How we watch sports is changing
Chris Russo spends a lot of his time analyzing how technology is changing the way we watch sports. As a managing director at Houlihan Lokey—a global investment bank that specializes in mergers, acquisitions, and strategic consulting—it’s part of his job. Not only has he been the senior vice president of new media and publishing for the NFL, but he’s also taught a course on digital transformation in the sports industry at New York University (NYU).
We spoke with Russo about the big shifts he is seeing in the digital sports industry, the role of big data in sports, and how the data that is collected will affect the way we watch sports in the future.
Skuid: First of all, define what “digital sports media” means.
Russo: Sure. Basically, if you look at history, the way fans experience sports started with going to live events. Then they moved to radio. Then they moved to broadcast television. Then they moved to cable television. Now, fans are really experiencing sports through all kinds of digital platforms, whether that be the internet and mobile devices, whether that be through stats, data, video. All kinds of ways for content to get to fans, through different kinds of media platforms, have emerged over the last 15 years.
Digital sports media is essentially content being distributed to fans through new kinds of platforms and new kinds of distribution vehicles. Essentially, that’s created all kinds of new opportunities for fans to engage. But it’s also created new business opportunities for existing companies and new companies in the space.
You’ve been in the digital sports industry for a while now. What are some of the big shifts that you’ve seen over the years in the industry, and what’s the next big shift?
I started my career in television at NBC and then at New Line Cinema, which was part of Time Warner. I then went to the NFL and ran the digital media business at the NFL from 1999 to 2005. In those days, we were launching some of the first fantasy games on NFL.com, getting involved in providing more sports data and analytics to fans. And the digital experience was really a complement to watching games on TV. It was really a great way to drive fandom and drive television ratings.
I think what you’re beginning to see is the primary game product start to be distributed through digital means beyond television. So, Amazon has acquired rights to stream NFL games. Twitter streamed NFL games last year. You see more and more product in the sports space being distributed digitally. And that’s not just the ancillary programming—some of the primary live game product is now being streamed as a primary distribution vehicle. And I think that’s one of the biggest changes, is that digital is now not just being complementary but it’s also, in some ways, becoming the primary way that fans engage around sports.
I read about Disney creating its own ESPN streaming service by 2018.
Yeah. There’s been a lot of news about that. Clearly sports are an important part of Disney, obviously, with ESPN, and they are working to have an even bigger presence in the streaming side of the business, because more and more fans are seeking content through digital platforms.
Do you think eventually, the only way to watch sports, other than live at a stadium, will be exclusively through streaming services?
I think that there are and there will be a number of different flavors. There are some services that you can buy digitally—if you want to buy every major league baseball game, or subscribe to every major league baseball game digitally, for example. There will be individual property subscriptions, whether you want to buy all the NHL games or you want to watch all the baseball games—there are individual properties that may have those services. There are, and there will be, bundled services where you can subscribe to a service, and maybe get some entertainment channels and some sports channels. Then, there may be some sports-only channels. I think there will be a wide range of opportunities for consumers to essentially subscribe to content, either on a sports league-specific basis, or more broadly across channels.
As you have stated in one of your online pieces, there seems to be this kind of gold rush of over-the-top video service, or OTT. Can you talk about the difference between OTT and traditional cable services when it comes to watching sports?
Sure. Traditional cable services involve you paying a subscription for, typically, a bundle of channels, some of which may be sports, some of which may be entertainment news. And so the consumer in the cable ecosystem was typically paying for a broad bundle of content. What’s happening now is there are cord cutters and millennials and others that say, “I don’t want to pay for all of these channels or have a big cable bill each month. I really want to pay for the things I’m most interested in.” Whether that’s Netflix, whether that’s a sports service, whatever that may be. Given that there are more people interested in different choices, the sports ecosystem is working to essentially serve those fans, and that’s why you see many different kinds of OTT sports services.
What are some of the challenges you see that might be coming our way when it comes to OTT?
I think there was a very clear business model in the cable world where everybody pays a monthly fee. Those fees went to the cable channels, and then the cable channels paid rights fees to the sports league. There was a very clear flow of money and a business model. With OTT, the business models are still evolving. Is this a direct-to-consumer model where the consumer pays directly? Is it properties like Amazon that are acquiring a bunch of different sports assets or rights and then selling an overall bundled fee? Is it Twitter acquiring certain sports rights and then monetizing through ads sales? The business model for OTT is still evolving. I believe, ultimately, there will be some very good business models, but there’s a lot of discussion about what’s the best model right now.
You’ve taught a course on digital transformation in Sports at NYU in the fall. Can you talk a little bit about that?
I’ve taught a number of classes in and around digital media at NYU. I’ve also taught a digital media and sports class at Northwestern University. I enjoy working with students and sharing insights on what’s happening in the digital landscape. Typically, I focus on a number of different areas, OTT being one, and also E-sports, fantasy sports, youth and amateur sports, and sports data. And I essentially try to provide really up-to-date viewpoints and insights and guests around those topics. It’s a very practical kind of approach to what’s happening in the digital sports landscape.
Can you talk about the role of big data in professional sports? When it comes to the business of sports, who’s collecting the data? What kind of data is being collected? What’s the data being used for?
The use of data, as you suggest, is a fairly broad question or topic. On the one hand there’s what I would call “player data,” which are scores and statistics and player performance data. There are companies that are collecting that data, companies like SportsRadar and others that collect the data and then distribute it to media outlets, so that you can basically get your data on your favorite players, or your teams, or your fantasy stats. That concept has been around a long time—player statistics and data—but it’s being enhanced now by new kinds of data that are being collected by putting extra cameras in stadiums or extra sensors on player uniforms. There’s what they call Next Generation Statistics, which are this new kind of data that’s being collected through new tech. Again, the purpose of that is to give fans more information. But also, some of that data is being used to help general managers and teams decide what players they want to draft, what players they want to start, and who’s really performing well or not, based on some of these new analytics.
There’s both the consumer side of the sports data, but there’s also the team management side, which is having to do with player performance. It’s an exciting time because there’s a revolution in collecting new data. Again, the question becomes: what are the business models? What data means something and what data doesn’t mean anything? There’s a lot of investment and activity in that area.
I feel like some of the fundamental challenges that come with digital transformation within the enterprise are probably similar to some of the fundamental challenges that come with digital transformation in the sports industry. Can you talk a little bit about that?
I think that sports are simply being distributed and consumed through new platforms and through new devices, and that creates a lot of opportunity and potentially, new revenue streams. But it also inevitably means that some forms of distribution—maybe that means print, maybe that means traditional cable depending on whose view you believe, maybe some businesses—face challenges in a world where people are consuming more content digitally. There are always opportunities with transformation. But at the same time, there are legacy infrastructures, legacy businesses that need to, in a sense, find the way they play in the new digital world. And that means in some places you have to cannibalize your own business to stay ahead of the game.
You have to invest in the new technologies, and essentially let fans and consumers move to the new platforms, even though it may mean difficult situations for your legacy platforms. But if you want to continue to succeed, you have to continue to invest and you have to continue to innovate. I think like any industry, there are a lot of great benefits to consumers and fans that technology has created. At the same time, there’s certainly disruption in the media space. Now there are challenges being brought to the cable television industry, and there will be innovation. Some parties will be able to be successful in the context of transformation, and other parties may have difficulties.