Of all the trends ostensibly accelerated by the Covid-19 pandemic, the convergence of physical and digital experiences was impossible to ignore in 2020.
In a year when live in-person events were few and far between, technology helped industries of all kinds, not least sport, find their feet again through hybrid offerings, with connected devices serving as a means through which to engage and cater to the needs of the virtual fan.
In the wake of Covid-19, few sectors have benefitted from this ‘phygital’ trend quite like connected fitness. Major funding rounds announced in recent months have illustrated ravenous investor appetite in the sector, whose rise continues unabated having been boosted by a physical contact-starved public leading stay-at-home lives. Meanwhile, new technologies designed to facilitate things like remote content production, virtual coaching and youth participation have grown in importance in line with the continuing push to deliver professional-grade products and solutions to amateur sports enthusiasts everywhere.
Together, these trends are reflected in the direction of travel for the sports tech sector at large. Never has there been a time when sports have felt a more pressing need to build and nurture digital fan communities. For rights holders large and small, technology now has a pivotal role to play in delivering more personalised and interactive experiences, particularly those built around immersive content, gamification and social viewing - all of which is invariably rooted in first-party data intelligence and AI-driven analytics.
It is against this backdrop that, for the second year running, SportsPro presented its pick of 20 early-stage startups whose products and services should be on every sports tech investor’s radar. To help compile the Class of 2021, the opinions and predictions of investors, advisors, executives and analysts were sought from across the global sports tech ecosystem, each of whom shared their views on the standout companies and top trends to watch in the sector in 2021.
Giles Morgan, Executive Vice President, Pumpjack Dataworks
Roger Mitchell, Founder, Albachiara
Benjamin Penkert, Founder, SportsTechX
Deepen Parikh, Partner, Courtside Ventures
Kyle Bunch, VP and Managing Director, Global Sports Venture Studio
Unmish Parthasarathi, Founder and Executive Director, Picture Board Partners
Michael Broughton, Advisor, Acceleration Equity
Jean-Baptiste Alliot, Advisor, Uefa Innovation Hub
Benjamin Stoll, Director of Strategic Alliances and Innovation, Fifa
Giel Kierkels, Head of Innovation, Dutch FA (KNVB)
Thomas Alomes, Head of North America, Sports Tech World Series
Jean-Baptiste Roy, Founding Partner, Asia Sports Tech
Charlie Greenwood, Founder, Sports Loft
What standout trends will define the sports tech space in 2021?
The use of machine learning and AI in a massive drive for cost efficiencies [and] the necessity for lower tier sports to find a business model. This will be around DTC strategic marketing, using the passion of their niche super fans to help create content and engagement.
The most valuable sports tech brands will be ones that solve business challenges for the industry. Technology for technology’s sake does not create value. It is the end that matters more than the means. With the sports industry facing its biggest revenue challenges in history, the technology that helps generate revenue and value will be the biggest winners.
Blockchain and computer vision-based startups will begin to surface with use cases in areas that are in commercial decline/disruption, such as sponsorship.
The concept of membership will define the industry and separate winners and losers over the coming decade. As we’ve seen in commerce, entertainment, and countless other B2B and B2C industries, those who can use data to build direct relationships - and with it, leverage to maximise revenue per fan/consumer - will thrive. Those who don’t will find themselves scrambling to keep pace.
In 2021 I expect two things to really emerge. [One is] community growth. All generations want to feel emotionally involved and just sending out push content isn’t enough, so watch out for more community building because all those empty stadiums have reminded people how important the fans are. [The second is] data. How do you engage and involve the fans and tempt them back into a stadium? Well, you need to know who they are. So expect data to be at the forefront of all rights holders’ strategies – and if it’s not then they haven’t learned the lessons of the pandemic.
The first to mention is fitness tech. Already a hot topic pre-Covid but the pandemic added some extra fuel to the hype, with both investors and users pouring money into it. The biggest driver was obviously the shift to at-home/connected fitness and we expect 2021 to ride this wave further. We also see interesting developments in grassroots content production, where various companies fight for the rights of lower league, youth and amateur teams in order to distribute shareable content and/or to provide pro-like analytics. There were some notable acquisitions in recent years, which could start to pay off in 2021 when we hopefully see more games again.
