II New ideas

Chapter 9

Impact of digital technology on optimizing organizational and social dynamics of the sport industry in China

Liangjun Zhou, Linyan Wang and John Breedlove


The world is undergoing a fourth revolution - technological revolution - that is unprecedented in its scale, speed, and complexity (Department for Business Energy and Industrial Strategy, 2017). The rapid popularization of digital technologies has propelled human society into the digital era. Researchers predict that approximately seven billion people will be able to use high-speed Internet by 2020 (Cui, 2019). This fourth revolution has had a dramatic impact on politics, the economy, society, culture, and life itself (Huang & Chen, 2019).

The rapid development of Internet technology has promoted explosive growth of data. Data has been called “digital black gold", and it has become an essential element in promoting economic and social development (Li, 2018). Business managers and researchers anticipate that a major benefit of artificial intelligence (AI) and “big data” will be sendee innovations that create new value propositions (Hartmann, Zaki, Feldmann, &. Neely, 2016; Huang &. Rust, 2018; Mayer- Schonberger & Cukier, 2013). In addition, many communities will benefit from the transition to digital environments through increased convenience and universal access to information. For example, the ET City Brain for Hangzhou has enabled police to reduce the average traffic accident response times from 15 minutes down to three minutes (Goldman Sachs Equity Research, 2017).

Digital technology is no longer merely a part of everyday routine; it is essential to young people’s existence. Children now become “fluent in the digital language of computers, video games, and the internet” (Prensky, 2005). Mimi Ito et al. (2008) and colleagues reasoned that young people’s technology use is best seen as a media “ecology” where “more traditional media, such as books, television, and radio, are ‘converging’ with digital media, specifically interactive media and media for social communication”. Moreover, digital technologies play a significant part in almost every organization (Setia, Venkatesh, Stjoglekar, 2013). These technologies enable cooperation amongst firms, information storage and analysis, improve customer service performance (Ray, Muhanna, &. Barney, 2005), and enhance the ability to accomplish service convenience (Eisenhardt &. Martin, 2000; Pavlou &. El Sawy, 2006; Teece, Pisano, &. Shuen, 1997). Organizations are facing a crisis of immediacy as they attempt to meet customers’ needs for content, expertise, and personalized solutions in real time (Parise, Guinan, &. Kafka, 2016). Business managers and researchers must rethink theory and practice to accommodate the digital era’s increasing complexity, information availability, frequent interactions, and speed of transactions (Wedel &. Kannan, 2016).

Digital technologies can provide a highly personalized and immersive environment that allows for interactivity and rich information exchange (Parise et al., 2016). Organizations can adopt innovative digital technologies, such as mobile, virtual reality (VR), blockchains, AI, wearable technologies, neuroscience, business process automation, and machine-to-machine interactions. Without this integration, organizations face many customer-experience challenges in both business-to-consumer (B2C) and business-to-business (B2B) markets. Predictions abound about the demise of brick-and-mortar stores, how customers will spend more time in VR, and robots replacing service employees (Huang & Rust, 2018).

In 2011, the global sports industry was valued between €350 billion and €450 billion (A.T., 2011), and the industry has continued to grow. Digital technology in the sports industry has been intrinsically involved in the development of sports events, not only to expand the communication potential of events but also to increase revenue potential through sponsorships and advertisements (Petrovic, Milovanovic, & Desbordes, 2015). In November 2017, the Australian Sports Commission released their Digital Vision to better understand how technology was impacting the Australian Sports Industry and how the industry needed to respond as a government initiative to support the digital transformation.

New businesses now emerge based on the behaviors and preferences of consumers (think Uber, Netflix, Amazon, and E-Sports). A new report by Tata Communications, examining the commercial transformation of sports, identifies 2019 as a tipping point for the global sports industry. Digital technology innovation is set to kick-start a new era of commercial growth for broadcasters, rights holders, and sport organizations (Digital tech innovation to kick-start new era of commercial growth for sports industry: Report, 2019).

The digital adaptation of sport venues offers new possibilities for ticketing, merchandising, and cross-selling. Sport has been used to help market technical innovations that have no direct connection to the sports world. Examples include the mobile broadcasting of the 2006 FIFA World Cup, the athletics World Championships of 2009 in HD, and the 3D live broadcasts of the 2010 FIFA World Cup. The digital environment presents opportunities for advanced new forms of depiction and interaction for sport (Hebbel-Seeger, 2012).

Digital marketing has truly changed the way sport is consumed. Digital marketing encompasses modern marketing techniques used online such as Social Media, Blogging, Search Engine Optimization (SEO), Pay per Click Management (PPC), Branding, Content Marketing, Video Marketing and App creation. Due to the rapid increase of internet use, some consumer behavior studies have focused on sport fan behaviors on websites (Ahn, Hong, & Peterson, 2014;

Carlson & O’Cass, 2012; Dwyer & Kim, 2011; Filo, Funk & Hornby, 2009; Hur, Ко, &. Valacich, 2007, 2011; Hur, Ко, & Claussen, 2012; Seo & Green, 2008). The Theory of Reasoned Action (Fishbein &. Ajzen, 1975), Technology Acceptance Model (Davis, 1989), and Sport Website Acceptance Model (Hur et al., 2011,2012) were the most widely used frameworks for investigating the adoption of new technologies in sport.

