two of them have the lion's share of the business. But there is a lot more than some financial value to be had when tech vendors participate in the sports world, some of which I covered in the post.

Imagine my pleasant surprise when a dear friend of mine, Stephen Bourke, CEO of the Aspire Institute, prominent Australian sports business strategist, and a colleague on the SEAT Executive Advisory Board, dropped this timely and incredibly interesting post on me, which also supports the point, though unintentionally, that there is so much more value to the sports industry than just a bit of revenue.

I've known Stephen for several years now, and his depth of knowledge and his energy for accomplishment always astound me. Maybe, because I'm 68, that much vigor is scary to me, or maybe it's just something else to see someone who is accomplishing so much at a young age. Most recently, and most cooly, he's become the program director of Managing Digital Transformation in Sport, an online program for sports business leaders and professionals. The course is arguably the first attempt at defining Managing Digital Transformation in Sport commences in September 2018 through Sports Business Institute in Spain.

You can find Stephen on Twitter at @sb1sport. But, for now, you can find him talking about sports, tech, and digital transformation right here.

When two giants of respective sport and technology industries came together to form a digital transformation partnership in 2015, Real Madrid's managing director, José Ángel Sánchez, acknowledged that the club is now a "fan company that uses software to get closer to fans," whilst Microsoft partner CEO Satya Nadella declared sport to be "one of the most disrupted of all industries."

Also: Sports, engagement, and tech company lack thereof

In an interview with website SportTechie, Sánchez expanded on changes to sports industry operations in the digital era:

Seventy years ago when the soccer economy was based on ticket sales, the president of Real Madrid built a huge stadium to house 120,000 people. He thought that having biggest stadium would provide the biggest revenues so he could be able to acquire rights to biggest players in the world. That's exactly what Santiago Bernabéu did. Now we have over 450 million fans so we have to build the virtual stadium to put them all in, and understand what they are expecting from us so the club can benefit from what they want.

So, how did this change happen and why is the industry of sports so disrupted? In short, fans and external competitors have changed, so sport needs to, too.

Fans are now connected consumers, and for their passion, they expect even more personalization and relevance from the team than they do from leading brands. As relatively small enterprises, sport businesses need to become their own version of a mini-Amazon. The next generation of fans is harder to reach -- since they no longer follow in the footsteps of familial tradition of team fandom, because they're blazing a trail to their own preferences that are reflecting their personal brand, thanks to online stars and unlimited global choices.

Younger fans are tending toward global stars, rather than teams ,which is why followership of Juventus FC spiked so significantly when they secured transfer of Christiano Ronaldo (sure, there is only one Ronaldo, however, LA Galaxy and DC United also enjoy this halo effect, courtesy of Zlatan Ibrahimovic and Wayne Rooney's arrival, respectively).

Competition for new fans has also shifted from other leagues and codes to everything and anything that any individual can now do in any moment. In particular, these are digitally enabled attention-grabbers like social media, video-on-demand bingeing (Netflix and YouTube) and gaming (for sports this also includes the competitive gaming industry of esports, which is able to attract potential fans first).

In response, not only do teams, leagues, and events need to be personally relevant at match time, they need to be always available for their adoring fans. This is achieved through content, which gives fans an all-access pass to the team and its personalities, creates excitement and interaction leading up to the next match, enhance the match day experience, and then dissect the event -- and on it goes.

Also: Football fans don't care about sports. Wait, what?

The good news here for sports is that, according to Microsoft's report, The Art of Storytelling, 71 percent of how a brand performs is based on the quality of its content -- so all brands should be in the business of content anyway, and particularly sports given the permission that fans naturally provide them.

The second piece of good news for sport businesses is that social and digital media is unlocking new revenue streams for those brands that play it strategically as a long game, which goes something like this: Creating engaging content builds followership, followership builds digital assets, digital assets unlock new partner revenues, new revenues and partners enable more engaging content, and the virtuous cycle to new revenues and appreciation is created.

In fact, the best sports teams have not only become content companies, they have elevated themselves to lifestyle brands status, where the team is a platform for creativity, innovation, and humour with social media its voice -- check out AS Roma's English Twitter account, for example.

Another way to consider how disrupted the business of sports has become is to put the industry through MIT Sloan Review's recent ''Three Signals Your Industry is About to be Disrupted" stress test, as follows:

Sign No. 1: Your Industry Has Significant Regulatory Burdens

While heavy regulations have a long tradition of protecting companies from new entrants, this may not be true in the future. Industries with high regulation often suffer from complacency, as they may not have had to worry much about customer experience or optimizing operations. However, emerging technology is changing this landscape and play without rules of regulation.

Like the attack that Uber, Airbnb, and Netflix had on regulations in their targeted industries (late fees for video hire, really Blockbuster) the regulated nature of sport is now at odds with our on-demand lifestyle.

