Golf’s Power Drive into Media Disruption

Golf's Masters Tournament trophy; the App

This year’s 2023 Masters Invitational in Augusta, Georgia show-cased professional Golf’s biggest conflict with the inclusion of leading golfers from the break-away LIV Golf league.  But it was not drama that drew attention from record audiences, including professional investors, it was the App used to experience it.    

Professional investors are in the business of navigating commercial trends and managing the allocation of their capital accordingly.  For nearly twenty years, the globally coordinated economic policy of quantitative easing has provided low cost of capital to professional investors internationally, allowing them to invest liberally in both public and private markets around the world with a greatly reduced level of risk.   

One of the most notable beneficiaries of this liberal capital flow has been the global tech industry.  The tech-startup ecosystem has generated both vast technological changes and many newly minted billionaires.  Cheap capital and tech entrepreneurialism has effectively transformed the global economy into a connected, data-driven commercial behemoth while simultaneously increasing the consumption of leisure time across global markets with wide-spread access to broadband internet and high-bandwidth cellular networks.  What cannot be understated is how deeply the tech industry has embedded itself into the fabric of modern life and across every sector of the global economy. 

The era of quantitative easing is arguably ending.  The boon of cheap capital being poured into the tech start-up ecosystem appears to be ending in concert with that quantitative easing, placing professional investors on alert for what comes next.  Many of those professional investors were once tech startup entrepreneurs themselves.  As professional investors take a step back to reflect, they fall back on leisure time to recharge as well.   

And many do this playing golf.  And watching golf. 

Phil Michelson
The highest grossing professional golfer in 2002, Phil Michelson now plays in the LIV Golf league. Image credit: Steven Dykes/Getty.

This month marked the start of the professional golf season with the one week annual Masters Invitational in Augusta, Georgia.  Why this single prestige event on the sports entertainment calendar is so important requires a bit of discussion.  But important it was, and a vast number of professional investors were watching, and reflecting. 

What is so important is not that they were watching the annual Masters invitational golf tournament, but how they were experiencing it. 

A Primer 

It may be hard to imagine today, but twenty years ago there was no Netflix as a Streaming, Video on Demand over-the-top entertainment platform.  There was no Prime Video either.  In the mid-2000s, the concept of SVoD had not even entered into the minds of many beyond those working on the fledgling infrastructure for broadband internet and high-bandwidth cellular networks. 

Wide-spread access to broadband internet service across North America made it possible for Amazon and Netflix to change the way audiences experienced film and television shows.  They did it without fan-fare and without the participation of the likes of Disney, NBC/Universal or Paramount.  In fact, they did it right under the noses of the Media Majors by focusing on improving the experience of the audience.

Twenty years later, Netflix is a publicly-listed company with an intrinsic value of US$345.04 on a five-year discounted cash flow basis, trading at a market value of US$338.63 with an upside of 1.9%.  That makes it a reasonably good long-term public equities investment, even today.   

Now imagine having the opportunity to invest into the private equity of Netflix twenty years ago. 

The valuation of Netflix, if not its value, is a result of what it did to disrupt an industry.

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Until Netflix, the Media Majors where in control of the how, when and where screen entertainment was delivered.  Until Netflix, the bosses at major distributors around the world dictated when, and in what cinema, an audience would experience the next studio tent-pole production, and whether or not an independent film would ever be seen by anyone.  Until Netflix, television bosses dictated on what day and at what time the population would gather around their television at home to watch the next episode of the most popular shows.   

Netflix disrupted the way in which audiences experience movies and television shows.  For the first time, millions of fans were able to watch, pause and continue watching from wherever they wanted, whenever they wanted, for however long they wanted.  It was an entirely liberating experience that audiences could not subscribe to fast enough.   

What Netflix was, twenty years ago, was a tech company with the motto, “Entertain the World.”   

The Media Majors are still recovering.   

How the Media Majors responded was by becoming Netflix.  And while Netflix may have once been a rogue tech company, today it is one of them.  And disruption is coming again.   

