The a16z Show - a16z Podcast: Eyeballs on the Game

Episode Date: October 19, 2018

with Jeff Jordan (@Jeff_Jordan), Yogi Roth (@YogiRoth), Zack Weiner and Hanne Tidnam (@omnivorousread) For decades, the increasing value of sports teams, rights, licenses and more have been fueled by sports media. But dollars follow eyeballs, and eyeballs -- at least on the traditional broadcast -- are going elsewhere. "If you don't know where you are going, you'll end up someplace else,” Yogi Berra once said. So where exactly are those eyeballs going, and what does that mean for the sports media industry, now that each and every one of us is an individual media platform? a16z General Partner Jeff Jordan, Yogi Roth, Pac-12 college football analyst and former athlete and coach, and Zack Weiner, co-founder and president of sports media platform Overtime -- in conversation with a16z's Hanne Tidnam -- talk all about the evolution of sports media and content, and what it means for how we will consume sports in the future. How will the way we watch sports fundamentally change? How this begin to affect the game itself? How are athletes thinking about brand in this new world of sports content? Stay Updated:Find a16z on YouTube: YouTubeFind a16z on XFind a16z on LinkedInListen to the a16z Show on SpotifyListen to the a16z Show on Apple PodcastsFollow our host: https://twitter.com/eriktorenberg Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Hi and welcome to the A16Z podcast. I'm Hannah and in this episode we talk about the changing lay of the land in the world of sports media. As audiences of the traditional sports broadcast fall, what happens to how we consume sports? Where are the eyeballs going? How will it change the kind of sports content we consume? And how is it affecting the game itself? How are athletes beginning to cultivate brands in this new world of content? Joining us for this conversation, our A16Z general partner Jeff Jordan, Zach Wiener, co-founder and president of sports media platform overtime, and Yogi Roth, Pac-12 college football analyst, sports storyteller, and former athlete and coach. What do you think the sports media landscape currently looks like because we know it's a landscape

that has been changing quite a bit in the last few years? I think sports media is at a massive crossroads. If you kind of go back 10, 20 years, it was a few channels doing the must-see game that almost everyone saw in real time. Fast forward, you've got cord cutting, happening massively. Consumption of the linear broadcast has changed dramatically. The iconic sports media properties, ESPN and Sports Illustrated are both in decline. Sports Illustrated, they're like trying to give it away. I mean, it's now down to like a dozen issues a year and literally they're trying to sell it and they're not finding many buyers. For being like a true cultural. Oh, just a phenomenon. I mean, I grew up waiting for Sports Illustrated to come to the door and would consume it,

cover to cover. And so that's now gone. And what's driven the constantly escalating value of the sports teams is almost exclusively these media dollars that have flown in. But media dollars typically follow eyeballs. And if eyeballs are declining rapidly, the media dollars disappear. What replaces them? It's an interesting overlay to the economics of the leagues and the teams. Are eyeballs decreasing or are they just kind of like fracturing into many different kinds of sort of niche interests, or is that impossible to say? The bundle of a game is declining in eyeballs, but then there are elements of that game that show up everywhere. I asked my friends at ESPN, why you guys just have two heads yelling at

each other now? What happened to all these great highlights? They go, well, the highlights are everywhere that doesn't differentiate anymore. Right, there's no use in us saying them. I've ever seen them. I think it's a really interesting time. You have all these organizations paying billions of dollars for these rights, and yet particularly the next generation are not watching traditional live sports as much. That to me is the crux of it because there is so much money there and there's so much potential audience that I think everything that we're seeing beneath the surface is caused by that. And that's just that millennials and younger are just not watching broadcast sports the same way. It's clear that the live broadcast is not working for the

younger generation and probably Gen Z even less than millennials. A friend of mine manages NBC Universal and they have the Olympic rights and it used to be, you know, you know, 20 years ago, the audience all watched one channel. Now they estimate their audience is about the same size in spite of cord cutting, but they now produce content on multiple channels as well as websites and streams, and they think their aggregate audience is the same. Oh, that's interesting. It's just been fragmented across the channel. So it's like splintering. It's splintering like crazy. You're not being forced to watch the one thing they curate. If you're into the luge, you know, you can watch the luge because there's a difference.

