#72 The Ballketing Letter
FlyFut: Growing a "Content as a Service Business" in football, NFTs for businesses, industry reports from Nielsen, Wunderman & McKinsey, sonic branding, resources for growth & more!
Hey there Ballketers,
Welcome to post #72! We can´t help think about the “72-10 win/loss record the Chicago Bulls were able to achieve back in the 90s, one of the greatest teams ever assembled and probably one of the pillars behind the NBA´s international growth:
This week:
We look into how FlyFut is changing the game of football (soccer) for pros, amateurs and youth teams using AI powered drones
A few reports that review some of the major currents trends of the industry in terms of consumer behavior, the sporting goods industry, sonic branding or the metaverse.
As usual, the best content of the week aimed at helping you take your sport business to the next level.
Let´s get down to business!
“Owning your strengths is easier when you recognize they don’t necessarily come from you, but they are yours.”
Jason Wright
The current president of Washington´s NFL team (Renamed “The Commanders”) is interviewed by McKinsey in an insightful interview full of lessons on leadership, resilience and other soft skills for leaders in sport.
FlyFut: Scaling a “Content as a Service” business in the football industry
This week we look into the growth behind FlyFut, a revolutionary product in the world of football that is helping professional teams like Atlético de Madrid or Real Valladolid improve their performance on the pitch as well as youth and amateur players by helping them feel as if they were professional themselves.
They achieve this by recording games with drone technology powered by AI, and in fact, their vision is that by combining both elements they aim to become football´s biggest content platform.
Origins & The Business Model
The company was founded in 2017 and it has its roots in a story where one of the founders, while working for Adidas, saw a contest on the employee intranet which asked to submit projects that would envision “the future of football in 2030.” He signed up for the contest and was able to achieve 3rd place worldwide.
That result, along with a key insight he received from a top executive at the firm, led him to pursue the opportunity. That insight was:
“Nobody is going to care as much for a piece of content than the one where they are the star.”
One could argue this insight is also applicable to the success behind eSports, for example.
Today, Flyfut has two main sources of revenue:
A product for the mass market where teams (both amateur and youth academy teams) pay an annual fee to access the footage from each of their games of the season.
A version of the product for professional football teams (FlyFut Pro) where basically the footage is used to analyze and improve tactics & strategy.
Getting to “product-market” fit: From a B2B to a B2B2C model
Initially, the idea the founders had in mind was to pre sell the entire season matches to leagues around the country (both amateur & official youth leagues); therefore, a B2B model designed to ensure positive cash flow from the get-go.
After talking to potential customers though, they realized this approach would not fly. While executives across different leagues were amazed by the features of the technology, they recognized not being able to purchase it given the upfront investment required to do so.
It was at that point FlyFut decided to pivot to what they describe as a “Content as a Service” model, in which the league would be the door or the bridge that provides access to the end users, who pay a subscription in exchange for an app that lets them watch content from their own games.
This effectively led them to shift to a B2B2C model.
Understanding user behavior through the metrics that matter & monetizing network effects
After getting some traction, the business noticed an interesting dynamic among users. While they were witnessing high levels of usage (22 minutes per day on the app), there was not a correlation to the revenues generated from subscriptions.
This essentially meant that one user was downloading and paying for the app but that it was the whole team using the same account to access the footage.
As a result, FlyFut decided to eliminate the option of purchasing an individual account and enabled “team accounts.” Conversions did not drop, and 2 out of 3 teams ended up purchasing their app.
Not only that, usage rates increased further; looking into the user journey they noticed that footage from a game during the weekend would fuel conversations among team members throughout the entire week via Whatsapp groups and other instant messaging platforms.
This is the value of understanding the relationship between the metrics that matter and the entire user journey.
And, it may also be considered a prime example of monetizing network effects. It seems pretty clear that FlyFut needs more people to use the product for it to succeed but it was not until they shifted the business towards charging on a “per team” basis (vs per user) that they were able to fully untap the potential of network effects.
