To date many sports organizations have tried to stand up a D2C value proposition that is underpinned by content.
The problem is that they’ve often done so with their least valuable content because they’ve also been trying to license their premium rights to third parties who remain specialists in bundling and monetizing this type of IP (intellectual property) and who offer upfront fees.
In 2025 we will see a marked shift in the way sports adresses the D2C opportunity. Instead of launching standalone offerings where the value proposition is non-premium content, they will pivot to creating new value propositions based on things other than content.
We will see fewer individual league and team content offerings built on non-premium content (and often only available in non-core markets). These simply cannot succeed in an entertainment environment where consumers also have access to huge content libraries like Netflix, YouTube, Spotify and Disney+.
In our 2020 trends we predicted, perhaps somewhat early, that sports fans would reach ‘peak subscription’ and this is beginning to bear out – the broadcast landscape is going through a consolidation and rebundling process that will see fewer streaming services, not more.
WWE’s move to close WWE Network in the US in favor of a deal with Peacock (and more recently with Netflix) was an early bellwether event, signalling the move from a D2C content distribution approach back towards licensing.
WWE were pioneers in the D2C streaming space and you could argue that the audience understanding they developed by launching and growing their own streaming service put them in a position to do these deals (as well as the one they struck with Fanatics for retail and merchandise). You could also argue that it’s simply easier to license high quality IP to specialists in their business model and focus on your on your core business.
Let’s be clear, sports is not done with streaming premium content – that market will continue to grow. Where premium content has been licensed however, sports will look either to create new premium content or offer other forms of value by creating a ‘Strava for…’ in their category.
Strava has successfully offered runners, walkers and riders a way to measure their activity alongside gamification elements like badges and leaderboards to keep them coming back to the product. Sports with a strong participation base will try to own the participation space. Other sports that don’t have a strong link back to participation will also look to gamification and rewards to create new and different value propositions on which to hang their D2C efforts.
Keep the main thing the main thing
We think that in the current rebundling cycle, sports will increasingly choose to focus on the core business activities that they really need to deliver well to drive value: putting on great spectacles, assembling the best talent, ensuring the integrity of their competitions and building compelling brands and stories around their properties.
INEOS’ investment into Manchester United saw it take control of football operations, while Mark Cuban sold all but his basketball operations stake in the Dallas Mavericks. This points to a focus on the core asset in sports – the quality of the sporting product.
First-party data, third-party specialists
Sports will predominantly still commercialize their content- based IP, as they always have done, via business-to-business specialists. This will not spell the end of their D2C ambitions. Sports will still need a revenue diversification play after all, especially those in the squeezed middle that are experiencing challenges with their broadcast deals.
First, sports will need to be more disciplined about the D2C value proposition it’s putting together for the consumer, and secondly it needs to be realistic about the kind of data business it can be.
To the latter point, data businesses are valuable when they aggregate enormous quantities of data and have the engineers, data scientists, product experts and sales networks to support the commercialization of those large data sets.
Utility, gamification & rewards offer a new value proposition
Having rich customer data will still be important for many sports properties but they will need to think more deeply about the value they are offering in exchange for that relationship.
We expect to see sports properties build valuable new media assets based on an entirely different relationship with the consumer. Sports with a strong participation base will look to build upon the trend towards consumer self-measurement by offering utility tools that help people track and improve their performance. These experiences will be gamified to encourage repeat engagement. Sports boast fans with shared interest that they can bring together in new social forums, so community tools and engagement platforms will play a role too.
Sports will consider different types of content that offer D2C value. These may include training aids, diet plans, or mental wellness and coaching expertise but the key is, this content will still be premium and not the remnants of what could not be licensed to third parties.