for the Luge. And so they're fulfilling demand, not with one stream, but with, you know, tons of streams. I work with high school quarterbacks in the offseason. So I kind of use the high school guys as research. What are you guys watching? How long should it be in the college space? It's clearly dropping. I think what is increasing is the appetite. So I think for artists and creatives, what's really fun for us is like, okay, how do we get on your phone and how do we keep you there? or how do we get you onto a link or, God forbid, onto a TV channel and keep you there? It's the greatest time right now for storytellers because we have to utilize the questions how and why obsessively. You've got to come correct. Like no longer are there three or four channels that we're just by default on a watch.

And even no longer are there 23 banging cable channels. Like there are millions of outlets and every one of us are an outlet and are a production company. Whether that's our Facebook page, our YouTube channel, Instagram TV, I think it's going to make the storytellers even better and hopefully make those stories even richer. Because now there's so much choice it has to be all about the story. What does that actually start to look like? What are the different ways that happens? I think you hear this word thrown out all the time, but I do think it really has to be interactive. I do believe there is a way to do an NBA broadcast that's more interactive, that's gamified, that has other elements to it that gets kids actually watching. So we've spoken to a few teams and regional sports networks about how we can sort of bring our flavor of younger content and our younger audience to live sports.

You guys did the little segment with KD dissecting the game of a bunch of the leading high school guys. Oh, that's cool. So you got like the high school point of view. Yeah, and it's cool to see sort of like these professional athletes interact with high school kids. But I'm even talking like, take a Knicks game. Like how can we bring our influencers to the table to call the game? How can we make it more Twitch style? Think about it when we get an alert after a game. It's so-and-so throws for 350 yards and four touchdowns, right?

I may have missed the game. But just looking at it, the alerts, I have an idea and the vibe. So to your point of making sure that you're hooking them as an analyst, can I get you to lift you up off of the alert even and be like, whoa, what did he just say? And again, even if it's just one thought or one one-one-minute video, I think that will continue to build the tribe that makes. maybe old school networks, quote unquote, a lot of people to drop into, right? You got to bring it. To get you to stay, it's like, I got to cook you dinner, give you dessert, tuck you in bed,

tell you three stories and give you a gift and like wake up in the morning with like breakfast and bed. How much time do you spend crafting the intro? Because I mean, when you go onto a game, you know, the two announcers are there and they're trying to hook you. So what's the prep process for like the first five minutes? You spend the whole week diving into the team. That's why college football to me is so much more unique than basketball or baseball because the amount of games is so less. I look for a theme and I'm trying to set a theme and hook you with that theme and bring you back every single opportunity. If it's a narrative arc, whether that's in 15 seconds or three and a half hours, you got to keep bringing me back. So I would hope if you tuned into our game,

you could tune at any point, but be brought back to the theme of what the hook was of the game and check back in with us. Because I know you're not sticking around for three. and a half hours. I think the audience has to be able to participate. So, I mean, this is a wacky idea. But we've had thoughts about, okay, if you have two or three broadcasters, how can you make it so that the audience votes and then one of the guys has to be in like a penalty box and then can't talk for five minutes. If you were doing something like that every five minutes during a broadcast, I think kids would want to watch. For new fans, it's about the culture around the game. They want to see what guys are wearing leading up to it. What are the fans thinking? So I think it comes

down to engagement and gamification and making it feel digital first. As a broadcaster, I think it'd be hilarious of Ted Robinson and I got voted off to my Rhode Island. But I think fans would just go, like, they would just vote us off if their team was losing. I get told every week I should retire, and I'm the greatest based on whoever wins and loses. So I think that'd be hilarious to try it out, so maybe we can be your test dummies. I'll give you a good example of how storytelling just has to improve. So we publish a lot of content on YouTube. And on YouTube, you can see these retention charts. You can see exactly what percentage of your audience is watching at every single minute. Yeah.