What Comes Next 

The business of televised sport is enormous, and the Media Majors clearly understand that delivering sports over their proprietary streaming platforms is one way to offset the effects of low quality content that has both swamped nearly all streaming libraries and caused subscribers to begin cancelling. 

Why sport?  Because globally, fans of live, televised sporting events such as football, tennis and golf outnumber any single nation on Earth (yes, including China).  They are, taken en masse, the largest single entertainment audience ever conceived of. 

But Media Majors are invested heavily in control, just as they were in the days before Netflix.  Fans are forced to subscribe to sports packages such as ESPN, purchase expensive pay-per-view options or gather around someone else who has.  Fans must watch the play that the channel has, not the play that just happened off-camera or that only another network caught. 

Fans of one team or one player may have to suffer camera time on another, and to listen to commentators that may completely miss a special moment that makes live televised sport so important. 

All of that has suddenly just changed, and it has nothing to do with the Media Majors.

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In fact, what golf fans of the Masters golf tournament just experienced changes everything, for all sports fans, everywhere.

What sports fans want is to see what they want to see and to know exactly what their favourite players are doing at the moment.  They want to follow the action that they are most interested in, when they are most interested in it and how they are most interested in seeing it.

And, thanks to tech folks who understand that the future is entertainment, sports fans can.

There’s Now an App for That

It is driven by sixteen different AI models that offer a personalised experience for every single person who uses it.  And, there’s more.  The App is free.

For now, it takes the form of the official The Masters Tournament App that delivers what fans want for the single, full week of the Masters Invitational.  But there is nothing now stopping its developers, IBM, from providing an identical App for Wimbledon.  Or for the Premier League.  Or the Olympics.    

Working with IBM’s dedicated team, the management at August National Golf Club developed strategy for capturing a whole golf tournament in its entirety, simultaneously, in real-time using advanced artificial intelligence models to deliver golf for fans of golf.  Every tee, every hole and every inch of fairway in between is covered. 

Thousands of high-definition cameras and microphones cover everywhere one might think something might happen.  All of these cameras and microphones feed into a cloud-based data infrastructure that allows as many as sixteen different AI systems to analyse and organise footage and sound in near-real time. 

All any user of the App requires is an internet connection.

If an App user wants to follow every tee, shot and hole of only one particular golfer, the App will delivery it in real time or record it all for later.  If the user wants something exciting at another hole to break in, it will do that.  If the user wants to create a fantasy foursome to compete against the leader board, the App will do that.

A highly sophisticated AI model will even provide commentary on every stroke, and prompt when the crowd elsewhere is applauding a great shot and then offer to recap with recorded video.  That commentary is trained in golf with all its technicalities and fan-favourite jargon.  It will vary its speech patters and avoid repetitive statements, just like a human commentator.  The difference is, this commentator works for the user, not a broadcaster.  There is no bias.  There is no agenda. 

There is only golf delivered to the fans, for the fans, as if they were in control.

A Genie Out of the Bottle

The Media Majors may consider AI to be both a blessing and curse.  They have vast amounts of money to spend on technical expertise to explain and help make use of it.  But they are not adept at innovation.  They are not entrepreneurial.  And they are not in control.

For some inside the Media Majors, AI is nothing.  For others, it may be the end of life as they know it.  For those that make the decisions, it is coming.  They just don’t know how.  Or at least, they didn’t.

At the same time, the tech industry is experiencing a contraction.  Thousands of highly talented tech employees, including CEOs, are now jobless or at least, “in transition”.  For those still employed, even the CEOs, a change in direction may be required or they, too, will be transitioning.

All of those thousands of coders, engineers and founders are highly adept at innovation.  They are entrepreneurial.  They also know professional investors and how to speak to them. 

The Media and Entertainment industry, for the most part, is not very good at speaking to professional investors.  But tech refugees, teaming up with media executives, may just change that.

The collaboration between IBM and Augusta National Golf Club is not a singular event.  And while IBM may have a head start on the technical infrastructure behind the Masters App, it likely has competition working hard to catch up.

What will be interesting is figuring out which sport gets the Masters’ treatment next.  Which vast fan-base out there will take control of how they experience their sport.

For fans of both Private Equity and Media, the action has just begun.

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