How virtual engagement is reimagining the entertainment and live event experience.
Social distancing and staying at home, the cornerstones of the effort to slow the spread of COVID-19, will continue to have a profound impact on entertainment and in-person events—from the cancellation of all major sporting events and musicians using social media platforms to perform from their homes, to the growth of esports viewership—entertainers and fans are interacting with each other in new ways.
Fenwick technology transaction partners Vejay Lalla and Jennifer Stanley moderated a discussion with seasoned investors and industry experts on the role of technology and how they think it will shape the future of entertainment and live events. Panelists included Annie Lin, senior corporate counsel at Twitch; Kai Bond, partner at Courtside Ventures; Kai Mathey, head of partnerships at Andbox; Wayne Mackey, co-founder and CEO of Statespace and Arteen Arabshahi, vice president of WndrCo.
The discussion focused on monetization and engagement. Here are the takeaways.
- Accessibility is critical to successful monetization. Innovative companies are monetizing virtual fan experiences in interesting ways that are personalized but also scalable. Companies will continue to find new ways to generate revenue but to succeed, they must offer fans affordable virtual experiences that flatten barriers to entry.
- Unique revenue streams from microtransactions abound. Every unique experience that a consumer can have, both online and offline, is a monetizable event—from a subscription or membership model, to a quick sidebar with a sporting fan’s favorite athlete, to a sponsorable event that invites a fan into a private virtual room to have a conversation with a celebrity.
- Both scale and exclusive-focused experiences are monetizable. Monetization will be greatest for experiences that are personalized but scalable. However, it is also possible to leverage the digital ecosystem to create monetizable VIP experiences, such as exclusive concerts, “meet and greets” and other intimate gatherings.
- Engagement with virtual experiences will depend on discretionary income. Knowing how much consumers are willing to spend is critical and hard to project. Companies will have to see what consumer discretionary spending looks like over the next 12 to 24 months.
- Necessity is the mother of invention. As significant business model innovation occurs over the next few years, people may become more open to purchasing season passes and other interactive items in a virtual space.
- Fans don’t stop being fans. Digital experiences cannot fully replace real-life experiences, but they are filling an experience gap. It remains to be seen whether this is a temporary boost to gaming and other digital experiences, or whether the current situation will have long-lasting effects. After sporting fans are able to return to stadiums, for example, will they consider engaging with Twitch or other platforms to augment the experience?
- Accessibility impacts adoption of products and services. Virtual spaces give fans and audiences ways to experience events they could not necessarily attend in real life. However, companies need to build features into their products that make them accessible to a large audience. Can regular users easily access and unlock the experience? Do they have to download software? Do they need a VR headset? Accessibility, again, becomes critical to both adoption and engagement.
- Fans are looking for authentic connection, interaction and participation. Even in the digital ecosystem, fans want to be seen and recognized. To have staying power, platforms need hooks and features in products, such as reaction buttons and stickers, that make it possible for fans to interact and then have their interactions be seen or recognized by fellow fans.
- Compelling storytelling is essential to fan engagement. Like traditional forms of media, strong content is still the backbone that will drive media or fan-based success. Their usage might look different post-pandemic, but there will potentially be more usage than there was before.
Areas of Engagement
- VR/AR technology will evolve. Some game developers have created powerful experiences in family entertainment. VR/AR technology is in its nascency, but this technology is likely to mature over the next several years.
- Fans are engaging with traditional events and experiences in new ways. Fans are rediscovering traditional content, except it is reimagined through a virtual format that allows for unique events and experiences, such as Verzuz’s realtime DJ battles on Instagram Live, which have become an online phenomenon while we shelter in place. Such experiences also have broader reach than a live event, and even become fodder for watercooler conversation for days on end on social media. Companies are likely to continue to put a new spin on traditional media content.
- Fans are finding new ways to engage with fellow fans. The chat feature is an integral part of the esports experience and provides a way for communities of fans to passionately converse about gameplay in realtime. Fans and audiences are embracing nontraditional ways to connect—for example, through Twitch broadcasts, Twitter and Reddit threads and other social forums which should have lasting impacts on how fans and audiences approach virtual social engagement in the future.
- Fans will eventually go back to live events. There will be a “snap back” when things are safer and fans will want to return to live participation. While this is only a benefit to esports or other experiences that already combine virtual and live experiences well, traditional media and sports businesses need to be careful in balancing their investment in both live and virtual experiences for fans.