How is the sports value chain adjusting to not having live sports due to COVID-19 and what does this mean for the future?

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One of the most visible absences in media because of COVID-19 is live sports, as all major sports leagues have been placed on hiatus while the world deals with the pandemic.However, technology, including Zoom and other video conferencing services, is being used creatively to produce shows remotely, with the virtual NFL draft serving as a prime example of the industry's resilience.As fans and teams alike begin to prepare for the new normal, 3 main questions have emerged about the sports industry:What new non-live content will work and sustain past COVID-19?When will live sports resume?How will the relationship and risk burden between sports content originators and broadcasters/advertisers/fans change?1. Much of the industry's immediate attention has been paid to creating (or re-purposing) non-live content to retain viewership and consumer mindshare as entertainment consumption has spiked in response to quarantine measures. Some examples include:Classic games: Airing unique library content that may evoke nostalgia among longtime fans, and even generate new ones, has been a common tactic used by many leagues.“Shoulder” content: Sports documentaries have seen a surge in interest. One notable example is the “Last Dance” documentary focusing on Bulls 1997-1998 NBA season distributed on Netflix with premiere episodes generating 6.1M viewers.Esports tournaments: Sports stars have competed in virtual tournaments, including F1's China Virtual GP (won by Ferrari driver Charles Leclerc), tennis’ Mutua Madrid virtual pro tournament (won by 3-time Grand Slam champion Andy Murray) and soccer’s LaLiga FIFA20 (won by Real Madrid’s Marco Asensio). See our recent POV on esports during COVID-19 here.Social media: Teams, athletes, and other sports personalities are engaging fans via their respective social media accounts, with each league adjusting their strategies to match fan culture. For example, the NBA tends to focus on individual players promoting the sport, while the NFL focuses on the league and its teams. As a result, the NBA has been able to generate a larger fanbase, as its players have been able to independently interact with millions of fans across the world.2. There is little doubt that live sports will return. However, the when and how remain elusive. Some leagues are mulling over games without an audience, which will be easier for some sports more than others. Below are some key business-related elements to consider when making these decisions:Contracts: Some contracts may have deadlines in place for when live games need to be delivered for payout.Advertising Market: The health of the advertising market at the time of live games’ return will greatly affect profitability.Venue Operations: By not having an audience, venues lose out on ticket revenues and concession sales.Crowding Out Effect: It is possible that multiple sports leagues may return at the same time, competing for both views and dollars.3. Finally, COVID-19 has highlighted the unsustainability of the risk profile in sports, whereby associations, franchises/clubs, and players all benefit from secure contracts, while broadcasters and sponsors bear the risk load. A recalibration of this relationship towards a more balanced risk profile seems inevitable with:New contract structures that share risk and place more load on delivery and quality by the leagues/clubs/playersExtended content beyond live games, with a commitment to more adjacent content to bridge interest and engagement between live gamesA higher performance-related element in sponsorship and advertising contractsTo learn more about Kearney's Communications, Media, and Technology practice, please visit our site here.