Innovation in artificial intelligence (AI) technology, especially generative AI, is moving fast. The sports media industry is feeling the pressure to adapt and is increasingly adopting AI to remain competitive. Indeed, 90% of sports executives believe that AI will have a medium or high impact on the sports media industry by 2030. AI is expected to strongly impact sports by driving operational efficiencies and unlocking new revenue opportunities including data licensing, IP licensing and management, new sponsor categories, and new AI-based products.

Taking advantage of AI and other tech innovations requires a holistic view and an agile approach to identifying and prioritizing new impactful use cases. 

While major organizations like the International Olympic Committee (IOC) have established a public AI governance and oversight agenda, other sports properties have experimented with AI with some success.

Likewise, the National Basketball Association (NBA) leaned on AI technology from WSC sports to automatically generate personalized highlight packages. Using AI for personalized automated content generation has boosted fan engagement and was crucial in generating over 1 billion views for 2023 season on the recently relaunched NBA App. To win in this highly competitive environment, executives need to identify and address revenue and optimization opportunities created by AI by cultivating the right environment (including data infrastructure, technology architecture, and more) and continuously developing new capabilities. It will also require new partnerships with new types of partners to stay on top of the latest trends and remain innovative.

Unlocking meaningful opportunities with AI starts with a structured methodology. This should include the following steps:

1. Evaluate use cases: Long-list all potential use cases, including impacts on revenue and costs as well as risks and any mitigators
2. Prioritize use cases: Consider cost and revenue opportunities against the time and resources needed for implementation
3. Design an AI roadmap: To make implementation easier, establish ground rules about technology (e.g., closed versus open-source model, vendor selection), people (e.g., nominating a cross-functional team of AI champions, investing in upskilling in tech and non-tech functions), and processes 

Historically, sports investments have focused on IP owners like teams and leagues. Recent examples of these deals include The Friedkin Group's majority stake in Everton Football Club and Saudi Arabia's Public Investment Fund's (PIF) framework agreement for a minority stake in PGA Tour Enterprises. However, there is a growing interest in investment opportunities beyond IP within the broader sports ecosystem, especially along the fragmented sports media tech value chain ranging from production and transport to distribution.   

In this report, we analyze the following market indicators in the sports investment landscape:

• Sports deals, investors, and value creation, including new types of investors involving private equity and sovereign funds.
• Investment strategies and opportunities in the sports industry, including opportunities in technology solutions and enabling capabilities.
• Technology service providers in sports media and opportunities along the media tech value chain in sports. 

We believe that these new investments, reaching segments in the wider sports media ecosystem beyond IP, will increase deal flow and attract more types of investors. This will, in turn, increase competition for assets with very different return/risk profiles and require investors to differentiate themselves.

Sub-segments in the sports media value chain, like automated production, IP delivery, advanced content management, augmentation, and gamification, benefit from tailwinds from the streaming transition and maturation of enabling technologies (e.g., the cloud).  
 
To capitalize on opportunities in the sports ecosystem, investors should prioritize:

1. Developing a nuanced understanding of today's sports ecosystem and individual segments, engaging with market participants, assessing the difference in return/risk profiles, and underlying market trends.
2. Conducting thorough due diligence on the size and dynamics of the underlying market, potential moves of competition, and the robustness of target's ability to scale and grow sustainably.
3. Defining a clear strategy of optimization of the individual asset and synergies beyond with portfolio companies or other strategic partners.

Live sports still draw audiences, as seen during the 2024 Summer Olympic Games, which broke viewing records on both linear TV and streaming worldwide. Our survey findings confirm that interest in live sports remains high across all generations, with approximately 60% of sports fans across all geographies saying they tune in to televised sports at least monthly. 

However, younger generations show less interest in live sports than their elders, potentially endangering the lifeblood of the industry. Our findings show that younger fans favor short-form and on-demand sports content, like highlights, citing the convenience and the abbreviated "to-the-point" nature of short-form video. Emerging categories of sports lifestyle content, like the hit sports docuseries pioneered by Netflix, further contribute to changing sports media habits and preferences.  

But beyond evolving content preferences, today's fans face two major hurdles in engaging with sports: content discovery and access. Sixty-six percent of sports fans report having difficulty accessing their favorite live sports, many of which sit behind subscription paywalls. Among the fans who struggle to watch live sports, 56% say they would spend more time watching sports if available on their main viewing platform. 

We believe it's essential for media rights owners to sustain and grow their fan base by building a path from top-of-funnel interest to paid subscriptions. The properties who do this will emerge as clear winners in fan base growth. 

To address these challenges and retain fan loyalty, rights owners should act urgently. We recommend the following:

1. Elevate the core live product while treating adjacent content—lifestyle documentaries, highlight reels, etc.—as standalone verticals. Take into account diverse consumer profiles (from avid fans to casual fans, older generations, and younger generations) and media buyers.
2. Build a balanced consumer journey that starts with top-of-funnel channels (like social media) and ends in paid subscriptions. Consider various platforms, niche content creators, and communities.  
3. Engage price-sensitive and casual fans through differentiated products and pricing. Prioritize content value (e.g., advertising experience, resolution, shared accounts) over volume.
4. Expand distribution efforts beyond legacy media to target smaller, more niche communities of fans. Experiment with business models that can incentivize content creators and hyperlocal media gatekeepers.