In our last issue we highlighted the trends that impacted Asia last year through a collection of our most-read articles in 2021. In this issue, we will explore the emerging sports trends in 2022 that investors and companies should keep an eye on and how Asia’s sports ecosystems will leverage and capitalize on these trends.
1. Embracing ESG
Although the global sports industry is starting to embrace ESG (Environmental, Social and Governance), there is still much less emphasis on ESG in Asia when compared with North America and Europe.
One example of the ESG movement in North America and Europe that is influencing Asia is the building of and engagement with green and sustainable stadiums. More and more stadiums in the US and Europe are starting to use sustainable energy, run branded sustainability programs, and include in-game activations that support greater awareness and action. Recently, the world’s first net-zero carbon certified arena Climate Pledge Arena in Seattle opened in 2021. These new sustainable stadiums should be a model that the many new stadiums that are being constructed in Asia embrace. However, this is just one area of the ESG movement that the sports ecosystems in Asia need to adopt.
In Asia, sports is a very powerful tool that should be leveraged even more to drive the ESG agenda in the region with top-down support from federations, leagues, teams and athletes that can impact fans and all of society. All parties should come together and contribute to solving social and environmental problems. Data shows that there is a correlation between ESG and the financial performance of organizations and it is a value-added factor to attract investors as well as to secure sponsorships and partnerships. It will also help the sports industry to build a positive reputation and engage with younger generations better as Gen Z tends to have a stronger ESG radar and are very purpose-driven.
Asia is transforming many parts of the global sports ecosystem, however, the region still has a long way to go before it meets global ESG benchmarks. If Asia wants to expand its impact on the sports world globally, it will need a stronger ESG value proposition for long-term value creation and sustainable competitive advantage.
2. The synergy between Sports and the Metaverse
“Metaverse” is more than a buzzword, it is fast becoming a reality. Many companies across different industries are working hard to enter this game including those in the various sports ecosystem in Asia.
Metaverse refers to a combination of multiple elements of technology including VR and AR where users “live” within a digital universe with a collection of 3D worlds, that users can explore as an avatar where they can work, play and stay connected with others.
The metaverse will revolutionize sports on many different levels – the way sports are played, practiced, watched, and consumed. The line between sports and esports will be further blurred. Metaverse will bring personalization and gamification to a whole new level. It will accelerate direct-to-fan experiences that leagues, teams, event organizers, and broadcasters can capitalize on and athletes and coaches will also leverage AR/VR remotely to extend and democratize training.
Asia offers a fertile ground for growing the Metaverse economy given the popularity and huge market size of the esports and gaming industries in the region. There will be synergies between the gaming industry leaders in Asia and the sports, esports and metaverse ecosystems. Coupled with other competitive advantages such as large 5G adoption, the digitalization of the sports and fitness industries, and a large number of digital-savvy Gen Z fans, there will be massive monetization opportunities for these companies.
3. Sports & Web 3.0: decentralization and fan-driven model
Web 3.0 can be defined as the decentralization of ownership that aims to counter the domination of tech giants, and the sports world has already started to see the transformation; particularly in fan engagement, broadcasting, and media. Web 3.0 will change business models in different industries, and sports is no exception where we will see increasing democratization. The hierarchy under the current sports ecosystem will realign as it is expected to shift towards a fan-driven model and there will be more direct-to-fan content. (Watch AST’s previous interview with PFL’s Donn Davis to learn more about digital fan engagement)
NFTs are a big part of Web 3.0 and sports NFTs are already a huge market, with the exclusivity of NFT drops contributing to an explosion in the value of the market. Deloitte predicted that this space is expected to generate at least US$2 Billion in transactions in 2022, doubling the figure of 2021 with up to 5 million global sports fans set to own NFT sports collectibles including trading cards, fan tokens, and game day highlights “digital moments” such as NBA TopShot. Sports teams and organizations in Asia can leverage NFT’s to attract younger fans and grow revenues. Sportium has closed a funding round recently to build out a multi-sports NFT platform on the Flow, investors include Dapper Labs, a blockchain company that creates NFTs for top sports leagues, and Animoca, a Hong Kong-based Unicorn that focuses on blockchain and NFTs, are rapidly opening the door to the “Sports Metaverse”.