In order to optimize social and organizational dynamics in the digital era, countries are using network technology to collect, integrate, activate, analyze, and mine massive data. China has the largest number of internet users in the world and is a critical distribution center for big data resources. According to a report released by QuestMobile, the number of apps in the Chinese market has exceeded 4.06 million and the total number of monthly active devices on the Chinese Mobile Internet has been stable at over one billion (Yu, 2019). Digital technology has provided a platform with huge data space and entrepreneurship opportunities (Li, 2018).

Digital technology is deeply embedded in various aspects of life including the transformation and upgrading of traditional industries, social life, and governance. It has become a driving force for the sport industry as well. According to the “2017 Internet Sports Consumption Report” released by JD and Nielsen, the consumption of internet sports goods in China increased each year from 2014 to 2016, and the per capita annual consumption nearly doubled from 2014 to 2016. In 2016, revenues reached nearly 200 billion yuan. Even with this recent growth, the per capita sports consumption in China is only one tenth of the global average, suggesting that there is considerable future growth potential.

Review of literature Digital technology

Urbinati, Chiaroni, Chiesa, and Frattini (2018) identified Big Data, Internet of Things, Cloud Computing, Virtual Reality, Artificial Intelligence, and Cyber- Physical Systems as the digital technology used in innovation. Fitzgerald, Krus- chwitz, Bonnet, and Welch (2014) defined digital technology as social media, mobile, analytics, or embedded devices. In this chapter, several of these important technologies are chosen as examples.

Big data resources are characterized by massive heterogeneity, fast access speed, and high potential application value. The role of big data in social governance can be specifically described as connection, dissemination, empowerment, aggregation, collaboration, poverty alleviation, and crowdfunding on the basis of data integration applications. Each of these resources can help to improve people’s livelihood. The application of big data resources is a combination of technology and management. In the big data scenario, the data resources have intelligent attributes through machine learning and artificial intelligence. The smart data industry has become an effective way for society and enterprises to improve the level of big data management and analysis (Li, 2018). Van Bommel, Edelman, and Ungerman (2014) found that virtual environments, the ubiquity of big data, and digital channels changed the consumer decision journey. Van Bommel et al. (2014) also remarked that companies not only need to capture data but should also use sophisticated analytics in order to interpret the data. For example, in marketing algorithms model costs determine the efficiency of a new campaign and identify new customer segments.

Social media has a global reach and includes communities/social networking sites (e.g., Facebook), (micro) blogs (e.g., Twitter), and media-sharing sites (e.g., Instagram). One-quarter of the world’s population uses these platforms. Facebook alone had roughly two billion users in 2017 (Facebook, 2017). Social media provides an ideal platform to enhance the consumer experience in both the sport and entertainment industries. Fans are no longer distant consumers but wish to participate in the media discourse and have direct access to clubs, players, and media (Chadwick, 2012). In addition to Facebook and Twitter, some clubs also have official Instagram and Snapchat accounts. Some clubs cater to the Chinese market by using Tencent, WeChat, and Sina Weibo, while others cater to the Russian market via VKontakte (Fleischmann, A. C. &. Fleischmann, M., 2019). Each of these platforms allows clubs to engage with their fans by encouraging them to like or comment on their clubs’ activities (Anagnostopoulos, Parganas, Chadwick, & Fenton, 2018). Organizations that have worked with a clear international strategy, enabled by digital technology, have amassed followers in the multimillions. Social media also enables innovative connections between fans and the athletes. For example, NASCAR is developing a “digital cockpit” that includes onboard telemetry and in-race social media interaction between fans and drivers. NBA players have posted music parody videos on YouTube that are a hit among younger fans. Whether it is exclusive content or live updates during a sport event, fans are taken in by the power of sport through social media.

The global phenomenon, E-Sports, is a popular new method for generating international value (Kay, 2016). This new enterprise has emerged due to the behaviors and preferences of sport consumers. The competition structure, titles, rules, and standards of E-Sports can be compared to the boxing world (Salice, 2010). The integration of virtual world competition with communication methods from conventional sporting events while presenting to live spectators is a significant technological achievement. Examples of VR-integrated events include the Paris-Dakar Rally and the Volvo Ocean Race. The acceptance of virtualized sport competitions leads to other forms of integration. During the German sailing event KielerWoche in 2009, the software Virtual Skipper became the first virtual boat class to be integrated into a real sailing regatta (Lampert, Schwinge, & Tolks, 2009). In these virtual competitions, the performance of the virtual athletes is reliant on the condition of training developed within the digital sports arena. This serves as a means of exchange of communication for the user. Many young people prefer computer interaction over physical participation in sport, including millen- nials who strongly prefer their favorite E-Sports over traditional sports.

Virtual Reality is a computer-generated environment that mimics physical reality. VR relies on a three-dimensional (3D), 360-degree view of a graphical environment. VR technology has already allowed practitioners in various fields to innovate and it is starting to play an important role in sports. VR helps athletes train, visualize competitive environments, and even rehabilitate after injury (Fitzgerald et al., 2007; Miles, Pop, Watt, Lawrence, & John, 2012). The novelty of VR might affect the perceived prestige and distinctiveness of an organization. According to XOS Digital (2016), VR can help organizations increase sponsorship dollars, impress important shareholders, improve fan engagement, and promote viral sharing. In addition, VR can benefit advertisers and enhance customer relationship management.

