Vantage 2018: the business of sport
Sport is changing, and the business side of it especially is in a constant state of flux. For AFL CEO Gillon McLachlan and Foxtel CEO Patrick Delany, that’s what makes right now such an exciting time to be in it. Telstra Vantage – the pre-eminent business, ideas and technology experience makes its highly anticipated return this September, touching down at Melbourne Convention and Exhibition Centre right in the heart of Melbourne’s iconic CBD.
The leaders of @AFL, @Foxtel and @Telstra_EntGovt joined @DaggarNickson at #TelstraVantage to discuss the outlook for sport and media, and how innovation in technology is helping to drive their businesses.
— Sky News Business (@SkyBusiness) September 20, 2018
Speaking in a Business of Sport panel at Telstra Vantage™ 2018, Delany noted that these days – at least from a broadcaster’s perspective – trends and changes happen so quickly that everything is urgent.
There’s been an uptick in the number of disruptors in the business over the past five years, he said, driven largely by new technology and changing media consumption habits. Viewership is shifting away from free-to-air broadcast into cable TV and a plethora of digital viewing options. And the stakes are large, with $20-30 million decisions in a landscape with hundreds of millions or billions of dollars in revenue each year.
On the technology front, the big ticket item is currently the emergence of 4K. High definition was a big step up – five times the resolution of standard definition – but 4K is another four times bigger than that.
Shifting, diverging audiences
Telstra Enterprise Group Executive Brendon Riley noted that this year was the one where mobile sports viewing took off, which puts pressure on traditional free-to-air and cable broadcasting. To McLachlan and Delany, that’s proof of how consumption is changing.
Of the 1.7 million people who watched the Melbourne vs Hawthorn AFL game last week, for instance, Foxtel had around 460,000 hardcore fans watching ad-free siren-to-siren with deep analysis, while Channel 7 offered more of a “for everyone” TV presentation style and Telstra’s mobile coverage of the game allowed fans to jump in and out as they went about their lives.
Delany noted that a lot of this digital growth is not new viewers. It’s not an ever-expanding audience pie but rather “mostly just pieces moving around,” he said.
Keeping fans engaged
The other side of the disruption in sport is this viewer-led change. It’s how sport is watched and engaged with by fans. McLachlan said that there are a million members paying more than $50 to support their favourite AFL clubs, and many of them don’t even attend the actual games. The key is evolving this emotional connection with fans, and growing the game by bringing in new fans.
The AFL has four key growth platforms for its long-term future: they want to be relevant to children, women, new Australians and to people in New South Wales and Queensland – where the supporter share is lower compared to other football codes.
Every business decision is filtered through these growth plans. McLachlan said that means looking at broadcast and sponsorship deals as long-haul partnerships, not billboards and eyeballs. And it’s much the same for Foxtel with their sports coverage. Delany said they favour sports governing bodies that see the long-view because that then allows more room for innovation with technology and fan engagement.
For Foxtel, 4K is just the tip of the iceberg. The cable TV giant plans to introduce a kind of “Netflix of sport” at some point, gamely disrupting its own business model in recognition of changing consumption patterns. And for the AFL, too, even on the back of a record year for attendances, there’s an understanding that change is a necessity.
When asked if the AFL will change its rules, McLachlan admitted that they’re thinking about it. “If we’re not changing things, in real terms, we’re going backwards,” he said.
The key for them is to continue to take the business forward – to follow the market – without breaking the heritage links with the traditions and history of the game, which means the same thing it does for all businesses with a long history – to look at the core product and enable it to be the best it can be through good research and inclusive customer (or in this case AFL fan)-focused processes.
To watch the full panel session at Telstra Vantage™ 2018, see below.