And that's like our Bible. Like we look at every single piece of content and we see, oh, between minute two and two minutes and ten seconds, we lost 20% of our audience. Really? What kind of decision would result because of that knowledge that you would do something differently? I'll give you a very clear cut example. We noticed that about 10 seconds into our videos, we were normally losing a little bit more than we should. Like, you know, it's a downward sloping curve because, of course, less people are watching five minutes in than one minute in. Natural taper.

Exactly. But we noticed a little bit of a stark drop-off at 10 seconds, and we looked at our videos and said, oh, around 10 seconds is when we normally play like an intro card. And it fades to black for a second, it says overtime, and then it continues the video. But you lost people about that. We lost people. And every single second has to really count when you think about digital content. If we start seeing all this play out, given these big economics of sports and sports media from the player contracts to the owners to the clubs, to the investors, how are these deals going to start getting renegotiated? when all these different models are coming, you know, when this earthquake is happening. Sports is a business that is a big crossroads, and they need to figure out how to go direct to consumer, they need to stream, they need to do a whole bunch of things. And I think they all know it,

but there's so many impediments to doing it, including these long-term rights deals. This is controversial, and there are lots of different points of view on it. I believe the leagues were betting that the viewership would go down. If you're going to cut a deal when you think viewership's going to do, what do you do? You cut a really long deal. And so all the major sports It's cut, you know, 10, 12-year deals for billions of dollars, but it locks in an annuity of money over some period of time. The interesting thing comes when these deals start having to be renewed. And so what happens? If ESPN has half the viewership when the NFL deal comes up, are they going to, you know, can they bid, are they going to bid? And that derivatively impacts the value of sports teams.

Now, the value of sports teams haven't gone down since I've been alive and I've been alive a while. So, I mean, people have been calling the top multiple times. hasn't happened yet. So I could be wrong too. Gaming comes in and replaces the media, the license rights and things like that. But it certainly creates a lot of turmoil along the way. Do you think that more value will go to the live experience, the same way we've seen like in the music industry? I mean, you'd think so, except attendance is also down. Oh, really? And a lot of the viewership is down. I just read the number of unredeemed season tickets is

increasing. They're selling the tickets, just fewer fans are showing up. So there's something inherent in, you know, it could be generational. Well, I think that gets back to your early question of how does the broadcast actually change? Because you could imagine a world where four or five years from now, the broadcast looks very different and technology is used to have 10 different broadcasts and all of a sudden maybe more kids are watching. I don't think that it's predetermined that viewership will go down. And there are some stats at that point the other way. The NFL this past weekend viewership was up compared to last year. So I don't think there's a 100% chance that viewership continues to go down. And then you also have,

first of all, new players in the market. You know, the last time most of the big rights deals were up, you didn't have Facebook and Amazon and Apple bidding for them. And then you also have new rights categories. You have VR, which didn't exist 15 years ago as a rights category. That's true, yeah. So I think there's too much going on to say that the media rights will definitely decline in value, but that's why innovation needs to happen.

Yeah, like Pac-12 networks, we're in a really fun spot because we own all of our rights. And sometimes we'll be able to potentially make two deals by the time some of the other conferences bear up just once. So there's been a lot of substantial shifts over the last few years and content from how we find it to the way it's delivered

to what shape it is, what size it is, what it looks like. I wanted to ask what you think the relationship between live sports and streaming platforms like YouTube, Netflix and so on, how that will evolve, say, in five years. Like, where do you see that going? That needs to evolve really quickly.

MLB, their idea of broadcasting baseball game of Facebook was to just put the broadcast and put it on Facebook. And I don't think that that works. Like the people that are on Facebook, they know that the game is on TV. They're just not turning it on. So you can't put the same product in front of them and expect them to watch it. And so, I mean, and it gets back to what I'm talking about. You need to change the nature of the game and the actual content, more storytelling, more interactivity. And look, it's risky. Like you may actually, the first time you do that, put out a product that's worse, but you need to take those steps in order to figure out what actually works. The legacy business is,

under siege, but then that does create opportunity. And the tools are different. All of a sudden, you have all these different tools you can bring to bear. You've got all these new formats on Snap, on YouTube, on Instagram. You know, going to where the fan is, you've got streaming all over the place. I'm a Stanford football freak. I'm one of the biggest streamers off the Pack 12 app because the women's soccer teams on the road that's the only place I can find it. We've tried to manipulate and sell and optimize so many parts of the game. Then maybe that becomes the niche thing of, let me just tune in when it really matters, specifically in the NFL where every game comes down in the last few minutes of the game or the NBA. I think each sport will kind of find their thing.

