China was the opening focus for the second day of the Sports Matters, an Asia sports industry conference being held in Singapore, organized by Branded and Campaign Asia-Pacific.
Speakers painted a picture of a market that is seeing substantial investment but hasn't even begun to reach its full potential. A market where fans get content for free while online media platforms such as LeTV compete with broadcasters for content—and to engage fans in the ways most attractive to marketers.
According to David Hornby, sports business director at Mailman Group, despite the keen interest of Chinese fans for international sports such as football, organisations such as FIFA have been noticeably absent in the market.
But that does not mean the market is stagnant. Hornby reported that Chinese sports fans were highly engaged and hungry for content, fuelled in part by changes to the broadcast landscape over the last two years—mainly the rise of IPTV players, along with the huge sums of money being invested into the market.
“About 15 deals were closed in July and August of this year in China," he said. "To put the size of the market into perspective, there are 19 networks in China with English Premier League rights; the United Kingdom has two."
The NBA topped the list of the most active sports teams and organisations engaging with Chinese fans online via WeChat and Sina Weibo. Football clubs such as Manchester United, Liverpool, Barcelona and Arsenal also made the list.
The NBA is also active with selling merchandise via the country’s largest online retailer, TMall.com. The organisation was the first league to do so, and about five European football clubs have since started as well.
According to Hornby, broadcasters are by no means assured of victory in the market, as there are no clear business models yet for the return-on-investment for content acquisition. And while sports organisations are starting to make money in the region, it is still only a fraction of the potential market.
“The Chinese are the most in-demand fan base in the world, with access to more sports content than ever before, and all for free," Hornby said. "It is the only market in the world where fans enjoy this. The challenge moving forward is, when do these users start paying? How do you start converting the market and persuade them to do micropayments for content."
During an interview on stage, Hang Yu, president of sports at LeTV Sports, noted that in the last eight months, the sports industry in China has “changed incredibly.”
“For now, our users get sports content for free but in the future, we will look at a paying model,” he said.
The company was formed in 2014 with a mission to help make China into a sports country, by providing access to not just content, but events and sportswear as well.
It has reportedly secured the rights for Hong Kong for English Premier League matches for three years starting from the 2016-2017 football season. While reports said the deal is worth a purported US$400 million, the company is expected to officially announce the deal in a press conference in Hong Kong on 22 September.
LeTV Sports currently streams over 10,000 live sports events a year across 20 categories of sports, which includes sailing, equestrian and lower-profile football leagues such of the Ukrainian Premier League.
But the company sees itself as a global sports company rather than a pure content provider and has multiple other business units looking into ventures such as 'integrated stadium solutions' (which augment the fan experience with stats and video replays via smartphone) and smart bikes, which are expected to go on sale before the end of the year in the United States.
It is also reportedly working on a LeTV Drone, which will work with the company’s user-generated content platform, to encourage users to upload their video footage from sporting events.
It is clear that the company isn’t relying solely on its viewers for revenue, and Yu said that the company is confident its current model is sustainable.
“If it wasn’t sustainable then we can’t afford to keep going like this," he said. "In a perfect world, we don’t want to be that aggressive but this is only way to survive in China where there’s so much competition.”
Patrick Murphy, CEO of Catalyst Media Group, noted that China is “a great ad market” during a panel discussion featuring representatives from Tencent, Sina, NBA China and LeTV Sports.
“We record about US$12 million in ticket revenue on average for one of our sporting events, but the media-rights market is healthy, and creating that revenue stream with a TV product takes you beyond just being an events promoter,” he added.
Sam Li, head of content acquisition and strategic partnerships at Sina Sports, shared that the platform’s approach differs slightly from its competitors, as it positions itself as a comprehensive media-coverage company.
“We have an ad-funded model and don’t do subscriptions, what we try to provide to loyal fans is access to the content they want to consume about their favourite sport beyond the live matches,” he said.
Consumption of sports content via mobile platforms is high in China, with panellists all reporting more than 50 per cent of their content is accessed via smartphones and tablets, though LeTV’s Yu noted that despite the rise, when it comes to the viewing experience, TV still dominates.
Thus, when the topic of CCTV, the country’s largest traditional broadcaster was raised, all panellists agreed that its reach could not be denied.
“We believe that the relationship between Sina and CCTV is complimentary, especially during a live sports broadcast where we play the role of the second screen," Li said. "We offer viewers access to statistics, up-to-date photos, messages from other fans and opinions to interact with and enjoy significant engagement.”
For Melissa Pine, vice president (Asia-Pacific) and Finals tournament director with the WTA (Women's Tennis Association), the region is the WTA’s biggest market right now.
“About 40 per cent of our global tour takes place in Asia, with 10 events in China alone, including our crown-jewel event, which is the China Open," she said. "We’re actively engaging with the local fans, we’ve worked with Sina Weibo and recently opened a WeChat account. All our major stars have personal accounts as well."
While the WTA opened its Beijing office in 2008, it has seen a dramatic spike in audience since Chinese player Li Na emerged as a top-tier contender over the last couple years, with one match recording over 134 million viewers in China.
“But now with Li Na retired, the question is who will be the next big player from China?" Pine said. "And we are increasing the number of events we hold in the country as it correlates with our efforts into developing both the sport and talent.”
Brandon Snow, senior vice president for global marketing partnerships with NBA China, said sports brands and organisations must think about how to engage with fans beyond just sporting events.
“For us, we can only be in China during the pre-season, but what happens after you leave?" Snow asked. "We’re looking at digital engagements, custom-made content as a way to sustain interest.”
Snow also echoed the boost a sport enjoys when a local player is involved, pointing to when Yao Ming was active in the NBA.
“When you have a local Chinese player, the connection the fans have with the sport just naturally increases exponentially. So youth development is an important focus for us for the longevity of the sport,” he added
Sam Xie, General Manager of Sports Business Development and Marketing, Tencent & Deputy Chief Editor for qq.com noted that with more Chinese people embracing sports-centric lifestyles and with the domestic sports market on the cusp of a major boom, the onus is on sports brands and owners to endear themselves to the fans.
“It doesn’t matter which sport, it’s all going to boil down to how well you market your sport in China for success and a piece of what Is going to be a very big pie,” he added.