Why Dentsu wants to get closer to sports startups

Earlier this month, Dentsu announced that it was launching an acceleration programme, Sports Tech Tokyo, to support innovation in the sports sector globally. The initiative is in partnership with Scrum Ventures, a venture capital company based in the US. It invites startups from any market to pitch their ideas in order to gain mentorship, networking opportunities and possible investment. The move follows a pledge by the Japanese government to grow the country’s sports industry to 15 trillion yen ($133.8 billion) by 2025. Here’s a closer look at what it means.

The move is not directly linked to Dentsu’s advertising business, but Fumihiko Nakajima, senior director of business development on Dentsu’s Future Business Tech Team, said working with companies that create infrastructure for sports fans (such as ticketing services) could yield a large volume of useful data. He said Dentsu is looking at ways to manage fan engagement, which is an area of marketing it has not previously been involved in.

Nakajima said a wider goal of the programme was to position Tokyo as the “capital of the sports technology industry”, and to help companies in the sector find applications in other industries such as entertainment and health. Such expansion would present “a lot of opportunities” for Dentsu’s own business, he said.

Fumihiko Nakajima

Dentsu is primarily looking to the US and east Asia for startup participation. Nakajima listed three main areas of interest in terms of innovation. The first is technology to help professional and amateur athletes in their training, both physical and mental. The second is ways to improve the viewing experience for audiences, taking into account TV, live events and areas such as VR. Nakajima said this was especially relevant for segments such as esports. Thirdly, Dentsu is looking for ways to enhance the process at stadiums, such as fingerprinting technology for entry and easier payment systems.

Nakajima pointed to various examples of recent innovation unconnected to Sports Tech that he found encouraging. These ranged from smart apparel that helps analyse athletes’ movements to a device that relays individual data to insurance providers and a system enabling micro-sponsorship of sports teams. But he stressed that he hoped to see things that were entirely new and unexpected.

Dentsu and Scrum will play a joint role in selecting applicants. Nakajima said to be chosen, it was vital to demonstrate that the business is scalable. Showing the potential to support areas outside the world of sports would also be a big plus, he said, noting that the government is looking to bring various industries together in order to achieve its ambitious growth target for the sports sector.

Once selected, the startups should have access to between 150 and 200 mentors in Tokyo and San Francisco. Nakajima said Dentsu and Scrum were currently sourcing them and that they would comprise professional sportspeople, people from the tech industry, and venture capitalists. Some mentors signed up so far include Hyung Kim of Line Ventures, Daniel Brusilovsky of the Golden State Warriors basketball team, and Tsuyoshi Kawata, an American football coach at Stanford.

Nakajima said startups could benefit from making connections with influential people on the advisory board, but was not able to say who was on it. He said an announcement would be made at the end of the month.

Asked whether sports sponsors would play a role in the project, Nakajima said they could, but as “collaborative partners” rather than sponsors. He said the term ‘sponsorship’ carried negative connotations. “They would prefer to support startups with their equipment or assets like venues” rather than through financial investment, he added.

Dr Philip Sugai, who teaches marketing at Doshisha University in Kyoto and works with startups, said Dentsu’s move aligned well with its established presence in sports. "Especially as esports is showing that there are new models for what we call ‘sports’ and ‘competition’ that don’t rely on physical prowess, this push to support new sports ventures will help ensure that Dentsu can see a new trend in sports marketing and sponsorship in advance of the market,” he said.

“It makes sense for Japan to invest in sports tech,” said Ko Fujii, CEO of Makaira, a technology-focused public affairs consultancy. “Japan has always been good in sensor technology, robotics and real data analysis, which are all essential for raising an athlete’s performance or supporting new forms of tech-based sport.” But he suggested Japan had some catching up to do, having fallen behind other markets in areas such as esports.

Fujii said Dentsu had “unmatched knowledge and expertise” of the sports sector in Japan, and given that advertising is a shrinking business, it made sense to “diversify into other forms of tech-based sports watching, which can be integrated with many new forms of business models and revenue streams”.

Marco Koeder, head of digital at JWT Tokyo, who also has connections to startups, noted that they often struggle to tell the world what they do in simple, compelling terms and would benefit from the connection to a company with branding expertise. He added that it was important to remember that startups “do not always equal Silicon Valley”. But he said that establishing Japan as a global hub for sports technology “would need some extra ingredients”.

“Silicon Valley did not become an epicentre of startups just because someone decided it should become one and because someone put money behind it,” he said. “The ‘Silicon Valley way’ is a mix of business culture, entrepreneurial mindset, philosophy, personal belief system and other components combined with an ecosystem supporting it.”

He said Japan’s propensity towards creating long-lasting businesses was an asset the country could use in this context. “The concept of the ‘sustainable startup’ can provide an extra inspiring and meaningful ingredient that could perhaps craft the ‘Japanese way’ of startups in the future,” he said.