Despite Covid, we have seen how younger demos are continuing to participate in youth sports, and obviously those numbers have varied. In general, youth sports participation has dropped over the years. However, we’ve seen technology and just how much accessibility can change that model. On-demand coaching, incorporating engaging content and immersive experiences, will yield more engagement. Larger media players are seeking content to combine adjustable markets, so going after and engaging young demographics is very important. And then changing the script on how parents watch, pay and follow their children’s sports is a huge opportunity and something we’re constantly looking at.
Two trends. Firstly, artificial intelligence will become more mainstream and the application of AI will be more relevant to the real-world – for example, using natural language processing to help answer fans’ questions or using huge amounts of data to spot trends in injury statistics. Secondly, the principle of paying for content online becomes standard. Netflix, Disney+, The Athletic and others have established paid-for content as the norm, now we can expect to see both a trend for bundling (eg Apple One) but also consumers paying for lots of individual subscriptions (in which case, what becomes the appropriate level for aggregation? Ios? Apple Pay?).
Whoop's wrist-worn fitness trackers are utilised by dozens of golfers on the PGA Tour and LPGA
Which sector within sports tech will see the greatest growth in 2021?
We break it into three buckets in terms of our thesis we’re looking at right now. One is content creation and distribution; another is lifestyle and collectibles. Sports culture transcends the game into everyday life for sneakers, apparel, physical and digital collectibles. One big trend we’re seeing is collectible sports trading cards. There’s been a huge boom behind that recently, so how do you develop platforms that create, facilitate, market and distribute these types of products? And then third is the overarching participatory area. Youth sports participation and the dollars spent by families is still a massive opportunity for software and offline businesses, so we’re looking at platforms that help facilitate transactions, engagement, interaction for players, parents and coaches.
Concurrency - or the ability to serve multiple streams at peak times during live sports coverage - on OTT will be a huge area of growth with a large number of platforms hosting major events in football, cricket and basketball. So expect smart solutions using ML-based predictive analytics.
While we’ve talked about sports betting since the repeal of PASPA in 2018, economic realities – both those facing sport and many local and national governments – are accelerating new legislation and expansion of the sector. Expect growth in investment and new companies, propelled by deeper integration by leagues, teams, and their media and corporate partners.
In the US this will be betting. It will be like that for a while as they figure out the size and scope of the market and more states come online. Otherwise, to be honest, it’s most likely to be gaming and esports. This is a train that’s not going to stop because of what the macro world looks like: more devices, more TVs in bedrooms, fewer sports fields [due to lockdowns], and the emergence of gaming as a service. Also, look at how people like Christian Volk at Fifa and his counterparts at EA are remodelling the competitive gaming space, and you can see an emergence of true viable tournament structures.
Technologies around digital health, learning and practise will continue to grow rapidly. Every element of the physical and mental athlete journey (including fitness, health, nutrition, wellbeing, mindfulness, strategy) will get enhanced via data intelligence, AI-driven services, the power of connectivity, and community learning and motivation.
Digital performance apps. Getting people to invest in measuring their individual performance, receiving high-quality feedback and training to improve.
Connected fitness and health, particularly recovery-focused solutions. The Covid-19 pandemic massively accelerated this sector in 2020 but it’s just getting started and 2021 will see further growth. For example, following Whoop’s recent US$1.2 billion valuation, look for performance recovery [company] Hyperice to join them in the sports tech unicorn club in early 2021.
The integration of sports tech related to recovery, sleep and mental wellness will see the largest growth and include devices like skin sensors and glucose, hydration and nutrition monitors. Another trend will be the acceleration and adoption of AI coaching and remote coaching. These trends will lead to even more data collection, remote monitoring and integration of this data on platforms, and will ultimately lead to the democratisation of sports where learnings from professionals will be more widely accessed by amateur athletes.
The augmentation of the viewing experience – whether directly on the device on which you are watching the game with the integration of stats, betting odds and chats with your friends, or on a secondary device providing answers or gaming that would crowd out the viewing experience on the primary device.
Performance recovery company Hyperice is projected to join the sports technology unicorn club this year
If you could invest in one sports tech startup, product or idea today, which one would it be and why?
Companies positioned at the intersection of the physical and virtual worlds will be the Tesla or Netflix of the ‘20s. For all of the hype and growing valuations we’ve seen in the last two to three years, connected fitness platforms like Peloton and Whoop and the operating systems of the metaverse, like Unity and Epic’s Unreal Engine, will only become more transformative as they converge with faster connections, smaller and cheaper chips and hardware, more sophisticated AI and other macro-trends on the horizon.