Sporting matches and events are held at scheduled times, dates, and venues, whereas the connected consumer now wants what I want, when I want, where I want. To counter the scheduled nature of fixtures, teams and leagues are adding an increasing array of digital tools for fans to craft their own experience. Beyond social and digital media content, these options can include a mobile app (since the smartphone is the remote control to the event), fantasy games, and loyalty program incentives.

Also: World Cup soccer in 3D on your coffee table

Also, sports participation -- a strong indicator of fandom -- is highly regulated by federations and leagues. Membership fees can be onerous combined with a high price on time from practice and playing commitments. Startups are now attacking this tradition participation model by developing mobile apps that can direct recreational players to local pickup games in an increasing number of sports and neighbourhoods around the globe (such as basketball in the US and Cricket in India).

Thirdly, esports is disrupting the supply-and-demand model of tradition sports, with Kleiner Perkin's Internet Report 2017 claiming that as many millennials now have a "strong preference" for their favourite esport, as those sports fans that share this level of passion for their preferred team. Esports are taking potential future fans away from traditional sports, with the industries unregulated nature enabling anyone to compete in competitions or interact online with the gaming community. Spend some time on Twitch TV to see what I mean.

Sign No. 2: Your Customers Have to Work at Managing Their Costs

The second signal for disruption is that your cost models are difficult to understand for customers. This is often the situation when there are one or more middlemen between the origination point of the product or service and the customer. Handoffs in the supply chain often increase cost without adding value, and they also can contribute to poor customer experience. If your product requires a great deal of work on the part of customers in order to manage their cost, either through price tracking or haggling, consider yourself at risk.

Like Real Madrid's original business philosophy, ticketing has been the lifeblood of team, league, and event revenues. Selling tickets was the business model for sports, now cheeks on seats account for only one percent of the fan base.

Owing to shifts in our retail preferences away from bricks-and-mortar to online convenience (thanks, Amazon), subscription models (thanks, Netflix), and spontaneity (thanks, Uber), those in the sports have to unpack the complexity and confusion of ticket packaging -- and that's even before the secondary market and scalpers get involved.

Leading organizations are responding to the need for greater transparency and flexibility in their ticketing model by employing a range of new incentives. Ticketing tactics now include targeted packages to fans as individuals (supported by a data and analytics engine); impromptu seat upgrade offers at the venue (by knowing who is in the house and where); as well as a range of customer service and loyalty value-adds for season ticket holders. Orlando Magic, one of the most innovative teams in one of the most innovative leagues, even let ticket holders trade in tickets for other services under their Magic Money scheme.

Also: How professional cycling is being taken up a gear by technology

Changing the approach to traditional ticketing is also changing the operating model of sports businesses: Platform technology investments are required to create a single-view of each fan and let them manage their account with the team without friction. In parallel, the organization is adding data analysts to its head count, as they become important to business forecasting and pricing models.

Sign No. 3: Your Customers' Experience Isn't Positive -- or Even Neutral

The third signal often exists as a side effect from the first two: Your industry is not optimized for modern customer expectations -- which means that customers aren't delighted to interact with you. This often happens in industries where the consumer doesn't have a lot of choice and is beholden to the provider out of necessity.

The sport and entertainment industry is unique in that it has its own terminology for describing customer experience -- and that is "fan engagement." In fact, fan engagement is the business for those in the sports industry. The modern challenge is defining this term so that it has a specific purpose for the organization beyond general industry labelling.

Sport has the ability to unify communities, generate emotions, and brighten people's lives. Those teams that create an engaging purpose around these principles and then deliver on them as core business will create growth amid declining industry indices such as aging fan bases and lower participation levels.

AS Roma achieve outstanding results by any metrics, because it has perfected its purpose in this context. The organization's north star is to be "the most fan-connected team in the world," which frames decision-making, investment, and culture.

Also: Collingwood Football Club kicking goals with data analytics

As ambassadors of the team, fans want the same swagger and confidence to fan experience as the best teams from around the globe are delivering for their fans. After assigning digital-age purpose, the organization needs to understand all of the touchpoints of interaction and transaction that a fan could want and then infuse them with technology to make sure fans get the outcome they are seeking.

It is no wonder that the CEO of SAP, Bill McDermott, has remarked that "every sports franchise is now a software company," reflecting how fan the sports industry is pivoted from the "build it and they will come" days of the past.

Thank you, Stephen.

This guy knows what he's talking about -- and I hope reinforces what it takes to engage fans/customers in a digitally enabled world -- because you all know that you need to understand that.



ANNOUNCEMENT: I'm extending the CRM Watchlist 2019 and EMI Award 2019 registration period to Sept. 30, 2018, rather than Aug. 31, since I did not do what I should have done and sent out reminders. There are apparently, thanks to my lack of effort, a lot of people who did not know that this year the deadline for registration is/was a lot earlier than in the past. So, at popular request (OK, four companies) I'm extending the deadline to Sept. 30 for both. But that will be it. So, if you are interested in registering for the CRM Watchlist or the EMI (details on the Watchlist and the EMI criteria here and more on what the EMI is here), email me at paul-greenberg3@the56group.com.

Related stories: