The NFL Has A Bigger Problem Than Kneeling Employees – Demographics and Trends

The NFL Has A Bigger Problem Than Kneeling Employees – Demographics and Trends

LANDOVER, MD – SEPTEMBER 24: Washington Redskins players link arms during the national anthem before their game against the Oakland Raiders at FedExField on September 24, 2017 in Landover, Maryland. (Photo by Patrick Smith/Getty Images)

A recent top news story has been NFL players kneeling during the national anthem.  The controversy was amplified when President Trump weighed in with objections to this behavior, and his recommendation that the NFL pass a rule disallowing it.  This kind of controversy doesn’t make life easier for NFL leaders, but it really isn’t their biggest problem.  Ratings didn’t start dropping recently, viewership has been declining since 2015.

NFL ratings stalled in 2015

NFL viewership had a pretty steady climb through 2014.  But in 2015 ratings leveled.  Then in 2016 viewership fell a whopping 9%.  During the first 6 weeks of the 2016 regular season (into early October)viewership was down 11%.  Through the first 9 weeks of 2016 ratings were down 14% before things finally leveled off.  Although nobody had a clear explanation why viewership declined so markedly, there was widespread agreement that 2016 was a ratings crash for the league.  Fox had its worst NFL viewership since 2008, and ESPN had its worst since 2005.

Colin Kaepernick kneels 2016, CNN photo

Interestingly, later analysis showed that overall people were watching 5% more games.  But they were watching less of each game.  In other words, fans had become more casual about their viewership.  People were watching less TV, watching less cable, and that included live sports.  And those who stream games almost never streamed the entire game.

And this behavior change wasn’t limited to the NFL.  As reported at Politifact.com, Paulsen, editor in chief of Sports Media Watch said, “it’s really important to note the NFL is not declining while other leagues are increasing.  NASCAR ratings are in the cellar right now.  The NBA had some of its lowest rated games ever on network television last year… It’s an industry-wide phenomenon and the NFL isn’t immune to it anymore.”  So the declining viewership problem is widespread, and much older than the recent national anthem controversy.

Live sports is not attracting new, younger viewers

Magna Global recently released its 2017 U.S. Sports Report.  According to Radio + Television Business Report (RBR.com) the age of live sports viewers is scewing older.  Much older.  Today the average NFL viewer is at least 50.  Similar to tennis, and college basketball and football.  That’s second only to baseball at 57 – which was 50 as recently as 2000.  But no sport is immune. NHL viewers are now typically 49.  They were 33 in 2000.  As simple arithmetic shows, the same folks are watching hockey but few new viewers are being attracted.  Based on recent trends, Magna projects viewership for the Sochi Olympics and 2018 World Cup will both decline.

I’ve written before about the importance of studying demographic trends when planning.  These trends are highly reliable, even if boring.  And they provide a lot of insight.  In the case of live sports watching, younger people simply don’t sit down and watch a complete game.  Younger people have different behaviors.  They watch an entire season of shows in one day.  They multi-task, doing many things at once.  And they prefer information in short bursts – like weekly blogs rather than a book.  And they are more interested in outcomes, the final result, than watching how it happened.  Where older people watch a game play-by-play, younger people simply want to know the major events and the final score.

To understand what’s happening with NFL ratings we really don’t have to look much further than simple demographics — the aging of the U.S. population — and the change in viewing behavior from older groups to younger groups.

Unfortunately, according to a recent CNN poll, while 56% of people under age 45 think the recent demonstrations are the right thing to do, 59% of those over 45 say the demonstrations are wrong.  In its “core” NFL viewership folks don’t like the kneeling, so it would appear the NFL should heed the President’s advice. But, looking down the road, the NFL won’t succeed unless it finds a way to attract a younger audience.  With younger people approving the demonstrations NFL leadership risks throwing the baby out with the bathwater if they knee-jerk control player behavior.

Understanding customer demographic trends, and adapting, is crucial to success

The demonstrations are interesting as an expression of American ideals.  And they are gathering a lot of discussion.  But they are not what’s plaguing NFL viewership.  Today the NFL has a much bigger task of making changes to attract young people as viewers.  Should leaders shorten the game’s length?  Should they change rules to increase scoring and create more excitement during the game?  Should they invest in more apps to engage viewers in play-by-play activity?  Should they seek out ways to allow more gambling during the game?  Whatever leadership does, the traditions of the NFL need to be tested and altered in order to attract new people to watching the game if they want to preserve the advertising dollars that make it a success.

When your business falters, do you look at long-term trends, or react to a short-term event?  It’s easy for politicians and newscasters to focus on the short-term, creating headlines and controversy.  But business leaders have an obligation to look much deeper, and longer term.  It is critical we move beyond “that’s the way the game is played” to looking at how the game may need to change in order to remain relevant and engage new customers.

Note how boxing recently brought in a mixed martial arts fighter to take on the world champion.  The outcome was nearly a foregone conclusion, but nobody cared because it brought in people to a boxing match that otherwise would not have been there.  If you don’t recognize demographic shifts, and take actions to meet emerging trends you risk becoming as left behind as cricket, badminton, horseshoes, bocce ball and darts.

I'd like to receive newsletters.

 

 

Colbert Beat Fallon By Following Trends, Which Will Make CBS More Money

Colbert Beat Fallon By Following Trends, Which Will Make CBS More Money

Photo: NEW YORK, NY – FEBRUARY 19: Writers and crew of ‘The Late Show with Stephen Colbert’ attend 69th Writers Guild Awards New York Ceremony at Edison Ballroom on February 19, 2017 in New York City. (Photo by Nicholas Hunt/Getty Images)

The Late Show hosted by Stephen Colbert is now the #1 program in late night television.  This come-from-far-behind change in market leadership, overtaking The Tonight Show hosted by Jimmy Fallon, is not about politics.  It is about understanding trends and using them to create value.

Back in February, 2014 there was real concern about the future of late night television.  Audiences had peaked decades before, when Nightline was huge and competed with The Tonight Show hosted by legend Johnny Carson. By 2014 many wondered if American programming after the late news was all shifting to cable TV as audiences continued shrinking.  Producers replaced Jay Leno with Jimmy Fallon in order to revitalize viewers.  Jimmy Kimmel was moved up in time as ABC killed Nightline, hoping he could carve out a growing niche.  And David Letterman, late night’s senior statesman, was about to be replaced by cable satirist Stephen Colbert.  But these changes gathered little industry interest, because the time slots simply were not doing well for broadcasters – or advertisers.

Fallon maintained a dominant lead in the time slot as Colbert’s first year was a yawner.

As TheWrap.com reported in September, 2016, despite the fanfare of Colbert taking over hosting, he “posed no threat whatsoever to Jimmy Fallon.”  Fallon’s show maintained a huge lead. With 3.65 million viewers it bested The Late Show by over 800,000.  Colbert, with 2.82 million viewers seemed mostly trying to keep a lead over Kimmel’s 2.3 million viewers.
But, as the New York Times headlined on May 17, 2017 “Jimmy Fallon Was On Top of the World. Then Came Trump.”  During 2016 viewers were engaged in the knock-down-drag-out political battle for the Presidency.  In an effort to build on political interest, Fallon’s producers invited Donald Trump on the show.  Unfortunately, most people viewed Mr. Fallon’s interview as fluff, and given the heat of the rhetoric the critics tore into Fallon hard for an interview that fell far short of its possibilities.  Some considered it a turning point, an interview from which Fallon has yet to recover his full audience following.
jimmy fallon inteviews trump 2016 Getty
ANDREW LIPOVSKY/NBC/NBCU PHOTO BANK VIA GETTY IMAGES

Meanwhile the producers at The Late Show kept their eyes on the mood of the electorate.

They had largely let Colbert promote Democrat Clinton, and even though she lost the election noted she had won the popular vote.  As Colbert continued to criticize the President, his audience grew.  Soon, Colbert was beating Fallon in total audience – something nobody predicted just a few months earlier.  It was quite a surprise when the 2016-2017 September to May season drew to a close and it was discovered that Colbert actually won the time slot, producing a larger total audience than Fallon.  It was only about 20,000 – but it was a win few saw coming.

