Betting and Content Converge as Sportsbooks, Media Chase Growth
Today’s guest columnist is Rich Routman, president of Minute Media.
We are constantly reading about new investments made by sportsbooks into technology or content, with the goal to facilitate growth and value in sports betting as a whole. This isn’t just a flash in the pan—the U.S. sports betting market is predicted to reach $37 billion by 2025, making betting the next and frankly only new category in sports that will contribute this much new value to the industry over the next five to 10 years. While the market is getting crowded, with a mix of traditional media companies and new entrepreneurial tech brands jumping in, there is one constant that seems to be driving both new and old-school companies, and that’s content.
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Sportsbooks want to become content companies, and content businesses want to become sportsbook operators. I believe the convergence of the two will start to become even more pronounced over the next few years. While each of these emerging sportsbooks have relied heavily on advertising for awareness and consumer growth, content sits at the forefront of their marketing strategies, and ownership of this interaction will create immense future value.
FanDuel owns several content businesses, including broadcast channel TVG. Penn National Gaming acquired Barstool and recently theScore. DraftKings owns VSiN and powers a content experience in partnership with SB Nation, and more are guaranteed to be coming. When aggregated, the aforementioned deals alone represent more than $3 billion of deployed capital in the last few years, far exceeding any content investment made by sports publishers in this emerging category. Simply put, bookmakers can afford to invest more heavily in content than publishers, as their customer lifetime value far exceeds those of the ad-supported industry.
With the focus being lifetime value of the customer vs. CPM from advertiser or one-off licensing fees, bookmakers are strategically better-positioned for this area and growth strategy. That being said, publishers that are seeking growth, counter-balancing CPM erosion or faced with challenges on audience expansion, are looking for ways to commercialize their business outside of advertising-led models. Key examples include Barstool’s recent launch of Barstool Bites, and multiple companies’ forays into NIL and NFTs.
Among many of these publishing players, there is a big difference in how they are recognizing and strategically deploying revenues from the sports betting category. Some have a laser-like focus on commercializing every aspect of the space and seeking the most near-term financial compensation, which on the surface, given the competitive landscape, makes total sense. However, if you are not investing in future sports betting content assets, you are simply wasting that money.
More traditional media companies like CBS and ESPN happen to be in a great position to grow their sports betting capabilities, given their historical users and fantasy subscribers. CBS, ESPN and Yahoo! all have many years of data that can pave the way to a strong affiliate marketing product if leveraged correctly. However, the exact opposite could be said of other sports broadcasters, as their lack of digital data outside of their TV-Everywhere verified audiences may require an entirely fresh start.
Bottom line: The current landscape has content businesses set up as the premier affiliate marketing channels, if managed and invested in appropriately. Content owners and creator, who will serve as the longer term winners, will be decided by the investments they are making today. To that end, I believe publishing brands should be setting aside a quarter of their investable content development budget to grow their market share and voice in this key area.
It’s not too late to bolster this sector of the business, and while it may seem expensive and crowded today, it will only get more expensive the longer companies wait.
At Minute Media, Routman serves as president. Prior to that, he served as chief revenue officer at Perform Media, a global sports content and media group. He also previously launched the distribution and monetization business for Silver Chalice Ventures and has worked on media licensing deals for college sports and at the NFL.
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