Monday, May 14, 2001

BBC, Sky, And Sports.com Will Dominate UK Online Sports

Betting revenues aren't going to salvage ailing UK sports Web sites -- this market is still over-supplied, and the next five years will see both the multi-sports and single-sport market decimated, leaving a few leading players, according to a new Report by Forrester Research. Forrester advises that survival depends on capturing unique content rights, building a strong user community, and leveraging online and offline promotional abilities.

"UK sports sites believe that betting will generate significant income going forward. They're wrong," said Forrester Analyst Rebecca Ulph. "Only 15% of sports sites' revenues will come from this source in 2006, as technologies like interactive TV attract an increasing amount of betting revenues. Although more than £700 million of bets will flow through sports sites annually by 2006, the retained income will only reach £70 million. Bookmakers will return much of the money placed as bets to the bettors in the form of winnings, and 10% will go in various taxes. Those sites developing in-house betting capabilities will retain all the accrued revenue but will also bear the burden of a higher level of cost. Without this new revenue stream to rely on, the sports site market will still be over-supplied and, despite recent closures, more casualties should be expected."

At present, the sports site market consists of an abundance of both multi- and single-sport coverage providers, with audiences spread thinly -- traditional publishers are already retrenching and even the big pure plays are suffering. The most popular UK sports sites are football clubs' own sites.

As the over-supplied sports site market struggles with inadequate revenues, sites will look for survival strategies. Those that have unique content and strong user communities and can leverage these through sophisticated marketing will be best placed. The key to driving a significant, monetisable user base is to offer users content that they cannot get elsewhere. Therefore, generic sport sites must acquire online rights, sign up top personalities and enhance coverage with unique new and archive multimedia to survive. For those sites unable to afford exclusive online rights, user-generated content is the solution for providing unique material. Such content is cheap and drives large, loyal audiences, bound together by common interests -- content creation, interactive features, and eCommerce integrated into communities.

"To maximise both revenue and traffic, sites need to re-evaluate their promotional offerings," Ulph added. "Advertising remains sports sites' key revenue stream: it will contribute 58% of income in 2006, but half of this will come from performance-based deals, up from 7% in 2000. To ensure that they attract advertisers, winning sports sites must offer online replication of offline sponsorship models, develop performance-based pricing, and exploit cross-promotional capability.

"Over the next year or so, three major successful multi-sports players will emerge, leaving just one or two profitable sites covering each sport by 2006. By 2003, Sports.com, Sky, and the BBC will control the multi-sports site market -- and those sites that can't acquire strong, unique, focused content will die. By 2006, the single-sport market will streamline dramatically, with winners being those that successfully leverage the revenue-generating power of communities or defray costs across networks."

Analytics Will Be a Hot Career Choice
According to Gartner, Inc., e-business investments, especially in the Web channel, are now subject to the same scrutiny and return on investment due diligence as other major investments. More than a year ago, Gartner analysts predicted that 50 percent of all e-business initiatives would fail. Today, those failures are mounting due to a lack of analytics. The nascent field of measuring effectiveness in all selling channels, particularly in the Web channel, is about to spawn some of the hottest career opportunities over the next five to 10 years.

The key to making e-business a viable strategy lies in deploying robust analytics. Yet many enterprise executives dismiss Web analytics as being interesting for Webmasters but not for business managers.

Gartner defines Web analytics as the metrics that measure effectiveness of e-business operations in terms of operations, customer experience and return on investment. Web analytics help enterprises prioritize Web channel activities and solutions.

Moreover, in times of economic downturn, a need exists more than ever for enterprises to execute precision marketing, effective sales and spot-on service. That is why enterprises should invest in Web analytics as a strategic e-business initiative. The key inhibitor, however, is not technology. The inhibitors are a serious lack of brainpower to interpret Web data, the inability to transform such data into the understanding of customer behavior, and failing to define the right response. According to Gartner, by 2005, enterprises will need three times as many professionals on their analytic staffs as they need today. The demand for analytic talent today outweighs supply by at least two to one.

Enterprises should invest in analytic skills and centralize them in one analytical department, because such talent is too scarce and expensive to leave scattered. For tactical purposes, this department should be focused at analyzing customer behavior in the channel, especially the Web channel. Strategically, a corporate center of analytic excellence can be the catalyst for far more sophisticated business technology practices.

"The killer trend for e-business just may be the real-time enterprise," said Frank Buytendijk, senior research analyst at Gartner. "Web analytics enable executives and managers to know where the company is in the quest for the real-time enterprise and when the company will achieve the ultimate real-time business capability across all channels, from the shop floor to the e-marketplace. People with the skills to enable and accelerate that goal will be in hot demand."