Virtual Reality can deepen the ties between fans and organizations by offering new ways to deliver information and event footage. For example, VR avatar marketing has great potential for selling goods and services, and VR is quietly being used by brands such as Adidas and Jeep Commander. VR technology, as a highly digitized medium for accessing information, can improve the experience of sport fans by allowing them to enjoy game content in a near-real environment rather than physically attending (Hemp, 2006). In 2014, VR was no longer considered a niche product (Cooley, 2014). In 2015, Live Like VR planned to launch an app to enable friends to watch games together at the same time without actually being together (Gaudiosi, 2015). More recently, on YouTube channels, professional and collegiate teams have posted VR footage of practices and highlights of games. Atlantic Coast Conference (ACC) fans get to experience football and basketball in VR with an app (Rettig, 2017).

Smart technology is another modern digital technology that has begun to expand frontline service interactions in both B2B and B2C contexts (Marinova, De Ruyter, Huang, Meuter, &. Challagalla, 2016). Smart technologies have significant advantages over the computer-based internet because they allow users to access sport information quickly using smartphone-specific features and obtain various sport information while on the move. Smart technologies can help sport organizations create numerous sponsorship opportunities, serve as a tool to enhance fan’s experience and engagement, serve as a market research tool with the capability of collecting information from users, and play a critical role in globalizing sport (Ha, Kang, & Kim, 2017).

Smartphones have become one of the most important mediums for increasing sport fan engagement. According to a sport consumption survey, about 50% of fans rely on their smartphones as a primary means of accessing various online sports content and videos (Burst Media, 2012). This rapid growth of technology has allowed fans to take advantage of smartphone functions to further support their fandom (Ha et al., 2017). Because of the widespread adoption of smartphones among fans, mobile services have become a crucial component of sport marketing strategies (Digital tech innovation to kick-start new era of commercial growth for sports industry: Report, 2019). With various mobile functions that are capable of facilitating fans both in and outside of stadium, sport organizations are implementing mobile marketing campaigns to better communicate with fans. Modern mobile marketing campaigns are often designed to facilitate game day experience and to encourage fan engagement with the team/organization (Ha et al., 2017). Approximately 70% of fans bring a mobile device to the stadium or arena and expect to use it during a game. Fans can use mobile applications for check-in, finding their seats, cashless commerce, and even finding the shortest bathroom and/or concession lines.

Organizational dynamics

As more and more companies choose to go digital and a critical mass is reached, a ripple effect is taking place that is changing the competitive dynamic and altering the commercial ecosystem. Manyika et al. (2015) and Yoo, Henfridsson, and Lyytinen (2010) found that digitalization is a disruptor, but it also opens up rigid barriers that lead to new opportunities. They state that digitalization allows companies to increase operation efficiency, broaden their innovation efforts, and better allocate their resources. Companies that had 50% or more of their revenues from digital ecosystems saw 32% higher revenue growth and 27% higher profit margins than their industry averages. As they prepare for growing digital disruption, companies have two major decisions to make. First, they need to decide the extent to which they want to try to control the value chain or become part of a more complex ecosystem. Second, they need to decide how much they want to invest in knowing their end customers.

Literature suggests that companies with ecosystem drivers as their dominant business model had the highest margins and growth. Fuentelsaz, Gomez, and Palomas (2009) argued that the implementation of new technology directly affects firm productivity through changes in the production process. Manyika et al. (2015) cover the increase in operational efficiency by showing that companies profit from e-commerce, cost savings, and streamlining of operations. For example, the digital retail giant Amazon uses advanced algorithms to present customers related products based on predictive computations and uses dynamic pricing in order to increase sales and profit (Chen, Mislove, & Wilson, 2016). Furthermore, retail banks use automated digital systems to increase paperless workflow and cut costs (Gordon, Deighton, Ullrich, &. Marcu, 2013).

New digital technologies gain ground quickly and change the economic landscape. Traditional companies which are typically less flexible are challenged by rapidly moving digital technologies that permeate industry standards. A new hypercompetitive world fueled by digital transformation offers smaller businesses new opportunities since the barriers to entry are lower than ever. Small businesses have fewer constraints, are typically more innovative, and are unburdened by outdated legacy systems (Manyika et al., 2015). According to a study conducted by Dobbs et al. (2015), firm profits for idea-intensive sectors are rising, especially leading firms in sectors with a higher average digital maturity are gaining market shares. With the help of sophisticated IT applications and systems, there are no limitations for improving workflow, streamlining operations, and cost reductions (Manyika et ah, 2015). Real-time data on inventory and forecasts of demand, computed by predictive algorithms, help companies to decrease mismatches between the two and mitigate both stock-outs and excess ordering. Advanced software helps designers and engineers to use fewer raw materials and arrive at a leaner production approach (Wroblewski, 2018).