There are huge opportunities in Asia given that the region is home to the world’s biggest tech giants, with a growing number of digital-savvy and high-spending fans. The questions are how can the industry monetize and create a better model for ownership and how can leagues and teams leverage web 3.0 to better engage with their fans?
4. Exponential Growth for Fantasy Sports
Fantasy Sports are online games where participants assemble imaginary or virtual teams of real sports players and earn points based on real-life statistics that are converted into fantasy points.
Key players in the traditional sports space including leagues, teams, broadcasters, and media companies have started to incorporate gaming in their businesses to diversify and grow their revenue streams and to connect with younger fans which has greatly accelerated the growth for fantasy sports.
In Asia, fantasy sports are massive in India especially for Cricket and have become one of the key growth drivers in the Asia Sports Tech industry. China’s tech giants like Tencent and Alibaba are also investing in Indian fantasy sports apps. Two of the fantasy sports unicorns are from India – Dream Sports, the parent of Dream11 closed two funding rounds in 2021, US$400 million in March and US$840 million in November, its valuation reached US$8 billion after the latest round. Mobile Premier League (MPL) became the second gaming unicorn with its valuation soaring to US$2.45 billion after its Series-E funding round. We will continue to see more M&A activity and investments in this space in the near future.
There is still a lot of space for fantasy sports to grow in Asia especially with the growing popularity of sports leagues, such as F1 and One Championship, etc. With their large fan bases, as well as competitive advantages such as having a sophisticated digital infrastructure and gaming ecosystem; fantasy sports is a multi-billion dollar business opportunity in Asia. (Read our previous article on Asia’s Domination on esports)
5. Winter Sports Craze
The Beijing Winter Olympics 2022 is just around the corner and it is believed that the event will further galvanize the development and growth for Winter Sports in China. It is also generating huge demand for winter sports goods, from skiing equipment, skiing apparel and skiing tech to education, training, and sports tourism; the winter sports industry is poised to explode.
With the government’s sports related policies to promote the industry, China aims to motivate over 300 million citizens to participate in winter sports and have the size of the winter sports industry to reach US$157 Billion by 2025. With the government’s support and encouragement Winter Sports have become unprecedentedly popular in China on both the amateur and professional levels and have successfully shifted from being niche sports to mass sports. China is developing more skiing facilities and alpine resorts, they have also established youth ice hockey leagues and snowboarding teams. In addition to making winter sports more universal in China, many cities have also started introducing winter sports programs on school campuses.
A successful Beijing Winter Olympics will accelerate the growth of the winter sports industry even more and global companies should seize this opportunity and leverage this trend to increase their presence in China. Our next issue will cover China’s Winter Sports craze in more detail.
6. More opportunities for women’s sports
Another key trend that will impact Asia’s sports ecosystems in the coming year is the continued success of Asia’s female athletes across multiple sports. The success of Asia’s female athletes and teams in golf, tennis, basketball, football, badminton and table tennis and the emergence of new stars and teams from the Tokyo Olympics 2020 and the upcoming Beijing Olympics will further increase interest and participation by women of all ages in the region. As well, the universal marketability of many of these athletes both on and off the court will help drive D&I initiatives and societal change.
This increase in women’s participation at all ages and interest in sports should also be starting to impact global TV and sponsorship revenues. According to Deloitte, global TV and sponsorship revenue from women’s sports was less than $1 billion in 2021 while $467 billion went to men’s sports. We consider this mismatch between the huge interest and engagement of women in sports in need of re-evaluation and represents significant opportunities for sponsorship and investment in Asia.
In the coming months, we will explore the many opportunities related to women and sports at all levels in Asia in greater detail. (We have previously covered Women in Esports in Asia)
Heading into 2022, we will see more adaptation and evolution, and the sports world will be further driven by two things – technology and purpose. The evolution will take time to achieve, yet along with other competitive advantages such as high 5G Adoption rate, world-class sporting events taking place in Asia, the region is in a strong position to lead this movement and accelerate transformation across global ecosystems.
If you are curious to learn more, feel free to GET IN TOUCH with our team!