College football has a specific audience. You know, international soccer has a specific audience. NFL clearly has a specific audience. And NFL audience right now is kind of like, man, I don't really know if I want anything other than the game. College football fans, we want the pageantry, all the essence and evanescence of a campus. So I really think it goes down to the sport, and everyone who watches the sport is a different palette for that sport. I just want to watch Aaron Rogers, Tom Brady, Russell Wilson, and Pete Carroll on Sundays. Those are my guys. Those are my teams. College football, I want to see it all. I think it'll be more things on the menu versus, hey, come to that high-end restaurant

where they kind of tell you a fixed menu. You'll be able to pick and choose what you want because we can download any type of option we want. Yeah. It's interesting, right, because that's so much of what the Internet has been in the very beginning is little niche communities and now it's sort of niche audiences or niche moments of the game. I mean, with eBay, it was initially, wasn't Beanie Babies? Like a big part of... Yeah, Beanie babies were something like 7% of all gross merchandise sales when eBay went public. In fact, it was not highlighted in the S-1. When it went public, 7%? Something like that, yeah. I mean, because it was heavily collectibles and Beanie Baby was

the white-hot collectibles. So how do you see these like niche communities sort of spilling over pushing out into the larger media landscape. If we're in the moment of like Beanie Baby's eBay for like sports media, like where does that lead to? I think that that relates to this idea of relating to athletes over teams. Like, you know, I can connect with fans of Kyle Kuzma. Like in the pre-digital age, you couldn't really do that. It was like you saw someone in a Lakers jersey.

Okay, we're all Lakers fans. I couldn't find that many people that were obsessed with the same player or were obsessed with a particular idea about analytics. I think it allows your fandom to go a little more specific. Yeah, let's talk about those fans. How do these new trends and content start to kind of trickle down and affect the fans? What they want from the game, what draws them in and what doesn't. Does it start to impact fandom in any significant way?

And how so? I think more than ever, it's personality-driven content. I mean, if you ask a kid what team they root for, I would say most kids in America right now, say the Lakers, because they're really a LeBron fan. We think about all the time what talent actually resonates with this audience. and it might be a 19-year-old. One of the keys to that has been focusing on this idea of the next generation of superstars, who's next up? And I think that it's sort of a white space that a lot of traditional sports media companies

have really ignored for a long time. Covering this next generation of superstars, first of all, you want that immediacy. You don't want to wait two days later for the coach to go through his film and then he sends it to the athlete. No, I don't care anymore. Exactly. Part of it is we identify who the really influential athletes are, and we have a technology that allows us to send one kid into a gym and send highlights to us in real time.

So for instance, Zion Williamson, we know that we want to be the first one with every single one of his viral plays. So we will make sure we're the first one with that. And that's a level of sports coverage that isn't generally happening. It's not because that's traditionally one of the issues with high school sports.

It remains very local and very fragmented. But now with technology, you're able to cover a lot more ground. So what is that technology play? The problem with highlights is you never know when the good play is going to happen. So we built a technology we call Flashback, where the game is streaming through memory the whole time. It's not saving it because we don't live stream games. But when something happens, you press a button and it goes back 12 seconds.

And it lifts it and it sends it automatically to our server. So if you're in a gym with low network, which is most gyms, our clip will be the first one out of there. And then we can put it on social media right away. And then everyone is sharing that clip. So now I'm going to totally date myself that it reminds me of when you used to try and make mix off the radio like, hold on one second, let me press play. And you would, of course, you never had the first 10 seconds of any good song. Yeah, that's exactly right. You don't want to miss that play. You don't want to miss the reaction. So this allows you to get sort of what you need.