The Late Show writers and producers noted the historic and growing unpopularity of President Trump, and the public interest in ongoing investigations, and built the headlines into the show.  Variety headlined on 7/25/17 “Stephen Colbert’s Russia Week Lofts Late Show to Biggest Weekly Win Ever.”  Using audience trends The Late Showdevoted a week to a comical look at Russia, which saw it generate a 2.87million total audience in comparison to The Tonight Show‘s 2.42million – a beat of a whopping 450,000 viewers.

late show hillary 2017 CBS
Photo: CBS
Continuing to evaluate what interested the public, producers brought on losing candidate Hillary Clinton, long supported by the show, to create Colbert’s largest audience since launch.  The next night they brought on President Trump’s former Communications Director, Republican and Trump supporter Anthony Scaramucci, to an even bigger audience.  By August 4 Colbert bested Fallon by 900,000 viewers for its biggest weekly win ever, and Colbert was clearly the summer winner with an audience growing at 11% while competitors were losing viewers.

All of this is very good news for CBS.

NBC (NBC/Universal is a division of Comcast) is not losing money on The Tonight Show.  And in the desirable segment of those age 18-49 Fallon still has the largest audience.  But, it is a good thing for CBS to have so many new viewers.  It brings in more advertisers, and higher revenues for each ad.   This leads to more profits.

One might say that this is all about the hosts, and their political leanings.  Maybe the content is driven by host opinions.  But CBS is winning viewers because it is following trends, and matching its programming to trends.  This is growing its late night audience, while NBC’s is shrinking.

Steve Burke, chief executive of NBC Universal was quoted in the New York Times saying “I think the answer is for Jimmy to be Jimmy.”  Sounds like what a father might say about his son when the boy finds himself in a rough patch.  But I’m not so sure its the position a company CEO should take regarding a very expensive employee in the lead of a major project.

Maybe NBC’s producers should spend more time looking at trends, and figuring out how to program content that will improve The Tonight Show‘s competitiveness.  The show was upended in just one year.  What will total audience look like next May when the 2017-2018 season ends?  Will revenues and profits be unaffected if NBC’s audience keeps falling while CBS’s keeps growing?

For the rest of us, the lesson should be clear.  Nobody is relegated to always being #2.  Regardless the leader’s size, if you study trends and figure out how to leverage them you can grow, and you can become #1.

 Understanding trends and applying them to your business is the best way to invigorate growth and improve your competitiveness.

I'd like to receive newsletters.

‘Pokémon GO’ – How Nintendo Beat Microsoft and Sony With an End Run

‘Pokémon GO’ – How Nintendo Beat Microsoft and Sony With an End Run

Poke’Mon Go is a new sensation.  Just launched on July 6, the app is already the #1 app in the world – and it isn’t even available in most countries.  In less than 2 weeks, from a standing start, Nintendo’s new app is more popular than both Facebook and Snapchat.  Based on this success, Nintendo’s equity valuation has jumped 90% in this same short time period.

Poke'Mon GoSome think this is just a fad, after all it is just 2 weeks old.  Candy Crush came along and it seemed really popular.  But after initial growth its user base stalled and the valuation fell by about 50% as growth in users, time on app and income all fell short of expectations. And, isn’t the world of gaming dominated by the likes of Sony and Microsoft?

A bit of history

Nintendo launched the Wii in 2006 and it was a sensation.  Gamers could do things not previously possible.  Unit sales exceeded 20m units/year for 2006 through 2009.  But Sony (PS4) and Microsoft (Xbox) both powered up their game consoles and started taking share from Nintendo.  By 2011 Nintendo sale were down to 11.6m units, and in 2012 sales were off another 50%.  The Wii console was losing relevance as competitors thrived.

Sony and Microsoft both invested heavily in their competition.  Even though both were unprofitable at the business, neither was ready to concede the market.  In fall, 2014 Microsoft raised the competitive ante, spending $2.5B to buy the maker of popular game Minecraft.  Nintendo was becoming a market afterthought.

Meanwhile, back in 2009 Nintendo had 70% of the handheld gaming market with its 3DS product.  But people started carrying the more versatile smartphones that could talk, text, email, execute endless apps and even had a lot of games – like Tetrus. The market for handheld games pretty much disappeared, dealing Nintendo another blow.