Inverting the pyramid to expand the ecosystem
One of the things that stands out from FlyFut´s case is that they traveled what we consider to be an inverse usage pyramid. Usually technical products start by entering the professional realm of a given market and they make their way over time into the mass market (what some call democratization of a given technology).
Think of brands like Therabody, Hyperice or even pop culture icons like Nike. They first targeted pro sports as a way to gain brand awareness and then leverage from its influence and popularity to enter the mass market, under the premise that if a customer “wants to be like pro athlete X, it must have the same products as X.”
FlyFut however, did it the other way around. They first entered the mass market and expanded their ecosystem from there:
They initially launched through amateur football leagues.
They then were able to close deals with the youth teams of well known teams in Spain. While they initially thought the product was targeted towards the kids playing in those teams, soon they realized their coaches recognized the huge potential it could have from the “tactical & analysis” side. From there, it was pretty logical it could end up working with the corresponding professional team.
To put this explanation into a real example, the sequence started with Real Valladolid youth team players using the technology for entertainment, then the coaches acquired the product for tactical purposes; from there, it expanded into other Valladolid youth teams until finally an agreement was reached with Valladolid´s professional football team.
(Oh, fun fact here, in case you were not aware of this, the current president at Real Valladolid is this “little known” football legend...)
From there, the breath of possibilities is enormous:
FlyFut recognizes to be negotiating with top clubs from the Premier League and Serie A.
They have also received interest from officiating bodies as a way for them to improve their own tech stack.
Of course, they could also look into expanding the mass market product to other countries or maybe other sports.
With all these possibilities ahead of them, it is not surprising to see that they project to scale from 150 pilots to 3.8K in the future (even if the drone uses AI tech, a pilot is still needed to supervise that everything works OK and even be a backup in case the technology fails.)
From an operations standpoint, this even led FlyFut to develop a brand guideline for new pilots. If brands like McDonalds or Apple put in place such guidelines to set the standards for an optimate customer experience, it makes sense that they did the same.
Product usage drives retention and revenue and the source of all of it is an awesome customer experience.
Revenues, rounds of investment and metrics
As we stated above, FlyFut has two main sources of revenues:
Amateur teams, which pay somewhere between €7.5K and €11.4K per year for access to the app with footage from every single game they play.
The professional teams, who actually negotiate a number of “labor hours” in exchange for an annual fee (which typically ranges from €6K to €8K). Then, it is the team that decides how to allocate those hours internally (to the pro teams, youth teams, etc.)
FlyFut´s founder recognizes part of the success should be attributed to the fact that teams and leagues understand quite well why and how to embrace the technology. This is another lesson to keep in mind:
It is best not to waste effort in selling to those who do not want to be sold to (they do not believe in the technology, product or service) and focus on those that “get it” from the beginning.
A third source of revenue that emerged comes from brand partnerships. For instance, they have an agreement with Adidas in which they send personalized offers to users.
So, if a user declares being a Real Madrid fan and, of a certain player in particular, Adidas will send an offer to that user based on their preferences.
In terms of revenues, the forecasts are:
Generate revenues of €1.5 million
Work with more than 615 leagues in total
Film more than 5K games
Acquire more than 50K users
The potential seems quite big for FlyFut and their recent rounds of investments are proof of it. So far, the business has risen a bit less than €3 million through them and is currently valued at €12.6 million.
FlyFut is also a great example that demonstrates a concept explained by Peep Ladja on “How to Win” on an episode with Drift’s CEO. Basically, the initial traction is gained through tech features and then making sure they build a capable business around it. The next phase, which is the one they are in right now, is to build a moat through brand, which so far seems to be on the right track.
Similarly, they also fall under the framework developed by Category Pirates that we have discussed in the past:
A digital service: The content
A physical product: The drone
An in-person experience: Based on the matches and the aftermath of those matches.
