Cisco's New Business Model: Luring Millennials to Stadiums

Cisco (NASDAQ: CSCO  ) is currently in the throes of drastic internal restructuring and product cycle transitions under the tutelage of chief executive John Chambers. The networking equipment maker has, as a result, been struggling to find a regular cadence of revenue as it continues to evolve its product portfolio. Not surprisingly, the company has been looking for new revenue streams to replace its rapidly fading ones.

One of these involves offering added connectivity, such as HD Wi-Fi access, to stadiums to help lure back young fans. According to a recent Cisco report, one out of three college students and young professionals consider Internet access as important as food and shelter. According to the report, 57% of young fans prefer watching games at home since they view stadiums as a black hole of connectivity with limited Internet access.

Stadiums are increasingly using Wi-Fi as a churn-reduction strategy to attract and retain young fans. Cisco, together with companies such as Comcast (NASDAQ: CMCSA  ) and AT&T  (NYSE: T  ) is at the forefront of digitizing stadiums and concert halls both in the U.S. and abroad.

Cisco's Wi-Fi monetization strategy. Source: Cisco

According to AT&T, the demand for high-speed Internet in stadiums has grown exponentially over the last four years.

Data usage at the Super Bowl over the last four years. Source: AT&T

Boosting revenue
From the stadiums' viewpoint, increasing connectivity makes great business sense. Denis Taylor, CIO of AEG, said that a connected stadium with an HD Wi-Fi solution helps the stadium learn more about fans. Data collected can then be used to narrowly target fans with the right products. Additionally, a connected stadium is capable of offering services such as in-seat food and drink ordering via mobile devices, which would help stadiums generate even more revenue.

Huge opportunity for Cisco
The opportunity for Cisco is huge. According to worldstadiums.com, there are 2,478 stadiums in the U.S., with 248 sporting a capacity of 20,000 or more seats.

AT&T VP of Antenna Solutions, Chad Towne, pointed out during an interview two years ago that the company has a list of 5,000 venues, including stadiums and concert halls, where it's looking to build out Distributed Antenna Systems, or DAS, to support Wi-Fi systems from companies like Cisco.

Cisco has been digitizing both new and older ballparks. The New York Yankees, Dallas Cowboys, Toronto Blue Jays, Denver Broncos, and Kansas City Royals have all connected their stadiums using Cisco's infrastructure and technologies.

Cisco's biggest Wi-Fi project to date is the Barclays Center, home to the Brooklyn Nets. The 17,500-seat arena is considered the world's most connected stadium. All the networking equipment used in the Barclays Center is Cisco's.