Technological skills and competence are important resources required for the innovation process (Freel, 2005; Renko, Carsrud, &. Brannback, 2009). It is implied that firms which are committed to embracing digital technologies are more likely to develop innovative digital solutions that improve their organizational performance. Boss, Malladi, Quan, Legregni, and Hall (2007) highlighted how companies can use cloud computing to quickly develop, test, and introduce innovations to the user community due to faster deployment cycles of new products and services. Westerman, Calmejane, Bonnet, Ferraris, and McAfee (2011) found that profitability and revenue generation are higher for firms with average digital innovation values. This evidence suggests that no matter how well technology has been deployed within an organization, its usage and services still need to be managed effectively (Lu & Ramamurthy, 2011).

Digital innovation can translate digital orientation and digital capability into better organizational performance. Gatignon and Xuereb (1997) note that a firm wishing to develop an innovation superior to the competition must have a strong technological orientation. They define technology orientation as a firm’s commitment to the application of new technology and responsiveness toward technological changes. Firms should be orientated toward embracing digital technologies and transforming them into innovative digital solutions. Teece (2013) explained that the Dynamic Capability Approach provides organizations with a coherent framework for developing and managing capabilities in a way that will build a competitive advantage. Dynamic capabilities are defined as “the subset of com- petence/capabilities, which allow the firm to create new products and processes, and respond to changing market circumstances” (Teece et al., 1997).

The underlying digital strength of a firm must be leveraged into digital innovation that could boost the firm’s performance. The growing importance of digital innovation is conceptualized as innovative digital solutions that enable digital transformation of businesses across industries. Firms should view the digitalization trend in industries as an opportunity and they are encouraged to continuously upgrade their digital capabilities. Digitalization of business firms across industries is enabled by modern digital technologies such as the internet of things, big data analytics, artificial intelligence, and cloud computing. Firms must succeed in embracing transformation through digital technology in order to enable major business improvements, enhance customer experience, and streamline operations. Firms that fail to transform at the same rate as modern technology may face destruction at the hands of their competition (Fitzgerald et al., 2014).

Commercialization is an attempt by a company to profit from innovation by incorporating new technology into products, processes, and services. Successful commercialization hinges on many factors. Generally speaking, companies must be able to do the following: finance new technology ventures; hire and train skilled scientists, engineers, managers, and production workers; protect their innovation from imitators; acquire complementary skills and technologies required to make an innovation useful; and gain market acceptance (OTA, 1995). According to Bughin, Catlin, Hall, and van Zeebroeck (2017) a company’s future success in the digital environment can be partially derived early on in its transformation by analyzing its digital intelligence. To attract and retain digitally capable experts, Lewis, Wright, and Gregory' (2004) suggest that HR professionals develop reward systems congruent with digital culture. As for policymakers, the findings suggest that government agencies should set initiatives for reskilling and upskilling of current workforce, as well as training young generations for future workforce by exposing them to digital education as early as possible. Furthermore, governments should consider increasing funding for digital upskilling of SMEs.

The increased use of technology in sport is largely due to the growing professionalization of sport organizations. This has led to technology being intricately involved in the development of mega sport events, not only for the accommodation of vast numbers of spectators and media viewers hut also for revenue increases through innovative forms of sponsorships and advertisements. Technology is applied for the purposes of communication, online interaction, events monitoring, results display, and software applications.

Social dynamics

Generally speaking, the economy is the fundamental driving force in social development. Modern social dynamics can he divided into three developmental modes: technology, institution, and cultural ethics. The social dynamics of the technical model refers to the interpretation model that advocates modernization. This is promoted by growing innovation technology and emphasizes the role of productivity' in social development. Technological innovation drives the development of productivity and makes it the most active and revolutionary force (Ly'u & Xu, 2014).

In modern societies, there is a desire to reduce material consumption and increase the proportion of intelligence and information. The spiritual production characterized by microelectronics has demonstrated powerful dynamic effects in this regard (Yang, 2000). Furthermore, Manyika et al. (2015) investigate potential future economic growth due to changes induced by the process of digitalization. The internet of things offers great potential to use assets more efficiently and effectively, thus business processes increasingly revolve around data-driven services (Pflaum &. Golzer, 2018). Technological innovation is essential to the future well-being of sport industry. The growing capabilities of competitors around the world continue to challenge the ability of companies to convert the science and technology base into a competitive advantage. Such concerns have prompted much debate about the role of governing bodies in encouraging innovation and the commercialization of emerging technologies.

Innovation is a complicated process through which markets often stimulate development of new technologies including scientific and technical research. Sometimes a new product is not initiated by new science, but instead it is an attempt to meet perceived market needs by drawing on existing technology and the pool of scientific knowledge. This process may be considered demand articulation. Through demand articulation, the need is expressed and then research and development (R&.D) efforts can be targeted towards developing them. In the market-driven paradigm, innovative activity takes the form of a search for the best technology or product to meet the anticipated or expressed need.

Over the years, sports have become deeply embedded in the fabric of society. As sports increase in popularity, there has been a dramatic increase in professionalism and commercialization, which naturally increases the pressure to win. It is this pressure that feeds the need for new technologies that assist athletes in achieving better results. Innovative technology solutions help to fuel new experiences and growth by connecting sports contests, teams, fans, and the broader community. The task of governing bodies is clearly not only to make use of events as showcases but also to ensure there are technological possibilities that convert experiences into long-term participation. This necessitates a new way of thinking for authorities, officials, and organizers. In order to derive value, strategic decisions need to be considered with a view to sustainability - in other words, the extent to which these investments can both improve the quality and experience of the sport events while simultaneously enhancing the potential to achieve future economic, social, and other benefits (Petrovic et al., 2015).

