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Sports: How Tech is Changing the Game

A new report by Anuj Gangahar from Citi Global Insights looks at how wearable devices, virtual reality and augmented reality are having a broad-based and profound impact on how we train for, play and watch sport.

Tech and sport are converging.

For some sports, the importance of technology is perfectly obvious. Take Formula 1 motor racing, for example. It’s seen by some as more of a technological and engineering arms race than sporting contest.

Elsewhere, the unstoppable march of tech is perhaps less obvious. But it’s no less profound.

Wear a device that measures your every movement. Use virtual reality to help you see the game more clearly – as a spectator or player. Use augmented reality to view data and analysis in real time superimposed on the field of play and in your normal field of vision. Build a golf club that meets your every ball flight, forgiveness and power need while also providing feedback on your ball striking in real time or to analyze later. Or smash through the two-hour barrier for the marathon wearing running shoes developed in a lab that give you that all important extra pep in your step.

With technology improving all the time, the growth of the business of sports tech looks assured. The full report looks into four areas of sports tech in more detail:

  1. Wearable devices
  2. Virtual Reality
  3. Augmented Reality
  4. Custom sporting equipment

All four are interesting for what’s already going on within them but also for the potential for future growth and development.

The report says that that taken as a whole, the sports tech market is well placed to benefit from societies and economies that increasingly put data at their heart. And a post- pandemic focus on health, wellness and playing sport provides added impetus.

The following Total Addressable Market (TAM) table, based on 45 underlying estimates, underscores the growth potential across sports tech areas. 

TAM Table: Robust Growth Potential ($ billion)

Theme

2022

2030

CAGR

Sports VR

4.0

38.4

32.5%

Sports Analytics

2.5

16.5

26.6%

Sports AI

2.1

19.2

32.1%

Sports Tech

21.1

66.0

15.3%

Sports Merchandising

30.9

53.8

7.2%

© 2022 Citigroup Inc. No redistribution without Citigroup’s written permission.

Source: Citi Global Insights

Sport and technology might seem like an unlikely pairing. One pushes the boundaries of human performance. The other the bounds of ingenuity. But there is a nexus- at least a couple in fact.

Pushing our performance to ever greater levels is the essence of what makes sport compelling for most of us.

But now, as performance increments are ever harder to come by with advanced training techniques available to all, technology is becoming a differentiator. Integrating technology into training regimes is already happening at the highest levels of global sport. The trickle-down effect is real and visible.

And in terms of audience engagement, the value of technology looks just as clear. As competition for viewing rights gets ever fiercer, broadcasters are searching for an edge over the competition. Tech provides a potential point of differentiation and several broadcasters have already entered the fray.

Price points and the details of the individual offerings vary but all are designed to increase the attractiveness and depth of the fan experience and keep them coming back for more.

As part of the full report we modelled the use of virtual reality and augmented reality in particular sports.

For the full methodology and more detailed analysis, see the full report, but here’s a little more on what we found for virtual reality.

Given the strong match between VR suitability and the highest revenue sports, incremental revenue opportunities could be significant. The model indicated that the total incremental revenue VR viewing could bring to the sports market by 2030 is estimated to be around $31 billion (yes, $31billion!), an 88% increment to the ticketing revenue and 17% to the sports market.

Incremental Revenue Contribution (in $mns)

Association football

15,069

American Football

9,296

Basketball

2,507

Auto Racing

2,198

Baseball

1,154

Ice hockey

846

Mixed Martial Arts

261

Tennis

41

Total

31,371

© 2022 Citigroup Inc. No redistribution without Citigroup’s written permission.

Source: Citi Global Insights

And for augmented reality, the incremental revenue for each sport modelled under the base case scenario is shown in the table below.  The model indicates that the total incremental revenue AR spectating could bring to the sports market by 2030 is estimated to be around $207 million.

Although AR will become more ubiquitous than VR by 2030, VR is expected to bring higher incremental revenue stream to the global sports market. That’s because: 1) VR is more suitable for at-home viewing and will therefore appeal to a larger audience base; 2) VR content usually enjoys a higher price by offering a larger experiential enhancement to TV viewing than AR to in-stadium spectating.

Incremental Revenue Contribution (in $mns)

NFL (American Football)

9.62

NHL (Ice Hockey)

11.22

NBA (Basketball)

11.04

MLB (Baseball)

35.14

UFC (Mixed Martial Arts)

0.02

Formula 1

4.16

The Big Five (Soccer)

27.96

The Majors (Golf)

1.15

Horse Racing

0.94

FIS World Cup (Alpine Skiing)

0.01

Sailing

5.13

Abbott World Majors (Marathon)

2.98

World Rowing Championships

0.02

Distance Cycling

6.70

The Grand Slam (Tennis)

0.26

© 2022 Citigroup Inc. No redistribution without Citigroup’s written permission.

Source: Citi Global Insights

 

To access it, if you are a Velocity subscriber, please log in here.

Citi Global Insights (CGI) is Citi’s premier non-independent thought leadership curation. It is not investment research; however, it may contain thematic content previously expressed in an Independent Research report. For the full CGI disclosure, click here.

 

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