How sports startup Spalk began to monetise its commentary platform
With the increasing nature of virtual production prevalent in linear television and online broadcasting, sports commentary platform Spalk is well placed to deliver a vital solution in the production supply chain.
The company’s Virtual Commentary Studio helps clients and rights holders create bespoke, remote commentary for as many markets or countries benefitting them without the massive overheads involved in producing live commentary.
The New Zealand born business started as a crowd sourced commentary platform but a pivot towards more professional commentators and professional voice talent has allowed them to monetise a much-improved product.
Now based in the United States, we spoke to Spalk CEO Ben Reynolds on his return to New Zealand.
Well done on the completion of your recent $1.5 million seed round of funding with Greg Norman’s investment company helping to lead the round. How will you use the latest injection of funding?
It’s great to have a robust group of North American investors involved particularly with Greg and his team onboard. We’re super excited because it’ll allow us to do all of the things we want to do.
Aside from the funding, what can the new group of investors help you with to continue the growth of your company?
Greg Norman’s profile adds an enormous amount of credibility to the business, particularly in North America. It’s well-known that not only has Greg had a really successful golfing career he’s had an enormously successful business career in his own right.
Beyond Greg we’ve got a really good group of co-investors, Stadia Ventures is one, as well as other angels in the sports broadcasting industry, some people from some of the bigger social networking and tech companies that we’re familiar with and some other professional athletes in North America.
With does the funding itself allow you to achieve?
The big focus for Spalk is moving and transitioning from product development to a full-blown commercial stage. In the three months since closing our funding round we hired a VP of Sales, based in Austin, Texas, to complement our existing US presence. It’s a real focus on sales and commercialisation in the North American market and we’re already starting to see some cool projects go live with the likes of World Rugby and FIBA.
That seed round of finance is all about us acknowledging we’ve done our product development and while we’re going to keep building on the product and improving it now is the chance for us to start commercialising it.
I’m always curious about what learnings a company gleans from their partnerships. What did you learn about your users and your product from your most recent World Rugby broadcast of USA v Samoa or your Scrum7 partnership?
World Rugby is a really good barometer of how our technology performs in front of the biggest rights holders in the world. We’ve got a really clear and compelling pitch for these broadcasters and what that pitch is about saving money because they don’t have to fly commentators to venues and however many commentators they want in whatever languages and styles that want on every game.
Working with World Rugby we’re able to get close to their team to understand more about their audience, the types of markets they’re really chasing from a viewership standpoint and it’s all the usual names you expect, trying to drive growth in Russia, Brazil, India, China and all these non-traditional, secondary markets. Some interesting stats from World Rugby, they reckon there’s about 30 million people in China who have an active interest in either following, watching or playing rugby.
That’s 30 million people trying to find content which is not being produced with Mandarin commentary. We can come into the picture at a low cost and enable you to produce, at scale, Mandarin commentary, or it could be Hindi, Tamil, any language under the sun commentary which you can sell and publish it to the rights partners.”
The multilingual potential is hugely interesting.
I think where we see our company developing over the coming years is really moving up the chain in terms of the size and scale of events we’re covering. The reason why the tier two and those second-string nations are so interesting is because there’s enormous cost pressure to deliver those events.
When Russia took on Japan in November, the game was played in England and it would have cost World Rugby 10,000 to 25,000 dollars to get a single commentary team flown to the country, pay their fees, have a production assistant, those costs add up. Instead we can say, ‘don’t fly commentators there, sit them behind a laptop and we’ll charge you a fraction of the 25,000 dollars you would have spent otherwise plus you get the benefit of having multiple commentary teams covering the game.’
We know that there’s a big cost pressure for those second-string rights holders, which makes it a perfect place to kick off partnerships but watch this space as we move up the chain and start delivering bigger events. The dream, being a Kiwi, is the All Blacks, that’s when we know we’ve truly made it!
Staying with cost pressures, the interesting thing is that this pressure on costs and resources forces sports and leagues to think differently. Do you agree that cost pressures encourages innovation that at times can be slower to implement higher up the chain?
Absolutely and I’ll use FIBA as an example. They’ve got a fixed but small budget for producing all of their youth events around the world.
Let’s say they have 30,000 dollars to produce a broadcast television quality youth tournament in Japan. The digital team have done an incredible job of doing is being incredibly cost effective in terms of the tools they’re using, which of course forces innovation and forces them to look at processes.
That’s why when FIBA’s Head of Digital (Nicolas Chapart) came across us he said, ‘I can save hundreds of thousands of dollars every year by using Spalk so I don’t have to fly commentators around the world. I still get a broadcast quality production.’ You see it throughout all of their processes they’re using tools like Restream, automated camera production companies like Playsight and Keemotion and companies like LIGR Systems to do their graphical overlays. All of these things reduce costs from the equation.
It’s a really good time for this virtual production studio supply chain and I’m excited about how we get more partnerships and integrations across automated video, automated commentary, automated graphics, those sorts of things.
How do you take on the challenge of high-quality audio on your platform?
