Disruption in Sports Journalism
Newsroom jobs in the US declined by 45%, from 82,000 to 39,000 between 2008 and 2017. This decline in journalism employment disproportionally affected local newspapers, specifically vertical only journalists, such as sportswriters. Moreover, with local newspapers’ ad inventory quickly “drying up”, as advertisers shifted their dollars to Google and Facebook, local sports departments in some cities were downsized to a “1 to 2 person” team. With sportswriters burden with having to cover each level of sports (professional, college, etc..) and genre of sports (basketball, football, etc..) within a city, writers would leverage national sports coverage, such as AP box scores and summaries, which were largely just game recaps. For the stories that sports journalists could cover, they lacked investigative depth and quality analysis due to the demanding editorial schedule. Furthermore, the lack of journalistic depth was further exacerbated in the “clickbait” era of news, as writers would focus on catchy headlines to drive ad impressions, and less on the editorial quality. The lack of sports editorial depth left a major void among sports enthusiasts, especially millennial sports fans in search of “quality over quantity” in sports journalism. According to Forbes, Millennials have a “Buy It for Life” mentality. Therefore, Millennials desire quality products that contribute to the improvement of their lives continuously over time. Regarding sports journalism, Millennials desired sports information that continuously improved their knowledge of their favorite sports teams to demonstrate their insightfulness to other sports fans, and to increase their sports reputational value.
The Athletic: “Smart” Sports Journalism
In 2016, the co-founders of The Athletic identified this opportunity by launching a local sports website in Chicago with a mission of “smarter coverage for die-hard fans.” The thesis of the site was to provide premium sports journalism rooted in data analytics. Moreover, it aimed to include exclusive interviews with players and management to appeal to young (age 18-34) local sports fans (and away). The Athletic, to deliver this promise of premium sports journalism, shifted the sports journalism business model by only hiring talented sports journalists with a proven track record. Not only that, but they also made changes to the revenue model from ads to subscriptions ($7.99 per month or $49 per year). With sports news & information traditionally free and ad-supported, why a subscription model? As Millennials are demonstrating a propensity for quality products and services that prove to be useful throughout their lives, they also wanted continuous access to these products vs. a one-time buy. This data point was substantiated by Millennials strong affinity for subscription services. According to Shop, in 2016, 92% of Millennials had subscription services and the most popular subscription service was newspapers and magazines.
The affinity for news subscription services coupled with users growing a desire for high quality and trustworthy content, versus commoditize and non-credible news (Facebook), birthed the era of “SaaS Journalism.” Operating much like a SaaS application, content providers own the relationship between the story and the readers. Content providers evaluate user data to determine what type of on-going value users desire. Moreover, they use this data to generate thoughtful editorial experiences and increase variety of content formats, which go beyond reading articles. Therefore, The Athletic has been studying the “SaaS journalism” playbook astutely. Also, as The Athletic crossed the 100K subscriber threshold in 2018, they received another round of funding at $40 million. The additional funding will allow “The Athletic” to make investments in developing new product value (that goes beyond the written word) and generating awareness to effectively grow their subscriber base.
Augmenting the Written Word to Drive Engagement
With an initial strategy of aggressively competing against local newspapers, the majority of The Athletic’s investment was in writers and editors, laser-focused on creating premium written word articles. These articles were contextually rich with investigation and analysis. However, on average an editorial article can be read under 4 minutes, and only 55% of people will read the article for the first minute. As a result, The Athletic users were not spending a significant amount of time on the site. This led to The Athletic exploring other content formats to deepen engagement, by acknowledging the complements and/or substitutes to editorial content. So, they then decided to develop additional content formats: video and podcasts. The Athletic wants its users to deeply engage with a key topic across different content formats, or digest in their most preferred content format to increase time spent, which drives renewal rates.
So, to test this hypothesis of introducing new content formats, the Athletic completed a business development deal with Players Tribune to create a five-part video series featuring Boston Celtics’ Gordon Hayward. According to Mather, as per SBJ, “The Athletic’s traffic increased by two or three times since 
the Hayward series debuted.” The successful video performance led The Athletic to invest significantly in its video operations by hiring an all-star video editorial team and adjusting their platform to host videos. Although video is an attractive proposition, podcasts were also fast-growing among millennials. According to Nielsen, 44% of millennials reported that they have listened to 1 podcast per week, and sports is among the top 5 genres for podcasts. Recently, The Athletic, to leverage their talent’s investigation skills beyond articles, invested in developing 20 new podcasts. Moreover, these podcasts feature national and local coverage, which will appear on the site. The focus for these podcasts will be on super-serving local audiences. Additionally, the first areas that will get these podcasts will be San Francisco and Toronto. Furthermore, The Athletic by coupling video and podcasts with its core editorial offering has not only expanded their value proposition of “smart sports journalism” to its current subscriber base, but also to non-subscribers with an interest in editorial formats beyond word. However, the question that remains is, how can The Athletic reach their target audience to introduce this new value?