Internet terminals such as smart phones and 4G networks have been widely promoted in China, and netizens in the country have grown tremendously. At the end of 2017, the number of netizens in China reached 772 million. This has become the era of “Internet + sports”. People enjoy using modern digital technology to consume sport events and sport news and also to participate. The use of smart, wearable devices has also increased dramatically. Using smart technology and products to reserve sports venues helps to solve the information asymmetry problem. To a certain extent, it alleviates the low utilization rate of the venue and reduces the time cost for searching the venue. All of these have encouraged people to be more enthusiastic in sport (Huang & Dong, 2018).

Digital technology optimizes the organizational dynamics of sport industry in China

The digital age has continually emerged a variety of sports formats, which are specifically aimed at increasing the number of sport organizations and sport clubs, creating a new sport industry chain, accelerating the cross-border integration of sport organizations, and improving the sport organization’s performance. The new generation of information technology has accelerated virtual convergence (Wang, Liang, & Li, 2018). In the digital age, strategies like cross-industry interaction strategy have been adopted in the sport industry.

Digital technology increases the number of sport organizations and sport clubs

According to Hansen (2004), the competitive advantage of virtual convergence depends on the degree of digitization. Through “data-information sharing-resource optimization-industry transformation”, continuous dynamic optimization of economic and social systems is promoted, cross-industry interaction, integration of production, consumption, social management, and other multi-scenarios are accelerated, and new business models are formed (Wang et al., 2018). Under the background of the rapid development of the mobile Internet, many third-party mobile Internet sports service providers have emerged in cities with more developed sports and leisure industries (Yang, 2015).

The new generation of information technology has accelerated the virtual convergence of different industries, and there have been a large number of outstanding enterprises such as Tencent Sports, Wanda Sports, Evergrande Sports, Country Garden Sports, and Kaisa Sports, which have entered the sports field through other industries. These emerging sports companies have cooperated with other companies to create a new business model. Examples include, Ali Entertainment which has invested U.S.$300 million in Suiting Sports and formed a media matrix with Youku, CCTV5, Qinghai Satellite TV, Carrier Platform, Trnall Box, UC Browser, Taobao Headline, and Alipay.

Digital technology creates a new sport industry chain

In today’s fierce technology-driven competition with Internet of Things and Services, Servitization and Smart Manufacturing/Industry 4.0, companies are developing digital-physical products by adding digital technology to previous non-digital products (Yoo et al., 2010; Porter & Heppelntann, 2015; Ardito, D’Adda, & Messeni, 2017). Digital-physical product development combines traditional product development practices with software development practices (e.g., Broy, 2005; Woodward & Mosterman, 2007; Svahn &. Henfridsson, 2012; Porter &. Heppelmann, 2015; Lwakatare et al., 2016). By utilizing the industrial advantages of the network information industry, the sports products manufacturing industry can develop R&D design level through industrial penetration and form a group of intelligent, mobile wearable sport equipment supplies (Yang, 2015). A good example is the world’s first smart shoe from Digitsole®, which automatically warms or cools your feet by connecting to a mobile application with sensor information (Hendler, 2019). In China, Li Ning and Xiaomi Bracelet jointly launched a new generation of intelligent running shoes (Takungsport, 2015). In 2019, Alibaba and Intel launched a new Al player tracking technology to render athletes in 3D during training or competition, allowing coaches to observe real-time biomechanical data and analyze players’ performance. Networks are planning to use this technology during the broadcast of the 2020 Tokyo Olympics (Ding, 2019).

Sport organizations are planning to build smart stadiums in the not so distant future. Wu Wanpeng, president of Nanjing Wande Group, said that Wande would build a smart stadium by: (1) making the venue more intelligent through sports + technology; (2) making the scene more thematic through cultural creation + brand IP; (3) making the layout more humanized through sport + scientific design; (4) making sport more community-oriented through sport + multi-network coverage (Nanjing Wande Group, 2019).

Digital technology accelerates cross-industry emergence of sport organization

The popularity of digital technology requires two unique characteristics of organizational innovation: convergence and creativity (Yoo, Boland, & Lyytinen, 2012). First, innovation with pervasive digital technology brings together user experiences that were previously separate (Zittrain, 2006, p. 1980). Second, the affordances of pervasive digital technology create convergence because digital technology is increasingly embedded into previously non-digital physical artifacts (Zittrain, 2006, p. 1980). The initial convergence of media and products sets in motion another type of convergence by bringing together previously separate industries (Zittrain, 2006, p. 1980). For example, Ali Sports initiated the road running alliance WORA and created the road running game Wo Run, which closely connected sport games, shopping consumption, fitness, and leisure to form a strong interaction.

Digital channels lower barriers to entry and increase globalization, leading to a spiral of intensifying competition and commoditization. Innovative organizations are taking the opportunity to diversify, bringing cross-industry convergence, and blurring the boundaries between industries. There is an extension of “superbrands”, such as Tesco, Google, or Virgin. Supermarkets now compete with insurance providers, energy companies offer credit cards, and retailers offer energy discounts. In this digital age, economic and social activities based on modern technologies such as “Internet +”, big data, cloud computing, and artificial intelligence are unprecedentedly active. Many leading enterprises such as Baidu, Tencent, Ali, Huawei, and Aerospace Science and Technology have built industrial forests through re-layout and implemented organizational strategy reengineering. These changes are forming a new pattern of corporate vitality through which many cross-industry companies have been established.

