NBA, Intel Capital Launch Sports-Tech Accelerator Program

Intel Capital

Intel Capital and the National Basketball Association have announced plans for a multi-year accelerator program to “advance the cause of startups in the nexus between sports, technology and entertainment” (think: immersive media, smart arenas). The NBA + Intel Capital Emerging Technology Investment Initiative will serve as a launch pad for the companies selected, providing investment capital (largely funded by Intel Capital), IP, opportunities for commercial collaboration and global reach. The program will consider sports-tech companies from anywhere in the world, at all investment stages; though, it intends to focus on U.S. based businesses raising Seed and Series A rounds. The announcement comes less than a month after Intel announced it would be shuttering its consumer wearables business (think: fitness trackers).

Howie Long-Short: We’re witnessing a trend of sports league/teams launching accelerator/venture programs. In January, the Dodgers announced they would be expanding their investment arm, introducing a “venture studio” with R/GA; and then in February, Harris Blitzer Sports & Entertainment, Creative Artists Agency and the San Francisco 49ers announced the launch of Elevate Sports Ventures. Elevate CEO Al Guido told us there’s a simple explanation as to why teams/leagues are first now entering the venture capital space; historically speaking, “sports teams (and leagues) didn’t recognize the power of their brand and what it meant.” They sure do now.

The new initiative will be funded by Intel Corporation’s (INTC) global investment arm, Intel Capital; which has fund 1500+ companies, including VenueNext, Peloton Technologies and DocuSign (just went public, DOCU).

In late April, INTC reported Q1 ’18 earnings (+32% YoY to $.87/share) and revenue (+9% YoY to $16.07 billion) figures that beat analyst expectations; with the company’s data-centric businesses (AI, cloud, data centers and IoT, 2nd largest segment of business) reporting the largest (+24% YoY to $5.2 billion, all-time high 49% of company revenue) and most rapid growth (+20% from trailing quarter). As CFO Bob Swan explained, “our Q1 results demonstrated continued momentum in our transformation from a PC-centric company to a data-centric company.” The company also raised FY18 revenue guidance by $2.5 billion to $67.5 billion. It’s worth pointing out that shares up are up 17.7% YTD ($54.34).

Fan Marino: Intel and the NBA have some familiarity with one another, as INTC currently serves as the league’s “exclusive provider of virtual reality content” (Intel True VR technology) and provides 360-degree video (for unique in-arena game views) to NBA broadcast partners around the world. Last month, the company also became one of the first two “Official Partners” of the NBA 2K League, agreeing to serve as the “Official Technology Provider” of the upstart esports league.

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102 Gamers Selected During Inaugural NBA 2K League Draft

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The NBA 2K League held its inaugural draft on Wednesday, at the Hulu Theatre at Madison Square Garden. 102 gamers were selected by the league’s 17 participating franchises, with NBA Commissioner Adam Silver introducing the 1st overall selection; Artreyo “Dimez” Boyd, selected by Mavs Gaming. First round selections will sign 6-month contracts worth $35,000, with the balance of the league’s players taking home a base salary of $32,000 annually. All players will receive room and board, medical insurance and a retirement plan. The teams, each consisting of 6 players, will compete for their share of $1 million prize pool. Game locations, the number of games to be played and the number of teams that will qualify for the playoffs, are among the details that still need to be worked out.

Howie Long-Short: The NBA 2K League is a collaboration between the NBA and Take Two Interactive (TTWO), the publisher of NBA 2K franchise. The company’s Q3 ’18 earnings report was highlighted by a reported +64% YoY increase in recurrent consumer spending (32% of total net revenue) and an 8% increase (to $258.4 million) in digitally delivered net revenue (54% of total net revenue). It’s expected that the increased exposure generated by the 2K League will increase both recurrent spending on the game and game sales in fiscal 2019. It should be noted that NBA 2K was the 2nd best-selling video game of 2017 in U.S.

Earlier this week, the NBA 2K League named Dell (DVMT) and Intel (INTC) as its first 2 Official Partners. Dell’s Alienware gaming PCs, powered by Intel processors, will be the exclusive machines used in competition. Both companies reported record Q4 ‘17 revenue. DVMT was +9% YoY to $21.9 billion, while INTC was +8% YoY (excluding McAfee) to $17.1 billion. Record holiday season sales for gaming products was among Dell’s quarterly highlights.

Fun Fact: NBA owners have taken the biggest leap into the esports space (projected to approach $1 billion in revenue this year), with 13 ownership teams having invested in or acquired teams. For comparison purposes, just 6 MLB ownership groups and 3 NFL owners maintain an equity interest in a competitive gaming franchise.

Fan Marino: 0 of the 102 gamers that made up the league’s inaugural draft eligible player pool, were female. While a bad look, it certainly wasn’t a conscious one by the league. Tryouts were open and gamers were not asked to disclose their sex until after the combine. Commissioner Silver said that the league has launched an initiative focused on the recruitment and development of female gamers; they’ll also work to gain an understanding of gender disparities in competitive gaming (just 1 female finished among the combine’s Top 250 performers).