All of our commentators have external microphones. When they’re commentating they sit behind a laptop or computer with an external microphone. What we don’t have is the control as they would in the studio over all of the background noise. Occasionally they would get a small amount of echo, we’re building some stuff into our product which would then collect the audio as is effectively able to sense check the background sound and use software algorithms to smooth out.
Especially smoothing out some of the pops, highs and lows.
You can do that using software and that’s the great thing where technology is at today. We’ve come along at a really good time to build this product where it can all be done using software. That’s the momentum and tidal wave that we’re riding, it’s the movement towards cloud-based and software-based solutions rather than the old-school commentary switchboard parked up at stadium or production truck.
It seems like you’ve executed an idea that I’m certain other people have had in the past. Why do you think yourself and your cofounders have been able to build on this idea from concept to fully-fledged business?
The business has undertaken an interesting transition. When we started out we had the classic idealistic idea of democratised sports commentary platform, anyone can commentate anything.
What we soon ran into was rights holders hate it because they don’t have control over their content. We pretty quickly figured out the value for sports leagues and broadcasters was less around the fan engagement piece and more around the cost saving piece.
About 12 months ago we underwent an enterprise pivot where we know we are the first in the world to be offering this concept of a Virtual Commentary Studio.
We know the fact that we make money is what classes us a business and sets us apart from all the startups that previously tried and failed to do crowd-sourced commentary from a B2C standpoint.
When did you realise that you’re beginning to execute this idea? Take me to that turning point when you realised that you are finding an audience and building interest, what was your thinking if you could recall?
I’m not sure if there was one specific moment.
The first one was when we started ticking over the four-figure view count of us commentating a cricket match in Auckland. We were thinking if a thousand people want to listen to us whilst listening to the regular commentators, then there is something in this concept of multiple commentators of content.
Then the next point came when we had our first broadcast integration with a local network in New Zealand and they saw an immediate doubling in their audience size when they offered two types of commentators.
Then when we met with the FIBA team for the first time and they raved about how much money it could save them and boost their fan engagement.
Lots of points throughout the business that’s given us increased confidence and it’s that confidence that reduces risk and makes the business more interesting for people wanting to join our team, partner with us or invest in us. Three years in we’ve hit that product market fit stage, we know exactly what we’re building and why we’re building it and now we’ve got a big sales pipeline where we are now trying to keep up with demand.
Spalk is now based in New York. Can you reflect on that move?
At the start of this year we had one overarching goal of the business which was ‘Americanising’ it. We knew the US was the biggest sports market in the world and there’s as much money spent internally on sports rights than the rest of the world, times four.
Within our overarching goal we set out with three goals for the year, one was Americanising the product, Americanising the cap table and three was Americanising our sales pipeline.
Heading into 2019 it’s really a case of putting our foot on the gas and really drive revenue outcomes out of that market.
What’s the next big opportunities in the US?
We see our sweet spot in North America is not with the big four leagues – NFL, NBA, NHL, MLB – it’s really with the second tiers and second divisions, the minor leagues and growth sports. It goes back to the same comment before about the difference in cost pressures and the competitiveness with which those leagues are trying to grow their audiences.
We’re looking at leagues like the MLS, Minor League Baseball, some minor hockey leagues, the power five college conferences outside of their basketball and football programmes. We did some quick math on it and we think there is somewhere between 150 to 250 million dollars spent in that tier two division alone on commentary production each year.
What other exciting proof of concepts that you’re pursuing?
The exciting POC’s for us is how to publish into linear television. At the moment we publish our content into any digital channel, whether it’s OTT or a social network. Next thing is to get linear distribution and work with some of the bigger networks in the US so we can produce content that ends up on television – but that requires us ensuring we can deliver content into the linear broadcast environment.
The other big piece is we do a lot of work with commentary agencies and talent networks around our commentator studio. We plan to build out a much richer feature set including multi-camera angles, picture-in-picture, sound effects and other cool things that make it similar to a commentators experience in a regular commentary box.
Who would you love to have commentate on your platform, even what excites you about the potential uses of the platform?
What excites me is opening up new fans to sports, you think about something like test cricket or Sheffield Shield, the average age of a test cricket fan is somewhere over the age of 35 and most of them are men. Cricket Australia have identified and knows that there is a problem with not only women, but younger women, watching and picking up a cricket bat.
What excites me about a New Zealand rugby match will be diversifying the voices on air, whether that’s by gender, ethnicity or age so that suddenly you’re a lukewarm All Blacks fan but you know that there is a Steph-Claire Smith and Laura Henshaw doing a Keep it Cleaner sponsored commentary on a match and suddenly that gets you incentivised for you to watch the match because you really look up to them, how exciting is that? Totally not traditional commentators but would make for an interesting way to engage particularly a young, female demographic and bring new fans to a game.
Very well said. A lot of things major sports grapple with is a lot of legacy and to be able to shake that off in an inclusive way or a fun way is something that is still to crack.
And the cool part is we’re not saying get rid of commentators but give viewers more of a choice so they can find their most preferred voice that they want to engage with and reflects their values more closely.
This article first appeared on Bullpen, a site that focuses on the Australian sports business, sportstech and the sports startup ecosystem.