Digital technology improves sport organization’s performance

The digital era is evolving so quickly that it is fundamentally transforming the way organizations operate in both the public and private sectors. This evolution requires organizations to develop new ways of thinking about sendee delivery that influence the way operating models are designed. Organizations must integrate the right people into the dynamic organizational context while also helping existing staff to gain digital competency. This balance is necessary in order to drive transformation (The changing role of people management in the digital age, 2016).

With the help of Internet information technology, the sports stadium (arena) has developed an Online-to-Offline (020) service which is convenient for sports users to obtain online booking and offline experiences. The 020 model has become the focus of “Internet + Sports” entrepreneurial innovation. Many third-party mobile Internet sports service providers have emerged in cities with more developed sports and leisure industries (Yang, 2015). For example, the group-based platform launched by Guangzhou City will bring together more than 100 venues. In April 2017, the Suzhou Municipal Government of Jiangsu Province and Ali Sports announced a strategic cooperation. This cooperation aims to combine Suzhou’s overall advantages in competitive sports, national fitness, and sports industries, with resources of Ali Sports in sports games, operations, and marketing, jointly creating a Suzhou model of urban sports solutions (Zhang,


Social media is a critical component of the digital age around which firms should focus engagement strategies. Due to the popularity of social media, sport brands invest significant time and resources to drive engagement (Filo, Lock, &. Karg, 2015). In the United States, 73% of internet users actively engage with social media platforms (Pew Research Center, 2013). In China, WeChat successfully attracted consumers through the social activities of “grab the red envelope” in the Spring Festival of 2014 (Huang, 2018). Of course, different social media platforms allow brands to engage fans in different ways. For instance, Twitter provides a mechanism for real-time updates and interactivity (Hopkins, 2013), while Facebook provides a medium to enrich consumer experiences (Filo et al., 2015). In March 2019, NBA China and Alibaba announced that they would jointly launch a cross-platform, NBA Content Interactive Zone, to connect NBA, Alibaba platforms, business partners, and fan communities. Fans can not only watch the games on social media but also interact through the cross-platform (Zhuang, 2019).

Digital technology optimizes the social dynamics of sport industry in China

The immersive experience brought about by the integration of culture and technology increases the sports population, changes the methods of sport consumption, expands content, and improves the sport consumer’s experience.

Sports technology integration increases the sports population through E-Sports

The sport industry has played an important role in the development of competitive online games. The original sports games were a transfer between traditional sport and digital adaptation. Eventually, the sport industry' model of event organization and operation helped to produce E-Sports, a new format of online gaming competitions. In 2003, E-Sports was officially listed as the 99th sports game in China by the General Administration of Sport (Yang, 2015).

E-Sports is now a global phenomenon. It is reported that more than 350 million people in Asia alone play E-Sports. In 2013, the Information Center of General Administration of Sport in China hosted the National E-Sports Tournament (NEST). In March 2016, Ali Sports founded the WESG (World E-Sports Games). In September 2016, the Ministry of Education in China added E-Sports and E-Sports management under the sports category. In 2017, the sixth International Olympic Committee Summit set E-Sports as a sports game, and E-Sports is included in the 2022 Hangzhou Asian Games as an official competition. In June 2018, Guangzhou Pearl River Sport and Cultural Development Company introduced Netease Company into the Guangzhou Asian Games City Stadium, transforming the squash finals venue into the first professional E-Sports venue in Guangzhou. In August of the same year, Netease held its first official E-Sports game “Over watch Contenders" in the venue.

Participation in E-Sports often leads to participation in physical sports. A study from Electronic Sports League (ESL) found that e-sportsmen are more likely to participate in traditional sports than the average member of the population (Lut- tmann, 2007). The study also showed that 95% e-sportsmen participate in traditional forms of sport, 8.5% are high performance sportsmen, 25% are involved in a sport club, and about 60% work out in a gym.

Sports technology integration changes the methods of sport consumption

The vertical e-commerce website for sport goods is a fusion of information technology and sporting goods sales in the business model of e-commerce. Sport goods sellers made full use of the internet value-added service platform and launched B2C sport goods e-commerce to increase their income in the internet sales channels. Domestic sportswear manufacturers generally open official online stores on Tmall, JD, Amazon, and other well-known domestic e-commerce platforms in China. Both the NBA and the IOC have located their flagship stores in Tmall (Wang, 2018). Consumers worldwide are using the internet for online shopping and payment (Yang, 2015), which suggests a trend towards globalization.

Sports technology integration expands the sport content

The number of people who view sports competitions on traditional TV is declining in most regions, but this does not mean that sports consumption is declining. On the contrary, sports consumption has actually increased due to the accessibility of broader viewing platforms (CUI, 2019). For example, in China, Alibaba uses Youku, Tmall, Taobao, and UC as platforms to play NBA highlights, original theme shows, historical classics, and other content. Alibaba also presents basketball culture trends such as NBA clothing and sneaker culture through short videos, KOL homemade programs, online live broadcasts, and quizzes. Through Ali’s big data network, Ali Sports can fully capture user needs, provide accurate services, and achieve consumption and service upgrades (Lanxiong Sports, 2019).

