Presentation to the Darley Flying Start Conference at Keadeen Hotel, Newbridge, Ireland
October 25th 2006
Gina Bryce
3G Telephony: The potential for racing and selling horses
Good Afternoon Ladies and Gentlemen. Technology is not usually something that ignites public excitement, however I do ask you to suppress your initial disappointment at the title of this presentation as over the course of the next 15 minutes I hope to show what a useful and, dare I say it, exciting service 3G can offer us in the Racing Industry.
I do not wish to insult anyone in the audience today as I am sure there are many technologically savvy individuals among us however if you are anything like I was you may not have a clue what 3G Telephony actually is. 3G Telephony is short for third generation technology and is officially speaking the ability to transfer both voice and non-voice data simultaneously. In other words the added video service allows you the same benefits as broadband internet such as music and video downloads, live media coverage and email but from your mobile phone. This service has been on offer across Europe since 2003 and is estimated to be in use in over 25 countries across the world. Ireland perhaps sensibly so waited to see the success of the venture elsewhere before finally launching their own service in 2005. The largest 3G network is appropriately named 3 and currently boasts 7 million customers across Europe.
In spite of the phenomenal service that the 3G network seemingly provides, why is it that when I mentioned the title of this presentation to my intelligent and seemingly up to date colleagues at Darley Flying Start, 99% of them never heard of 3G Telephony? The reason for this could be one of many as since its official launch in 2003 3G has been plagued with a host of difficulties. The main problem it has faced in my view is the fact that the technology on offer was not initially developed sufficiently to prompt an instant product craze, meaning there has been no real overnight impact in Europe. Given the size of the screen on a mobile phone, there is an increased demand for impeccable quality to overcome any poor resolution, an area which fell below the required standard when initially launched. Secondly we all know what an image driven culture we live in and buying phones is no exception to this rule. 3G handsets, although having been greatly improved recently, were not sufficiently attractive to inspire the fickle purchasing public. Furthermore prices have remained stubbornly high and expensive network installation costs have also meant that coverage outside of the major cities has been patchy to say the least.
However, despite a disappointing start 3G it is not an entirely unsuccessful venture. The screen quality and handset design has been greatly improved and coverage is extending all the time. The venture has also enjoyed huge success in other countries most notably and perhaps unsurprisingly in Asia. In the U.K. around 7.7% of all mobile users are on the 3G network while in Japan the figure is currently 57% and rising at a phenomenal rate. Inspired by this success, Europe’s big mobile operators, such as Vodafone, are currently pressing ahead with plans to launch rival 3G networks perhaps indicating their faith in the venture. Asian conglomerate Hutchinson Whampoa behind the 3 network says that “demand in the UK is picking up albeit more slowly than at first thought”.
Hopefully I have managed to make it a little clearer as to what 3G can offer so now I want to move on now to the service this market could provide for the thoroughbred industry. Firstly, I would like to start by highlighting the 3G services that are already available in the racing sector. There are two joint ventures currently in operation on the 3 network, one which is headed by At The Races and William Hill and the other by The Racing Post and Racing UK. Both launched in 2005, these services essentially allow you to view live racing from your phone in the same way as you would on a computer. The At The Races and William Hill venture provides the additional option to place bets as you watch while the Racing UK and Racing Post venture which comes under the wider umbrella of The Betting Site and provides access to form analyses and data. Both services run on a pay per view system currently operating at around £1.00 a minute.
In terms of broadcasting live racing through the 3G service we must once again return to Asia as the benchmark for success. In December 2004, a joint venture between 3 Hong Kong and The Hong Kong Jockey Club was launched to provide real-time video race clips and betting services. In order to promote the deal, 3 Hong Kong offered racing fans a comprehensive package at only HK$28 a month including one hundred free horseracing downloads. The Hong Kong Jockey Club has also shown its immense support for this venture, in recently lifting the limitations previously imposed on mobile phone usage at racecourses. This will allow 3G customers to enjoy a full suite of mobile communication services anywhere inside and outside the racecourse. At present it may be difficult to imagine a time when the 3G racing service will gain so much support however I believe there are four main parties who could indeed reap huge benefits from a similar promotion. These are the media, the racecourses, the bookmakers and perhaps the most important sector, the punters.
Starting with the media I would like to discuss the potential success of 3G application in racing in the UK and Ireland and the effects such ventures will have on the sport as a whole. 3G telephony in my opinion represents the ultimate convergence of media markets, making services previously only available from the comfort of one’s home at the disposal of the mobile individual. This is an opinion that is shared by the Executive Chairman of Racing UK, Simon Bazalgette, who believes that the launch of this service “not only demonstrates how horseracing continues to be at the forefront of new technological developments in managing media rights but also represents another major step towards maximising the value of racing’s media rights for the benefit of the sport as a whole.” The mere fact that such a pre-eminent media giant such as Racing UK has recognised the potential for increased coverage through the mobile sector in addition to broadband, in my view, is indicative of their faith in the potential growth of this area.
In my opinion racing, as opposed to many other sports lends itself superbly to the option of accessing live coverage while on the go. Due to the fact that a large proportion of racing takes place during the working week many people would not have access to a television or computer, therefore a mobile phone offers the perfect alternative. In addition the amount of coverage that an individual may want to watch is often minimal perhaps amounting to only one race in which he has an interest. Fast access to racing from courses across the UK and Ireland and soon to be expanded to cover racing abroad allows you to watch your chosen race at the mere press of a button. This service in my view will greatly increase the exposure of racing across the UK and Ireland and in turn act as a springboard to advertise racing as a whole.
