Code Red: Google's disruption offers opportunity for the sports industry 🔍
OpenAI’s ChatGPT has caused a ‘Code Red’ alert among Google's management team but does a reinvention of the search engine business model actually provide greater opportunity for the sports industry?
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Google’s search engine business model is under threat, again.
According to a report from the New York Times last month, chat bots like OpenAI’s ChatGPT have caused a ‘Code Red’ alert among the tech giant’s management team.
This alert comes only a few months after a serious flag was raised by Senior Vice President Prabhakar Raghavan, who runs Google’s Knowledge & Information organization, claiming that core Google services such as Search and Maps are being impacted by a growing preference for social media and videos on platforms such as TikTok and Instagram as the first stop for younger users on the path to discovery.
“We keep learning, over and over again, that new internet users don’t have the expectations and the mindset that we have become accustomed to.” Raghavan said, adding, “the queries they ask are completely different.”
The launch of ChatGPT only further moves to disrupt these accustomed norms. The fast mode of question and answer is far simpler than trawling page by page to find answers. This has a huge impact on Search and the advertising model behind it - which fuels more than 50% of the company’s entire revenue.
The technology has also opened up a source of knowledge that was unreachable via traditional search; podcasts.
As of January 2023, there are over 5 million podcasts with over 70 million episodes between them. That is hundreds of millions of hours of information. And within this, there are a ton of insights being shared by influential thought-leaders in their respective fields. However, recall and discovery of this information is highly challenging.
This has led some very clever individuals to combine the transcripts of their favourite podcasts with the latest models from OpenAI to formulate bespoke search engines that enable you to search every episode for answers to your specific question.
For instance, both Riley Tomasek and Dan Shipper have created search engines that allows you to ask Andrew D. Huberman, an American neuroscientist, tenured associate professor at Stanford University School of Medicine and host of the Huberman Labs podcast, a question and receive a well formulated answer.
I have no doubt that this sort of project is formalised into a product offering or even a subscription model providing you access to ask questions of thought-leaders within specific fields of knowledge, whether that is health and wellness, philosophy, or business leadership.
You can see the issue for Google. Why search the web asking, ‘What is the healthiest morning routine?’ when I can ask a well-respected expert in the field like Andrew Huberman directly and avoid the rest of the noise?
With this information brought to light, the suggestion from the New York Times’ Nico Grant and Cade Metz that this ‘new wave’ of chat bots using artificial intelligence (AI) could reinvent or even replace the traditional internet search engine business model is perhaps not overdramatic.
Of course, that is not to say that Google cannot help to create this new model. In fact, Sandar Pichai and Google AI head Jeff Dean have explained that Google’s AI language model LaMDA also has similar abilities to ChatGPT, but due to the reputational risk brought by this technology, the company has to take a more conservative action.
They must also figure out how to generate revenue from it whilst not cannibalising their current advertising revenue (which is likely to total more than $200 billion in 2022).
You may well be asking at this point, what does this have to do with the sports industry?
Well, any fall off in the approx. $200 billion getting spent on advertising with Google Search must go somewhere, right?
For sports teams, leagues, and federations, which currently generate around $65 billion in sponsorship, there is a huge opportunity in vying for even a small fraction of this giant advertising budget currently spent with Google.
Secondly, this change in the search engine model increases the value of video. Google will hope that any less time spent searching and browsing through written content online is converted into more time engaging with their video content via either YouTube and YouTube Shorts.
They will also be keen to explore bolstering their subscription revenues to protect against any advertising retraction to their search business in the future. And it appears this is already a priority for their YouTube business.
As YouTube’s chief product officer Neal Mohan explained to The Verge, the subscription business is “a big part of our future.” He views subscription video on demand and advertising-based video on demand combined as twin engines of their future growth. This helps to explain why YouTube has just spent $2 billion to acquire the rights to the NFL’s Sunday Ticket and why they might look to purchase more sport rights in the future.
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