Finding a Niche: The Key to Digital Sports Start-Ups

A blog post on BusinessInsider.com caught my attention last year, and it's been sitting around my bookmarks since then.

"It's Time To Knock Down The Barriers To Digital Sports Startups" says Brian Litvack, who goes on to discuss the lacking start-up ecosystem in the sports world. He points to reasons such as the dominance of the big media players like ESPN and Yahoo, fickle audiences with constant high expectations, the difficulties of obtaining official team sponsorships, and the challenges of the typical advertising models for sustaining early-stage web start-ups.

Litvack calls upon the major sports leagues to help change this: "It would be interesting to see the NBA, NFL, or MLBAM develop a program to support and work with digital companies to enhance the sports fan experience. Creating a more favorable environment would be welcome by the tech community as there's no shortage of ideas, sports-crazed entrepreneurs, and potential in sports."

Of course that would be ideal, and seems like a win-win which would allow sports start-ups to see greater opportunities, and more engaged fans for the sports leagues. But calling upon established players like those to change is generally futile. While within those organizations, innovative spirit certainly lives - specifically with MLB Advanced Media and some its work - there probably isn't much hope of a wish like Litvack's coming to fruition.

This doesn't have to be doom and gloom for digital sports start-ups, though. While these barriers are certainly problematic, their impact is probably far bigger on start-ups attempting to cater to majorities, rather than those catering to niches. And if it's majorities a start-up is after, perhaps this isn't the space they should be entering (at first). As Litvack points out, the major players like ESPN, Yahoo and the league's themselves have saturated those markets pretty well.

Rather, it may very well be those niche start-ups that have the most potential in the current digital sports ecosystem. As popular as the likes of ESPN are, their popularity requires that they cater to a middle-ground of fans, leaving unmet needs of specific groups that don't fit in. Often, that's the die-hard fans. And the great thing about die-hard fans is that they're far more likely to spend to get their fix than the general consumer. That means advertising models don't necessarily need to be the default.

One of my favourite examples - as a self-described baseball nut - is Ottoneu. Ottoneu is a fantasy baseball game for the die-hard fan. The game is played "dynasty" style, allowing it to be enjoyed year round, with deep teams full of minor league prospects, and scoring is based off of "advanced statistics", known to be more accurate at judging a player's real value than those like RBIs and runs scored.

That may not tickle the interest of most, who are more than pleased to enjoy the fantasy games offered by ESPN and Yahoo. But for those looking for more, Ottoneu has that solution.

Better yet, they've perfectly identified their method of reaching that market, pairing with FanGraphs - one of the industry leaders in advanced baseball analysis, research and commentary - for their launch this past year.

Without a user base likely large enough to support sustainability through advertising, Ottoneu has logically been using a subscription model, charging as little as $9.99 for the full-year, per team. With the niche market salivating something different than the mainstream offerings, Ottoneu has seemingly had little trouble getting potential customers to spend.

Ottoneu is a classic example of the opportunities that do exist in the digital sports start-up landscape, despite the obvious challenges and barriers that are there. Hopefully I'll get a chance to chat a bit with Ottoneu's founder, Niv, who has always been open to discussing his business, about the results he's seen in the first year of Ottoneu and what his plans are going forward. It's a niche market, for sure, but like any start-up, a great product always has the chance to capture more attention or expand into more directions than it imagined.

If anyone has other examples of digital sports start-ups succeeding in a niche, or even finding surprisingly strong results reaching larger markets, I'd love to hear about them over Twitter or in the comments section.

Welcome to Sport-Ups!

As you might expect from someone who just started a blog, I sort of like words. I'm a fan of them, you could even say. Like anything else, I even have my favourites. Here's two of them: sports and innovation.

Nothing too shocking. I mean, sports - how could you not like them? (Oh, I also like hyphens, as you may learn if you read this blog frequently.) Sports are pretty great. For the most part, they're completely insignificant. 20-or-so random men from around the world get grouped together to represent certain cities or states against groups representing others. They play, we cheer, we cry, we study, we obsess, we rant, we applaud, and we dream. Many psychologists and sociologists could carve out careers trying to figure out what it is about sports that put them at the centre of our hearts and minds. But there they are, in one form or another, keeping us distracted from the other perils of life for hours a day. How could anyone not like that?

And how would any of that be without innovation? If someone hadn't decided to throw a ball in a hoop, or invented the radio or the TV...  it's sort of scary even to think about.

Of course, innovation has given us a lot more than better ways to enjoy sports. We've seen medical breakthroughs, scientific discoveries, easier access to seeing the world, and simpler ways to live our every day lives.

The word "innovation" strikes me so much that I even decided to pursue an education in it. After finishing my Bachelors of Business Administration, I completed a Masters of Business, Entrepreneurship and Technology program from the University of Waterloo - easily one of Canada's most innovative institutions. The program offered me a chance to gain some expertise in the way these innovations come to life.Whether it's established companies remaining on the cutting edge or start-up ventures seeking there chance to change the world, there are few things I find more captivating than the entrepreneurial spirit.

Sport-Ups is the intersection of these worlds.

I plan to discuss a bunch of things in this space, from new product launches by the major sports players to new ventures from those hoping to wind up competing with them. Once in a while, I may even use this blog to rant about something else that's stuck on my mind in the sports or business world.

I also hope to get to know others with the same passions that I have and those hoping to become a part of this world. The easiest way to get in touch is probably through Twitter, and you can find me through the side bar on the right.

For now though, I'm going to pull-up Rogers on Demand Online for a live HD stream of today's Toronto Blue Jays game. Thank you, innovation!