The second area of interest is one that is closely related to the interests of the media. It is axiomatic that the racecourses will be interested in gaining as much exposure as possible in an attempt to both encourage visitors to their courses and more importantly promote revenue through media deals. With an extra medium through which these coverage deals can be orchestrated, the racecourses can potentially widen the market they reach and increase the number of people watching racing on a regular basis. The recent poor ratings of Channel 4 racing in the UK and discussions over the future of this venture, only serves to highlight further the waning amount of people able to watch a full day of racing. If 3G telephony can capture people’s imagination to the level that has been achieved in Japan for example, I believe there is every possibility that this could fill any possible void in revenue left by decreased interest from other media investors. Although it is a currently an area of fierce debate, I would also speculate that any rise in revenue for the racecourses could prompt the much needed increase in income dedicated to prize money in the UK and Ireland.
The third interested party I want to look at is bookmakers. At present, William Hill is the only operator that can be accessed through a 3G phone however in the attempt to provide an alternative to broadband I believe it is more than likely that other bookmakers will soon follow suit. This service will allow their business to reach an extended market in catering for the punter on the move. 3G technology also offers the possibility for bookmakers to increase their rapidly growing remote channel sector which at present represents around 35% of the horse racing turnover. However despite the potential to increase income in this area, David Hood, PR executive for William Hill believes that this area will only really represent a minor amount of betting revenue. He believes that despite the proliferation of the service and the improved quality it will take at least ten years for this sector to really penetrate the public conscience.
The final sector that I believe could benefit hugely from 3G technology is the punters or racing fans. The services available on the 3G network in my view, offer an extremely useful multi media service that places all the required sources of information at your fingertips. The punter will have access to form information, a betting service and live coverage of the race so that even if he (or she of course) has been dragged away from the racecourse or bookies to attend to other engagements, they will still be able to enjoy the racing experience. I myself can see this service becoming hugely popular among the band of reluctant men who are forced to sit outside shops on a Saturday afternoon. I’m sure that access to live racing will offer a means of easing this misfortune.
In addition to potential benefits for those involved in the racing sector of the thoroughbred industry, 3G telephony could also be contextualised in terms of the bloodstock sales. Although no service is currently available in this sector, it is necessary to ask ourselves what scope this new technology offers for future development. Could the facility already available on broadband, which allows you to watch horses in the sales ring, be extended to encompass access on a mobile phone? Alternatively could we envisage a time in the future when bids could be placed using this multimedia service in the same way that bets can be? Could 3G Telephony be used to provide data on a particular sale in the same way that we can now access online catalogues? Although highly speculative, these are all questions that must be asked, for as we all know technology is expanding at a vast rate and although ideas may seem unfeasible at the moment you can never underestimate this increasingly influential area in our everyday lives.
Nevertheless, although it is perhaps naïve to dismiss technology such as 3G even in an area that is very new to such ventures, it is also necessary to ask ourselves the actual feasibility of such a service. In order to gain an industry opinion of this matter I spoke to both leading bloodstock vendors, Goffs and Tattersalls where I found a very similar response. The Goffs Sales Director, Nick Nugent from Ireland’s said that until larger auction houses such as Christies or Sotheby’s decide that there is potential for increased coverage through the 3G medium it would make no sense for a much smaller enterprise to make that leap. Additionally he believes as I’m sure we will all agree, that it is not really an applicable service to bloodstock sales due to the absolute necessity to see a horse prior to purchase. Jason Singh from the Tattersalls I.T. department expressed a similar opinion in wanting to see more evidence of the market success before investing. As the market leaders when it comes to the internet, and as the only sales company in the world at present to offer live coverage of every sale, he did suggest that 3G telephony could be something to consider for the future particularly to provide videos of horses breezing at the Breeze Up Sale. In the light of this I think the sales arena is not one which lends itself to 3G technology to the same degree as the racecourse however the probability of it eventually penetrating consciousness to the extent that it could be used as an alternative to the broadband service can not be entirely disregarded. In terms of immediate benefits to the auction house however, it would seem that there is no real urgency to invest in this technology as until the popularity of 3G grows there will be now marked effect on sales revenue.
I am sure that by now some of you may have formed your own opinions about 3G Telephony and its place in the thoroughbred industry, however I would just like to summarise what I have spoken about and share my own personal views on what I believe to be the future of this market. So as we have seen the 3G market in Europe is not something that has got off to a brilliant start. There has been much speculation and expectation surrounding the product but it has not been met by any real concrete success. I believe the main reason for this is not the initial problems with the service but a lack of accessible marketing to clearly indicate to people the simple services on offer. Abstract, trendy advertising such as that broadcast by 3 in Ireland at present is not sufficient to capture the interest of what I view to be still in the large majority a slightly techno-phobic continent. The 3 network are not only trying to sell an expensive and initially disappointing product but they also face the added challenge of overcoming a cultural mindset that does not want to trawl through mobile phone shops to find out the services available.
I think the success of the venture in Japan and Hong Kong only serves to underline the fact that it is not the service that is the problem but the way it is being received by the public. As I have hopefully shown I believe 3G offers huge potential to benefit the racing sector and facilitate the desire to watch and bet on racing in an increasingly fast moving world where people do not have the time to sit in the bookies all day. I think that the service is perhaps not quite as applicable in the sales sector but as the cultural mindset changes, and hopefully it will with the younger technically minded generation coming to the forefront, we will all witness the phenomenon of 3G telephony and hopefully allow it to facilitate our own lives as advocates and aficionados of horseracing.
Thank you very much for your time Ladies and Gentlemen.
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