With the emergence of 5G, content consumption can grow exponentially (CUI, 2019). Ali Sports has revitalized more than 100 sports venues thus far, which have become the consumption entrance for sports retail. Zheng (2017) said that in addition to buying sports tickets, games, competitions, and other sports services, shopping demand is very strong.

A lot of buying behavior is not for use, but for the experience, and the frequency of replacement is very high. For example, we find that women often change swimsuits, and sometimes they buy things as rewards for themselves after exercise.

(Zheng, 2017)

Sports technology integration improves sport consumer’s experience

Digital technologies are changing customer expectations and behavior, the structure of organizations and networks, and the role of humans in the marketplace. The lines between human and machine are becoming blurred (Lemon, 2016). In the digital era, user experience and customer demands have become the reference for product updates. As the cost of information exchange is greatly reduced, consumers pay more attention to the differentiated demand experience, the timeliness of consumption, and the time and delivery cycle (Wang et al., 2018). Today, commoditization has penetrated into all aspects of life and the Chinese consumption concept has changed significantly. Price benefits, quality, differentiation, richness of products and services, and the emotional satisfaction of consumption play important roles in the user’s consumption decisions (Yu, 2019). Fan consumption and sports experience are undergoing wide-ranging changes. Information consumption, along with game attendance and merchandise, is a way to show support for a league, team, or an athlete. Access to team-related statistics, interviews with athletes, business decisions, and practices can impact overall satisfaction in the relationship between consumers and sport organizations (Rynarzewska, 2018).

ESPN, Sports Illustrated, and Bleacher Report are committed to delivering sport information to fans in a timely manner with a rich format. Sport fans have a natural propensity to seek information about their favorite teams and athletes (Tapp & Clowes, 2002). Consumers seek to engage with service organizations that enable superior experiences (Lemon & Verhoef, 2016). The challenges and opportunities facing service organizations are substantial because customer experiences rise at the intersection of the digital, physical, and social realms.

Researchers agree that a customer’s perception of his/her experience is holistic in nature and involves multiple internal, subjective responses to interactions with an organization (Meyer & Schwager, 2007; Schmitt, Brakus, & Zarantonello, 2015).

Digital platforms allow sports fans to create emotional connections with players. Increased direct access to leading sports stars helps fans identify with the big personalities, while simultaneously allowing athletes to access audiences they were previously unable to reach (Digital tech innovation to kick-start new era of commercial growth for sports industry: Report, 2019). The connection between sport stars and fans is becoming more and more direct, which gives the individual sport stars much better channels of communication than traditional media. In this model, the sport star is the owner of the commercial right and even plays the role of the broadcaster (CUI, 2019).

FIFA, FTU, F1NA, World Rugby Federation, NFL, LPGA, Manchester United Club, C Ronaldo, etc., all signed strategic cooperation with Ali Sports. Ali Sports uses the Alipay platform in the sports service sector to expand coach training, training facilities, and other services. In the second half of 2018, domestic sports video platforms have cooperated with sports clubs - Tencent Sports and Arsenal, Manchester City, Guangdong Hongyuan, PP Sports and Inter Milan, Manchester City - to launch joint members (Yu, 2019).

The Sports Sponsorship Model is undergoing a profound transformation. Modern sponsors are using strategic approaches to interact with specific target audiences in specific regions. This requires close collaboration between sponsors and sport organizations, as well as strong analytical skills to increase understanding of consumers (CUI, 2019). The more sport organizations are able to share data at the same level as Google and Facebook, the more attractive they are as a sponsor- able property. Sport enterprises need to adopt a platform-based approach to their business model in order to stave off competition and protect their sponsorship revenues. In January 2017, Alibaba joined the Olympic Global Partner Sponsorship Program and became the official partner of Cloud Services and E-Commerce Platform Services, as well as the founding partner of the Olympic Channel. In April of the same year, Ali Sports and the Asian Olympic Council reached a strategic partnership to jointly promote the development of E-Sports in the field of traditional sports and the market development of the Olympic Games (Zhang, 2017).

Using digital technology to China’s sport industry development

The organizational structure of the new economic era is mainly embodied in the network-based organizational structure. This is characterized by breaking through the hierarchical barriers of traditional organizations and freely disseminating information. The impact of this technological change is exponential (Ren, 2016); therefore, in order to cope with the technological changes and market changes, sport organizations must undergo continuous organizational improvements.

With the continuous development of technologies and concepts such as “Web of Things” and “Internet +”, data is being used by enterprises as a new produc- tion factor, thus generating competitive advantages and differentiation ability (Wang, 2017). Many internet companies are information service companies that have mastered large numbers of consumer transactions and behavioral data by providing internet transactions, social, and search services. As consumers spend more time on the internet and make more transactions online, internet companies continue to increase data resources. For example, e-commerce companies (i.e., Alibaba, Amazon) increase transaction data, search engines (i.e., Google, Baidu) increase user behavior data, and social service software (i.e., Tencent, Facebook) increase social relationship chain data. Internet companies can use these data resources to quickly establish their service systems and enter different industries (Filo et al., 2015); However, at present, data collection in many service sectors is either invasive and/or unstructured. Seamless integration of systems and devices into user activities requires a commitment to superior data management in the digital realm that connects to actors in the social realm (Bolton et al., 2018).

