More than 22 percent of the households in North America actively follow sports on the Web, according to a report by Forrester Research, and the Internet may soon disrupt the broadcast network monopoly over the delivery of sports entertainment.
New Web technologies will allow professional sports leagues to create and deliver innovative broadband sports programming directly to fans, according to Forrester’s report “The Sports Power Shift.” This will effectively shift power away from the networks and redefine the model behind the sports entertainment business.
The traditional delivery of sports programming found broadcasters, including television and radio at both local and national levels, at the center of the exchange between marketers, professional leagues, and sports fans. The Internet-driven sports power shift, however, moves professional leagues to the center of this once broadcast-centric value chain. As bandwidth improves, league sites, team sites, and the sites of Web partners will provide a non-network distribution alternative, not only for content but for merchandise and tickets as well.
By 2004, the sports power shift will dictate new roles for the major players in the sports marketplace: professional leagues, broadcast networks, marketers, and fans,” said Mark Hardie, senior analyst in New Media Research at Forrester. “For professional leagues like the NFL or associations like the PGA, the Internet will become more than just another distribution channel. It will become an opportunity to exploit whole new revenue streams.”
According to Forrester, the sports power shift will be fueled by advances in technology, including increased broadband access; widespread use of email, chat, and instant messengers; and the proliferation of analysis software and hardware developments. By 2003, more than 27 million households will have broadband access to the Internet, which will be necessary for viewing high-quality streaming video highlights. Meanwhile, Forrester reports, there are firms commercializing military technology to create features such as auto-racing graphics and golf tournament ball positions for video-poor Web users.
In the Web-enabled world of sports entertainment, leagues will no longer license exclusive distribution rights for an event to a single network. Instead, several entities will be able to share the task, offering their own unique experiences on television, the Internet, or on wireless devices, Hardie said.
As viewership fragments, marketing dollars and e-commerce will follow eyeballs. By 2004, Forrester projects that advertising on sports-related Web sites will reach $2.4 billion, with sports-related e-commerce climbing to $4.7 billion. For a typical league such as the NBA, online revenue streams are predicted to contribute as much as 15 percent of total revenues in 2004.
“The sports power shift will force brand advertisers to abandon one-size fits all, mass market advertising in favor of cross-media targeting campaigns,” Hardie said. Not only will sponsorship packages include a prominent presence on sports-related sites, but on-air advertisements will point audiences to archival highlight footage, promotions, and e-commerce opportunities on the Web.
Forrester surveyed 50 professional sports teams and evaluated their Web sites for the report. The median team site revenue today is $100,000 and is dominated by online advertising. Teams expect site revenues will grow tenfold to $1 million by 2004.
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