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Four Reasons Why Sports Startups Are Scoring Big

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When a professional sports team wins a title, it makes the front page of The New York Times. When Tom Brady, quarterback for the New England Patriots, controversially may (or may not) have deflated some footballs during a crucial game against the Indianapolis Colts, it was reported by every news media and became a trending topic on Twitter. Ask any sports fan, or even just a regular Joe, what “Deflategate” is, and they will be able to tell you. Sports are a major part of our culture, and their influence and reach is undeniable.

Historically, sports have been considered a closed boy’s club, but that’s quickly changing with emerging technology and media innovation. In fact, it’s become a great way for startups to show quick value and take advantage of inherent network effects.

The popularity of the MLB-owned streaming video platform, MLBAM (MLB Advanced Media), is perhaps the best example of how the sports world is investing in technology. MLBAM recently signed a high-profile, $1.27 billion partnership with the NHL, a deal that goes to show how much money sports, and their fans, are valued at. In fact, this past year, VCs have invested more than $1 billion in venture deals on sports tech startups.

Need more convincing? Here are four more reasons.

Fanatical User Base

Sports fans are passionate. A technology service or product that focuses on supporting or tracking a professional, or even a collegiate, sports team comes with a built-in user base. These are not just the download-and-forget-about-it users that many apps run into. No, these are long-term users who will opt into notifications, click through suggested links and, most importantly, be engaged and interested.

One of the biggest hurdles of the app industry is retention. A recent study showed that 20 percent of apps are opened only once, and 39 percent are opened more than 11 times — which means an astounding 61 percent of apps are opened 11 times or less. For sports apps, however, this is not the case. In a study by Flurry, sports-related apps are the third highest in user retention, at 67 percent, right behind weather and reference.

The Power Of Sports Analytics

As fantasy sports prove, fans pay attention to statistics. What is a player’s batting average this season? What is a player’s shooting percentage from the free throw line? Fans pay attention, they invest in the data, they bet. For example, fantasy sports website DraftKings has raised $375 million to date, and has more than 50,000 active daily users. DraftKings users participate in pools with their own money, which they do after careful analysis of player and team stats.

Fans are not the only ones who care about analytics. Coaches and athletes from high school-level teams to professional teams are all invested. Companies that analyze sports data, like Krossover, have taken advantage of this. An application that is built on providing and analyzing sports statistics is a surefire way to gain engaged, interactive users.

Domino Effect

Oftentimes, applications looking to partner with major brands and companies are bogged down by slow-moving business development cycles. Scoring one major partnership doesn’t necessarily mean getting a second one will be easier. This doesn’t hold when it comes to sports. In fact, there is a domino effect when it comes to working with sports teams.

Sports are a major part of our culture, and their influence and reach is undeniable.

If a company signs on with the Los Angeles Clippers, the Los Angeles Lakers and other basketball teams will very likely be interested. This is evidenced by the MLBAM-NHL deal. The National Hockey League saw the success and reach that MLB was having with MLBAM’s video streaming platform and wanted to offer their audience the same experience.

Sports teams don’t like to be left out, especially when it comes to opportunities to engage with fans off the field, off the court and on a different platform.

Game-Day Hype

Every sports fan knows when the baseball season starts, when March Madness begins and which Sunday the Super Bowl will fall on this year. Startups can take advantage of the big games and other events by planning special promotions, contests and offers around the important events.

Event ticketing startup SeatGeek, which has raised $103 million, took advantage of the annual Home Run Derby by creating an infographic that pinpoints the best section for fans to sit in order to catch a baseball. After seeing the results, fans could buy tickets directly by clicking on the infographic — a clever way to sell more tickets.

Sports have generally been categorized as slow moving and convoluted, but that is quickly changing. Sports organizations’ digital teams are listening to what an increasingly younger fan base wants — a better, faster and more engaging experience. With the baked-in network effects, there are multiple reasons why sports startups are ripe for success. Sports are not a fad, and their fans will become lifetime supporters.

Featured Image: Russell Werges