Hopefully, you can also find valuable lessons from FlyFlut´s business case. We are excited to see their development and share them with you further down the line.
An “NFT for businesses” special
Practical applications of NFTs for businesses
An insightful episode of the Crypto for Business podcasts that reviews the different ways NFTs can be used in business. The main idea we took is that NFTs help you take your community efforts to a new level in terms of engagement, monetization and even referrals.
Pay special attention to the Proof of Attendance Protocol, it could be a game changer…
Using NFTs for B2B marketing
In this episode of the Inbound Success podcast, they explain, in basic terms, what the blockchain, Web3 and NFTs are, how they can be used by marketers, and what, specifically, B2B marketers should know about their role in the marketing mix.
Growth strategies in web3
The growth strategy behind Axie Infinity
Insightful episode of The Marketing School Podcasts which hosts the Co-Founder of Sky Mavis and the Axie Infinity game. They talk about the mechanics of the game, how Web 3 is changing the world of marketing and, the crucial role that community plays in their remarkable growth rate.
Behind the scenes with Genoa FC
The Groundsmen Podcast interviews Juan Arciniegas from 777 and they discuss all aspects related to managing a historic football club like Genoa FC. From fan engagement to more operational aspects, it covers a wide range of topics with interesting insights for anybody working in the football industry.
A sales masterclass for fitness businesses
If you want to raise the bar on your sales game, this episode of My First Million is a must. Among other things, it will help you define a formula for evaluating opportunities, a framework to approach sales conversations or the two elements you need to be a better sales person.
The latest market reports & trends from the industry
The Nielsen 2022 Consumer Report
Interesting insights on the Nielsen 2022 Consumer Outlook report for those in sports, fitness & wellness. On one hand, consumer spend on memberships in those categories is projected to decrease 15% over the next 12 months. On the other hand, awareness about the importance of physical and mental awareness is among the top categories; those in the space could do well in keeping embracing mixed experiences between at home and the gym.
McKinsey & the State of the Sport Apparel Industry in 2022
McKinsey publishes a “must read” for those in sport apparel industry. In the report you will find deep analysis on the trends shaping the industry, insights from top executives as well as opportunities and challenges ahead.
A dictionary of the metaverse
Wunderman Thompson shares a basic dictionary that explains definitions of a few terms associated with the metaverse. A good resource to start understanding the space…
Why Sport brands will embrace Sonic Branding
An interesting article on Morning Brew that shares why sport organizations will rely on “sonic branding” as an important element of their portfolio of brand assets from now on, with some experts considering it “as important as the visual asset, or the logo, or the font type.”
Level up your marketing game
Strategies to grow an infrequent product
Reforge publishes an extremely useful framework for those of you that are trying to grow products that are not used with high levels of frequency. Based on the ICED framework:
I = Degree of Infrequency
C = Degree of Control Over the User Experience
E = Degree of Engagement Before, After, and During The Transaction
D = Distinctiveness of The Product
This article focuses on strategies to grow infrequent products based on 3 main tactics:
Move the product toward “timing known + easy to influence
Add adjacent use case to reduce the gap between interactions
Latch on to habit products or layer a habit product
A masterclass on “Category Creation”
Dave Gerhardt shares an awesome article on category creation. It touches upon several topics that include taking strategic bets, focusing on thenarrative more than product-specific positioning, frequency and even, willingness to be uncomfortable while launching it.
A masterguide for your growth marketing strategy
CXL shares an awesome article that balances to perfection between strategy and execution of a great growth strategy. It touches upon:
The Ansoff Matrix (Market Penetration / Market Development / Product Development / Diversification)
Defining the funnel (Acquisition Activation Retention Referrals Revenue)
Planning Objectives
Embracing an “experimentation mindset”
And that does it for The Ballketing Letter #72! Thank you if you made it to the end of the post and, if you have any feedback, please reach out.
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