Competitor strategic errors

Fortunately, the bitter “fight to the death” war between Sony and Microsoft kept both focused on their historical game console business.  Both kept investing in making the consoles more powerful, with more features, supporting more intense, lifelike games.  Microsoft went so far as to implement in Windows 10 the capability for games to be played on Xbox and PCs, even though the PC gaming market had not grown in years.  These massive investments were intended to defend their installed base of users, and extend the platform to attract new growth to the traditional, nearly 4 decade old market of game consoles that extends all the way back to Atari.

Both companies did little to address the growing market for mobile gaming.  The limited power of mobile devices, and the small screens and poor sound systems made mobile seem like a poor platform for “serious gaming.” While game apps did come out, these were seen as extremely limited and poor quality, not at all competitive to the Sony or Microsoft products.  Yes, theoretically Windows 10 would make gaming possible on a Microsoft phone.  But the company was not putting investment there.  Mobile gaming was simply not serious, and not of interest to the two Goliaths slugging it out for market share.

Building on trends makes all the difference

Back in 2014 I recognized that the console gladiator war was not good for either big company, and recommended Microsoft exit the market.  Possibly seeing if Nintendo would take the business in order to remove the cash drain and distraction from Microsoft.  Fortunately for Nintendo, that did not happen.

Nintendo observed the ongoing growth in mobile gaming.  While Candy Crush may have been a game ignored by serious gamers, it nonetheless developed a big market of users who loved the product.  Clearly this demonstrated there was an under-served market for mobile gaming.  The mobile trend was real, and it’s gaming needs were unmet.

Simultaneously Nintendo recognized the trend to social.  People wanted to play games with other people.  And, if possible, the game could bring people together.  Even people who don’t know each other.  Rather than playing with unseen people located anywhere on the globe, in a pre-organized competition, as console games provided, why not combine the social media elements of connecting with those around you to play a game?  Make it both mobile, and social.  And the basics of Poke’Mon Go were born.

Then, build out the financial model.  Don’t charge to play the game.  But once people are in the game charge for in-game elements to help them be more successful.  Just as Facebook did in its wildly successful social media game Farmville.  The more people enjoyed meeting other people through the game, and the more they played, the more they would buy in-app, or in-game, elements.  The social media aspect would keep them wanting to stay connected, and the game is the tool for remaining connected.  So you use mobile to connect with vastly more people and draw them together, then social to keep them playing – and spending money.

The underserved market is vastly larger than the over-served market

Nintendo recognized that the under-served mobile gaming market is vastly larger than the overserved console market.  Those console gamers have ever more powerful machines, but they are in some ways over-served by all that power.  Games do so much that many people simply don’t want to take the time to learn the games, or invest in playing them sitting in a home or office.  For many people who never became serious gaming hobbyists, the learning and intensity of serious gaming simply left them with little interest.

But almost everyone has a mobile phone.  And almost everyone does some form of social media.  And almost everyone enjoys a good game.  Give them the right game, built on trends, to catch their attention and the number of potential customers is – literally – in the billions.  And all they have to do is download the app.  No expensive up-front cost, not much learning, and lots of fun.  And thus in two weeks you have millions of new users.  Some are traditional gamers.  But many are people who would never be a serious gamer – they don’t want a new console or new complicated game.  People of all ages and backgrounds could become immediate customers.

David can beat Goliath if you use trends

In the Biblical story, smallish David beat the giant Goliath by using a sling.  His new technology allowed him to compete from far enough away that Goliath couldn’t reach David.  And David’s tool allowed for delivering a fatal blow without ever touching the giant.  The trend toward using tools for hunting and fighting allowed the younger, smaller competitor to beat the incumbent giant.

In business trends are just as important.  Any competitor can study trends, see what people want, and then expand their thinking to discover a new way to compete.  Nintendo lost the console war, and there was little value in spending vast sums to compete with Sony and Microsoft toe-to-toe.  Nintendo saw the mobile game market disintegrate as smartphones emerged.  It could have become a footnote in history.

But, instead Nintendo’s leaders built on trends to deliver a product that filled an unmet need – a game that was mobile and social.   By meeting that need Nintendo has avoided direct competition, and found a way to dramatically grow its revenues.  This is a story about how any competitor can succeed, if they learn how to leverage trends to bring out new products for under-served customers, and avoid costly gladiator competition trying to defend and extend past products.