Compiled by Vinit Furia
A sporting event is commonly regarded as a positive reinforcement event for sports in society. It persuades the audience to be interested in sports, to take the initiative to care for their health, and to build an athletic culture around it.
However, if you look at any sporting event, the number of stakeholders and logistical planning involved leads you to believe that the profits here must not be peanuts or just to cover labor or menial costs; it is a HUGE business.
And a sizeable chunk of this huge revenue comes from the digital medium of sales through various offerings.
Let’s understand this through the example of Indian sports revenue.
According to a report released by CII (Confederation of Indian Industry), IBDF (Indian Broadcasting and Digital Foundation) and KMPG, sports revenue from digital platforms is expected to grow to ₹4360cr in FY26 from ₹1540cr in FY22 increasing with a CAGR of 22%.
Subscription revenues for sports are likely to grow as OTT subscribers increase and OTT platforms make a visible, determined attempt to transition to an SVoD (subscription-led video-on-demand) future. Over the last several months, OTT platforms have made significant initiatives to improve sports coverage; Amazon Prime Video, for instance, recently secured exclusive cricket rights from New Zealand Cricket for November 2020. Viacom18, which purchased the digital rights to the IPL for Rs. 23,758 crores earlier this year, is also streaming the FIFA World Cup for free on its OTT platform JioCinema.
Despite the rapid growth of digital consumption in the past few years, the TV sports market is expected to be more than twice the overall digital sports market in the medium to long term, in accordance with the report, and TV as a platform for sports consumption and monetisation is likely to remain highly relevant for the foreseeable future. For example, IPL 2022 had a TV reach of 400 million vs a digital reach of 100 million.
Future growth prospects of Sports Revenue
Sports-related NFTs have received great attention and investment in the last year, which has opened the way to further blockchain-enabled developments. A nexus will arise around sports collectibles, ticketing, betting, and gaming as the use and inclusion of cryptocurrencies and associated exchange platforms grow.
Crypto players have been significantly spending on sports sponsorships in order to increase brand visibility, legitimacy, and customer acquisition. The crypto exchange FTX struck a five-year contract with MLB and acquired the naming rights to the Miami Heat’s arena. In addition, Coinbase has collaborated with the NBA and WNBA to better inform fans.
Individual and season tickets are being transferred to blockchains, transforming what was once a simple piece of paper into a more dynamic product or investment vehicle. Initially, we may see ticket bundles containing NFTs to thank fans. With sufficient smart contract capabilities, we may see fractional ownership of season tickets in the future, as well as a reinvention of the ticket resale process.
Digital means of revenue collection in sports have a lot of scope, both now and in the future. Fantasy Sports apps, while unusual entrants, also want a piece of this pie, with Dream11 being the frontrunner with its ever-growing financials:
With novelty tech becoming an integral part of our lives in the future, the sports industry can certainly bank on the growth prospects these unconventional means of revenue collection bring forth, such as something rooted in current tech: in-game advertisements, or something relatively more advanced tech: blockchain and a decentralized way of providing services.