To hit rewind on real life for a second. It's particularly useful for sports. So one of the early go-toes on overtime was the reaction shot. You know, one part of their businesses highlights and they capture highlights that previously weren't captured anywhere near the breadth they were captured in. And so, you know, athletes, amazing high school plays that you never would have seen. You now see all the time. And one of the things that happens, like after a brutal dunk, the fans, the camera scans the fans, and the fan, the reaction shots are the whole thing, you know, just kind of like, you know, just, oh, you know, whatever it is. The crowd goes insane. And you want it very raw. There's something about someone using an iPhone

that it just feels very immediate like you're so close. There are some plays that we have that are shot both of an iPhone and a real camera. And we've tested this on Instagram and it actually performs better when you shoot it with an iPhone. That makes total sense to me because it feels like it's like a man on the street, right? That's exactly right. So how does this new exposure on all kinds of levels to these younger athletes playing in games

that didn't used to be covered before? How does that start to affect the way these athletes are perceived or even think of themselves? Zion Williams just had what, three million followers or something like that on Facebook. And so he's learned to market himself at that age and it does change the dynamic of sports media. It seems

to be much more people-driven versus just reporting our stories. Every summer there's this event called The Opening, and we call it Football Heaven. It's the top 166 high school football players in the country, and we're on the practice field, and Larry Fitzgerald is there, which is a big deal. There's Jerry Rice, one of the greatest players,

if not the greatest player in the history of the NFL. And then Odell Beckham Jr. shows up, and it was like Bieber showed up in front of like 1,013-year-olds. They were screaming and jumping. They surrounded his golf cart like it was. was a flash mob. And it was a really interesting moment for me. Like, you just had Jerry Rice and Larry Fitz like on the practice field with you. And they were appreciative of it. But then here comes Odell, who has done a lot of things, but not nearly what the other two have done thus far

on the field. And it was this moment of like, whoa, these guys are in love with him because of his IG, because of his persona, of course, of how he plays. But that's just the barrier of entry. And as you said, Yogi, it's not just about your skill. I mean, lamello ball, 3.5 million followers on Instagram might not even make the NBA. So I think the social cachet that these guys have, that's actually how we decide who we want to cover, not necessarily by who's the best. It's who's the most interesting and authentic to this audience.

Right. And a lot of these kids are being given opportunities because of this exposure, right, that they would never otherwise potentially have gotten. Oh, absolutely. Kids get more scholarship offers, or some kids that may never even get to play in the NBA, they're now what I would consider like a basketball influencer

or a football influencer. Describe what you mean by that phrase. That's really interesting. So I'll use an example of a guy named Mack McClung. This is a kid that had maybe 30,000 Instagram followers at the beginning of this past season, got a lot of coverage partially from us, and now probably has 600,000 Instagram followers. I would say that most of the basketball population does not believe he's going to go to the NBA. I do because I'm a supporter. But this kid is a legit celebrity now. This guy can have a ton of brand endorsements once he leaves college. There are a lot of different things that he can do because of what social media has done for him.

And it's a whole world of sort of content around him. That's exactly right. I mean, he's not the best basketball player in the country. No one would argue that, but people want to see him. There's something about him, both his play on the court and also who he is off the court that makes him enigmatic. And now I think you're finding athletes, even college athletes, figuring out their brand. If you're going to put content down there, don't just put it out there, but have a purpose

behind it. People who have great access to be popular are learning. they have to refine their craft and be like, dude, what is my lens into this world of millions of channels? Because I better have one or I'm just going to kind of get lost in the shuffle. So that was what I wanted to ask about brand, right? So if now high school athletes are starting to think about how they're perceived and whether their footage is ending up on overtime and then, you know, at ESPN by the end of the day, do kids have to start thinking about brand, you know, at 16, 17 years old and how they're building their sports career? I mean, I know, I know,

at 16, I was not mature enough to manage my own brand at all. Yeah, there's immense pressure. For some kids, it's a good thing, and it makes them mature really quickly. And then you have other athletes that come in and they couldn't care less who they're interacting with. All of that is magnified by what you do in social media. I mean, I've seen countless athletes write these really long Instagram captions, and every other word will be capitalized, and there'll be all these spelling errors,

and they are broadcasting to millions of people. Yogi, what do you think about this kind of new role of this athlete influencer? It's a different type of branding. I see the top 24 high school quarterbacks every year that have hundreds of thousands of social media followers and are told they are supposed to be this. And they're still trying to figure it out. So what I think is so critical for high school student athletes is to help give them tools. What are 50 things you want to do in life?