Finding Smart Passionate Sports Fans
Creating Awareness
Over 93% of Millennials access social media via their smartphones once a month, and their top preferred platforms are Facebook, Instagram, Twitter, and YouTube (per GlobalwebIndex). Furthermore, 43% of millennials utilize social media to find content and to stay up to date on news and current events. This data point informed The Athletic’s go-to-market strategy, by heavily relying on social media to generate awareness among Millennials. The 
Athletic, within a local market, would strategically poach popular local sports journalists, that are not only talented but also have a strong Twitter following. After becoming a journalist for The Athletic, the journalists were encouraged to share their editorial content with their twitter followers. Likewise, they were rewarded for every acquired user from their feed. The Athletic, by taking a unique approach of generating awareness, was able to efficiently tease out which users were interested in their services to retarget them. Therefore, to effectively re-target users, The Athletic only allowed users to sign up with their Facebook account or email. Then, after receiving this information, The Athletic leveraged the information to re-target these users across platforms and via email. Moreover, the social media and email campaigns were centered on popular tentpole sports events, such as the NFL Super Bowl, NBA Finals, and March Madness. This strategy was implemented to appeal to the users in a heighten state of desiring informative sports news and information. These campaigns featured in-product messaging with aggressive price promotions for the annual subscriptions (50% off). As a cash strapped startup, The Athletic had to quickly generate profitability from their users. They tried to accomplish this financial goal by utilizing price power to gain users that opt for the annual subscription over monthly. Hence, the aggressive promotions were only on the annual subscriptions. Although some users were interested in the offering, they desired a sample of the offering to further “consider” the subscription service to determine its value.
Giving Time for Consideration
For the first 2 years, The Athletic was a desktop-only subscription. The Athletic smartly utilized a portion of the new funding to improve their distribution by
developing an iOS app, due to the fact that more than 90% of Millennials access content via smartphones. However, what was most intriguing about the iOS app was that The Athletic introduced a free tier, which allowed non-subscribers to read up to 3 articles for free per month (freemium model). The freemium model allows The Athletic to accomplish three strategic goals: create their own user funnel to efficiently target users considering their offering, allow users to sample their editorial value proposition, and ensure that well over 90% of their free readers hit the paywall to create an upsell opportunity. However, with no ad monetization in the free tier, The Athletic had to have a “short leash” on non-subscribers usage to minimize costs (only 3 free articles vs NYTimes 10 free articles per month). Nonetheless, some non-subscribers that intended to purchase a subscription, they needed more time to evaluate the subscription to determine the value of the service before committing to the annual subscription.
Searching for Intent
Moreover, as The Athletic has already attracted the “smart sports enthusiasts” to their service, they have aspirations in “crossing the chasm” by attracting the proverbial early adopters. However, early adopters sometimes have a minimal 
amount of skepticism and need a little encouragement to try the offer. So, with the infusion of new funding, The Athletic has a larger safety net to manage initial losses when acquiring a subscriber. Furthermore, this cash infusion has allowed The Athletic to create new promotional offers to tease out users with intent to subscribe. Similar to Spotify’s short-term promotional offering of 3 months for $0.99, The Athletic created an offer of “$1 for 90 days” to provide users with sufficient time to assess the value of the service to their lives. The Athletic remains hopeful this will unlock subscription sales for users with intent, much like the success Spotify had with their promotional offer.
However, some users may need even more time (longer than 3 months) to assess the value. It could be that they are averse to subscriptions, or they might believe that the current free products (ESPN, Bleacher Report) are sufficient. Instead of continuously
ad targeting these users, many media companies are taking a cost-prohibitive approach by scaling investments of produced content to allow users to sample content on other platforms. Media companies take short clips of long-form produced content to host on social media platforms, which give them the ability to drive the cost of acquiring these users down to zero and occasionally done profitability as sometimes ads run alongside the content. Therefore, to create this customer acquisition approach, The Athletic has been leveraging investments through video content to create short clips to host on YouTube and Instagram, in hopes to serving users away from the platform cost-efficiently and cheaply acquiring those users over time.
Summary
Furthermore, the new round of funding has allowed The Athletic to make smart investments in scaling their subscriber base by: creating new product value (videos and podcasts) to encourage usage to retain their subscriber base, developing new acquisition tactics to attract users ($1 for 90 days) and cultivating new distribution channels to allow fans to enjoy content “on the go” (iOS & Android app). The Athletic remains hopeful these investments will push them to scale to quicken their pace to profitability and subscriber scale.
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