The smart data industry has become an effective way for society and enterprises to improve the level of big data management and analysis (Li, 2018). For example, using Alibaba Group’s e-commerce, cloud computing, big data, payment transactions, and other advantages, Ali Sports can provide a complete support system and turn itself into the core of upstream and downstream industries (Zhang, 2017). Moreover, NBA teams, such as the San Antonio Spurs, have used big data to help owners and coaches recruit players and execute game plans. The 2013-2014 NBA season was the first for all teams to have SportVU tracking. The data’s greatest impact is in helping management build a team of effective and compatible players. Data analysis is also likely to contribute to better biomechanics in sports. Wearable devices can now determine how much physical stress players have endured and may eventually predict the likelihood of injury so a player can be rested before he is hurt.

The introduction of the World Wide Web revolutionized marketing communication (Karg & Lock, 2017). Organizations shape markets by delivering unique experiences that provide them with a competitive advantage and lead to favorable business outcomes (Bolton Gustafsson, McColl-Kennedy, Siri- anni, & Tse, 2014; Verhoef et al., 2009). Hence, an organization’s ability to leverage digital technologies is an increasingly important source of competitive advantage because businesses must respond to market dynamics effectively (Kumar & Reinartz, 2016; Leeflang, Verhoef, Dahlstrom, & Freundt, 2014). Information systems (IS)/information technology (IT) strategic planning (ISSP) has been identified as a vital process in integrating IT into organizations, thereby promoting organizational success and competitiveness. Specifically, with the recent growth in interest in e-business and e-commerce, ISSP is widely viewed as an effective means of implementing a successful e-strategy (Lee & Bai, 2003). When firms operate in high-velocity market, they have to develop dynamic capabilities in order to obtain either a series of short-lived competitive advantages (D’Aveni, 1994) or a sustainable competitive advantage (Teece et al., 1997). With the development of the internet, new ideas such as user supremacy, fan economy, and platform thinking are constantly emerging.

Through digital technologies like “Internet +”, organizations are given the following opportunities for convergence. First, through internet and information technology, production and living space can be digitized and networked, production factors can be interconnected, and the physical world and cyberspace can be integrated. Second, through the cross-industry penetration of the internet and the Web of Things, integration between offline and online is promoted. Third, through massive real-time interaction between the supply chain and consumer data, 1CT technologies such as big data, cloud computing, resource allocation methods, efficiency of production, service, and resource allocation are improved. Fourth, by relying on the internet and the Web of Things, the energy storage space of the entire social resource is greatly expanded (Wang et al., 2018).

Collaborative innovation must match the needs of the people. It is important to make full use of the role of sport organizations in the overall innovation ecological environment. Sport organizations are the mainstay of technological innovation. It is necessary to further strengthen the engine function of digital technology innovation and promote the deep integration of digital technology and the sports industry. In order to deal with these challenges, sport organizations need to develop digital engagement strategies and comprehensive digital operating models that address the needs of suppliers, employees, and customers alike. They must decide whether they can enhance their existing models, or whether they need an entirely new model. Sport organizations should apply innovative technologies to the sports industry so that they can realize the value of technological innovation through sports products. For example, Alibaba and the International Olympic Committee have launched a new Olympic broadcast service cloud technology. Evergrande will jointly build China’s first 5G smart stadium with China Telecom, using technologies such as face recognition and VR technology.

The use of digital technology and information technology can accurately capture consumer demand, psychology, and consumption methods for integrated analysis. For example, Youku and Ali’s economy-related businesses will vertically open up users’ needs in video viewing, live viewing (barley), transportation (Gao De map), catering (hungry), tourism (flying pig), etc. (Langxiong Sports, 2019). NBA China and Alibaba’s cross-platform “NBA Content Interaction Zone” can provide NBA market partners with consumer insight reports, more accurate delivery tools, and NBA theme marketing solutions. In the future, three types of data including government management data (such as national fitness, stadiums), academic or market research data, and behavioral data (Ali shopping, event audience, marathon participants) need to be integrated.


China has been experiencing a dramatic economic transformation due to the development of information science and technology. The sports industry’s focus on science and technology innovation, cultural creativity, and high-end equipment manufacturing will become an important aspect of the development of China’s third economy. To promote the innovation and development of the sports industry in the digital era, a multi-perspective and diversified innovation development model, and a coordinated development mechanism are on demand. It is necessary to further strengthen the engine function of digital technology collaborative innovation and deepen the integration of digital technology and the sports industry. This chapter illustrates the research model with case evidence and suggests tentative theory in the form of propositions. Further research is needed to explore the impact of the practices and contextual measures proposed.

According to the 2019 China E-Sports Talent Development Report, by the end of 2018, there were 71,000 E-Sports eco-employees among the practitioners in China’s E-Sports related industries; however, it is expected that by the end of 2019, the overall labor demand of industry practitioners will reach 331,500. The talent gap in the E-Sports industry is huge, and the management and development of technical talents are in short supply. The demand for professional education is urgent, with a great potential for pre-job training market. The integration of application and education is still the most difficult problem for E-Sports education. These important issues require further research and continued discussion.


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Chapter 10

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