Computer vision solutions for the automated collection and analysis of sports data. This provides coaches with real-time tactical analysis, media production teams with a library of enhanced content, and sports betting providers with a new way to gather official data on a game. Most importantly for sports rights holders and their broadcast partners, it creates operating efficiencies that can help the industry still reeling from revenue losses this year. Advances in these optical tracking systems are further bolstered by the rollout of 5G, which will reduce latency to near real-time.
To be honest, I would hesitate between Uplift Labs, Buzzer and GreenPark. It may be a cliché when you look at investing in startups, but the team is the most important factor. These three companies have incredible teams that can put together a variety of products and execute them in line with market demands. Their value proposition is fully aligned with the shift in the industry. The survival of a startup depends on its connections and access to leading executives, including at sports leagues levels and, thanks to their main investors, these three startups are very well placed to move forward quickly and demonstrate value.
Anyone who is building a brand, who is building a community, and is building longevity behind that community, is really appealing. I don’t have one company in mind. There are several that we have not invested in yet that I’m certainly very excited about and there are some that we just missed entirely. That’s the unfortunate reality of venture, but a lot of that shapes how we look at the market going forward.
The growing popularity of at-home fitness and virtual coaching has fuelled a surge in Peloton's market value
What is the most overhyped sports tech trend or product heading into 2021?
Not a specific product, but a trend certainly is hardware or devices that don’t give actionable feedback. There are some companies that have done an incredible job - look at Whoop or Aura; the data you receive from them will dictate how you live your day. That’s incredible. There are still a lot of wearables out there that are collecting data but don’t necessarily provide that actionability on a long-term basis. Collecting data for the sake of collecting data is not that interesting.
New bundled sports platforms financed by ads. The “Netflix of sports” play is a siren call full of danger.
Not so much overhyped as a much-discussed but still unknown variable: the rush of new capital from SPACs and private equity into sports and sports tech. The announcement of each new sports investment vehicle comes with a promise to make key investments into technology and the future of sport and entertainment. Those new investors could fund the next wave of transformative innovation, but it remains to be seen where that capital will be deployed and how it may impact sports tech in 2021.
Fan engagement. This might be heresy in our industry but I simply don’t see the current thinking around fan engagement being even close to the mark. It’s a big step forward from the past but we are measuring it all wrong, basing our success on the success of the big tech platforms and talking about likes and shares. That’s not engagement, not least as in the majority of cases we aren’t capturing the data and aren’t learning about our fans and followers.
Anything that was created specifically to answer Covid and lockdown, where there wasn’t a long-term value-add for when people have either got used to empty stadiums or for when people return.
We have to mention virtual reality. The technology has been around for a few years now and even in times of a global pandemic, including lockdown phases, it hasn’t gone mainstream. If VR doesn’t take off now - and we can’t see any indicators at the moment - we don’t know when it will. It seems like mixed reality offerings is the way the industry is heading towards, which reflects the preferences of the users and fans.
VR will be interesting to follow, with special care to how younger audiences will engage with sports and entertainment through this new medium. However, the watershed moment for VR might be further out there in the future as the content and experience ecosystem, as well as the distribution of the necessary hardware and connectivity, is still evolving.
Esports team ownership. Unless it’s primarily a lifestyle brand play - for example, 100 Thieves - I think it’s a much tougher nut to crack than the eye-watering investment figures would indicate. A long-term fundamental problem with making money from an esports team is that game publishers (who are ultimately owners of all the IP on which your business relies) are not incentivised to grow the league value in the same way traditional sports leagues are. Publishers, such as Epic Games, are focused on bringing people onto their game platform and then keeping them there to generate revenue from in-game micro-transactions. To this end they’re better suited to focusing on creative, unique in-game social and metaverse activations, such as the Travis Scott concert, to achieve this. That’s not to say esports and gaming more broadly doesn’t have an incredibly bright future, but owning a slice of the game publisher is a better bet than owning the team itself.
Any tech that does not solve a solution. Games and products come and go as trends. Data is the currency of true value because it provides an absolute knowledge of consumer, trend, preference, habit and change. The industry needs to get busy investing now.
The jury remains out on virtual reality's growth prospects amid underwhelming consumer adoption to date
This discussion forms part of SportsPro's Sports Tech Investment Week. Read more here.