Not necessarily win every Super Bowl or MVP or Heism and Trump. What are 50 things you want to do? That is a step that gets missed when student athletes get to college because coaches don't have the time. And all of a sudden, what happens? You have an identity that is told who you are. You are told constantly, you're the top quarterback in the country. You're supposed to be the dude. We've got major issues around anxiety, depression, identity, and social media is only ramping up. What are the character traits that you want to share? And are you sharing them should be like required coursework every semester of a student athlete's career in college, let alone when they get their first recruit. reading letter. I mean, even you think recently about the whole Colin Kaepernick, you know, he's 30 years old and obviously has a lot of influence and is able to make a decision and, you know, stand by his word. But Zion, when he was 16, had almost as much

influence as Colin did at that point. And is a 16-year-old really ready to do that? I love the fact that student athletes have the platform at a young age. I think it's amazing. They've earned it. That's what sports are. But you got to surround yourself or be given some tools to prepare for this. And a lot of times you get burned. You know, like, man, I didn't think that was going to be the headline for me. I didn't mean it to be, but that was a lesson. Let's talk about the game itself. Now there's all these different ways you can sort of consume content around the sport and around the game. How do you think this is impacting the purity of the game? Do you think that's something that gets changed by this kind of different media consumption in the future? So it changes

scouting, right? Does it change other things? I think it changes a lot. I think it changes with the student athletes to start. You know, we ask everyone. every quarterback, every season. We look at a thousand of them and whittle it down to the top 12. One's the MVP, the other of the elite 11. These are the top high school kids in America. And we ask them the same question, which is, do you love what football does for you or what you can do for the game?

Coaches are really struggling, figuring it out, because who doesn't like getting loved up at 16 with scholarship offers, tweets, letters, cool gifs, great images you can post on your own platform that are created by other institutions? I think it does sometimes affect the play on the court. Jeff and I were playing basketball this morning. If someone had a camera out there, I would have noticed it. And it might have affected how I played. As soon as there's a light on you, you're aware. You're aware. You're being observed. And for these kids, it's not just a camera, but that video is going to be seen by tens of millions of people. And it's hard not to keep that in your head. And you hear coaches complain about it all the time. They're like, don't play for the camera. Don't play to be on overtime. Wow. Try to play fundamentally. What I've seen broadcasting games is that the games and the viewers are becoming even more pure. It's kind of like people talk about. the violence in football specifically. I love the targeting penalty. I love when we're trying to clean up the game for my kids and their kids. And I think the same's happening overall in viewership.

Like, you're only watching it. If you really love Stanford football, you're going to tune in this weekend on the Pact 12 networks. If you are curious about Bryce Love or KJ Costello, you'll see the highlights. And I just think that's where we're at. Outside of the top two or three games a week, maybe, that are like epic games. Overall, viewers are being like, y'all, I'm rolling with my team. I even feel that way as a consumer. If I watch a game and I'm kind of like, man, like, you're just giving me like the general stuff right now. Give me two, three deep on the depth chart. Give me the backstories behind these guys. And I think as viewers, myself included as a consumer, I want more expertise. I do think that the purity of the craft of the game is only increasing,

which I think is better for the game as there become more and more opportunity to do things. outside of sports. I think yogi's right that there are some people out there that want to watch the game more pure. But I have pretty strong conviction that the younger generation, there's very few kids like that. The kids do want the fanfare around it. They don't want to just sit down for three and a half hours and put their phone away and just watch the game pure. And I think for a lot of it, it does come down to this idea of FOMO. Like, you know, I think one of the reasons why live sports has always been so popular is like you don't want to miss out on that moment. I don't even DVR games anymore because I'm so afraid that I'm going to see the result on my phone. You want to

have that moment, that impact. And I think when you can see the highlights on Twitter instantaneously, I'm basically participating anyway. So there has to be something about the broadcast that doesn't quite translate to a highlight that might actually get me to watch. All right. Well, thank you guys so much for joining us.