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Nike Paying $1 Billion to be the NBA’s Official Uniform Supplier, Stars Covering Up Swoosh

Nike became the official supplier of NBA uniforms this season, having agreed to pay $1 billion over the next 8 years for the right to place their company logo on team jerseys, shorts and socks; but the partnership has gotten off to a rocky start. The new jerseys have been tearing and stars Steph Curry and James Harden, who represent competing sneaker companies, have gone out their way to avoid having the Nike logo visible near their shoes; rolling or cutting down their socks to protect their lucrative endorsement contracts. Unfortunately for Nike, nothing in the NBA’s operations manual prohibits a player from wearing team issued socks as they please.

Howie Long-Short: While Nike (NKE) can’t be pleased, they signed this deal to put their swoosh on jerseys; not socks. Adidas was the league’s previous official uniform supplier and their contract didn’t even include socks (Stance was the league’s supplier during the ’16 season). ADDYY held their earning call on Thursday and while the news was overwhelmingly positive, the company did note that the loss of the NBA jersey contract has hurt basketball revenue sales. In this case, their loss is NKE’s gain.

Fan Marino: Want to get a good look at Curry’s (or Harden’s) newest player exclusive? Strap on your Samsung GearVR or Google Daydream headset and pull up a courtside seat to the game. Intel (INTC) has announced a partnership with Turner Sports (TWX) that will enable the company to broadcast select NBA on TNT games using TrueVR technology; beginning with the 2018 All-Star game. Users will be able to choose their camera angle (including courtside) and freeze and watch highlights in 360 degrees.

Nike paid the NBA $1 billion to use its uniforms, and 2 of the NBA’s biggest stars are hiding the swoosh

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MLB PARTNERS WITH INTEL TO OFFER FREE OUT-OF-MARKET VR BROADCAST WEEKLY

MLB offers fans a free weekly (Tuesday evenings) out-of-market virtual reality broadcast, powered by Intel (INTC) True VR. Using the Intel True VR App fans can control the broadcast POV, get access to postgame highlights and on demand replays of each game. To watch the VR steams, you’ll need a Samsung (KRX: 005930) phone, a Gear VR headset and to download the VR app from the Oculus (FB) app store. Curiosity is driving viewers for short windows of time, but the challenge ahead for MLB is figuring out how to keep that viewer tuned in for a 3-hour game.

Howie Long-Short: When Intel was looking for a VR partner, they were looking for 3 things. Defensible IP, scalability and the ability to stream its feed into a two-dimensional screen as well as to head-mounted goggles. It found its match in Voke VR. Intel lead their $12.5 million Series A round in March ’16, before acquiring the company in November 2016.

Fan Marino: True VR offers views down the first base line, from the right field corner and behind home plate, but the most popular views thus far have been the dugout views. That doesn’t surprise me. It’s a chance for fans to get “behind the scenes”, without the content being scrubbed first (i.e. Hard Knocks).

Virtual Reality Reaches The Big Leagues With Intel

NFL EMBRACES DIGITAL HEALTH AND ATHLETIC PERFORMANCE TECHNOLOGY

The NFL is getting smarter, as its teams and players embrace the recent explosion in digital health & athletic performance applications. Here at JWS, we look to put the companies (that you can invest in) behind those applications on your radar.

Zebra Technologies (ZBRA); Catapult (ASX:CAT) – Both companies track the movement of players during games, providing next generation stats based on location, speed and acceleration. ZBRA places radio frequency identification tags on each player and receivers around a stadium, then triangulates the position of the tags. CAT uses GPS and accelerometers to determine location and movement.

Sparta Science – Strength tool used to measure the force a player applies to a plate in the ground as he jumps (i.e. the push off). Qualcomm Ventures (QCOM) is among their investors.

STRIVR – Developed a virtual reality system that runs players through practice reps. BMW (ETR: BMW) i venture is among their investors.

Kinduct – Intel (INTC) backed data management company, that converts data into actionable insights; recently partnered with Zebra Technologies.

Howie Long-Short: The NFL has its own private equity arm, 32 Equity. The firms most recent investment was in Blue Star Sports, the Jerry Jones backed sports technology provider. The investment capital will be used to fuel technology acquisitions that enhance the youth sports experience and foster youth sports participation.

Fan Marino: STRIVR was developed at Stanford and first used by David Shaw’s team during the 2014 season. Kevin Hogan was the first QB to use the technology. If you’ve never seen STRIVR in action, check out this 30 second clip!

NFL Technology: What’s New for the 2017 Season

INTEL: SIGNS 7 YEAR DEAL WITH IOC TO PROVIDE EMERGING TECH FOR GAMES

Intel (INTC) has agreed on a 7 year deal with International Olympic Committee, to provide emerging technology solutions including: True VR, 3D & 360 video content, AI, drone light show tech and 5G mobile platforms, for the Olympic Games, beginning in 2020. The deal has an estimated value of $400 Million.

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Intel Will Work with the IOC to Reimagine the Future of the Olympic Games with New Levels of Fan Interaction Through Leading-Edge Technology

Howie Long-Short opines: I don’t buy this price tag. Long way to go for 5G mobility to be a reality. I’m intrigued to see if they can make VR work though.

Fan Marino says: I found it difficult to watch a 2 hour basketball game in True VR, during March Madness. Short Olympic events (think: track & field & swimming) would seem to be best suited for head-set wearing required technology. Once the head-set is on though, you feel like you are in the front row.