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Disruptor Scan - February 2025

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Commentary

A new scan looks at the possible disruptors to sport and recreation within the next 2 to 5 years. This is designed as a tool for discussion or to help adjust organisational approaches. 

The big issues for this quarter are:

• national outlook remaining depressed
• access to healthcare becoming more challenging
• increased geopolitical turmoil
• worsening environmental conditions
• the appropriate response to AI.

What we are seeing

National outlook remains depressed

1. The high cost of living and poorly performing economy remain critical impediments to personal and national prosperity (social and financial) in New Zealand. While inflation and interest rates have fallen, and there are signs of business optimism, economic recovery will not be quick. New Zealand lags economically well behind key trading partners.
2. The Government has adopted an economic growth strategy with a reliance on greater trade, tourism, foreign direct investment and mining. None of these are likely to improve economic performance over the short term. In the meantime, emigration remains at very high levels.
3. This is likely to negatively impact participation in organised sport and recreation at all levels, as families, councils, and sport and recreation organisations continue to face financial and workforce challenges. For example, the NZ Winter Games will no longer continue due to escalating event delivery costs, challenging New Zealand sponsorship and media markets and the international federation sanctioning fees and prize money being indexed against strong European currencies.

Access to healthcare becoming more challenging

1. Access to GPs and disability services persist due to funding challenges and workforce shortages. While more nurses are being trained here, a significant number do not find employment after graduation. Hospital upgrades are also being deferred in some cases. The impact of disestablishing the Māori Health Authority (Te Aka Whai Ora) is uncertain. The Waitangi tribunal criticised the unilateral decision and stated that the Crown’s decision prejudices Māori in several ways.
2. Reduced access to GPs and disability services limits support for those with chronic conditions or disabilities, while deferred hospital upgrades delay treatment and rehabilitation. The removal of Te Aka Whai Ora raises concerns about addressing health inequities for Māori. This may discourage participation due to unmet health needs or lack of culturally appropriate services. Workforce shortages and inaccessible facilities hinder opportunities for people with disabilities to engage in recreation.

Geopolitical turmoil

1. The new Trump administration is, as anticipated, disrupting long established international agreements, trade, and partnerships. National interests are becoming privileged over shared values in Western countries. This will, over the short term at least, create greater protectionism, which may result in poorer economic performance and heightened geopolitical instability.
2. A rise in more conservative governments globally will lead to curtailment of more socially progressive government and business policies and practices. Contradictory energy, climate, and social policies from the United States will add to the economic, environmental and social disruption.
3. This turmoil creates heightened uncertainty and risks for national and international sponsorship of, and participation in, sporting events. The risk of conflicts (physical and in cyberspace) is likely to increase, potentially disrupting international travel and events.

Worsening environmental conditions

1. While renewable energy production continues to grow, greenhouse gas emissions are also rising. Extreme weather events associated with climate change are increasing, with devastating human and economic costs. Research is confirming the contributions climate change is making to specific extreme weather events. However, these events seem unlikely to substantively affect political and business policies and decisions. Economic short-termism, with a focus on increasing productivity and consumerism at the expense of the environment remains dominant. Policy decisions continue to address specific environmental challenges separately, rather than seeing their interconnections. Because of this siloed approach, adverse environmental impacts are compounding.
2. A growing frequency and/or impact of extreme weather events, and other declining environmental conditions, will disrupt local and international events and activities, and increase the financial pressures for sport and recreation organisations.

Appropriate response to Artificial Intelligence (AI)

1. AI continues to feed a “fear of missing out” attitude internationally. The United States’ “Stargate Project” seeks to maintain dominance, especially against China. While some applications show promise in specific settings, some commentators note that AI has had minimal impact on productivity or profit for many companies adopting them. The costs of implementing AI and the capability needs are also often underappreciated. None-the-less, there is a growing risk of people losing jobs or facing wage cuts through companies implementing AI programs. Claims that we are close to artificial general intelligence should be treated with scepticism, but AI approaches are developing rapidly.
2. The growing energy demand for AI is also causing alarm about the environmental costs. The recent release of the Chinese-based DeepSeek, which claims to have similar abilities as ChatGPT for a fraction of the computational and energy requirements, has challenged the US narrative of bigger models are better. However, DeepSeek appears to have similar limitations as other large language models, and there is some scepticism about the company’s claims of its lower energy use and costs.
3. The impact of AI on sport and recreation is uncertain at this stage. Organisations will need to think carefully about the benefits and risks of adopting (or not adopting) AI systems, especially the people capabilities they may need to successfully use them. The environmental costs of using AI may also become an important social issue for the sector.

Questions prompted by these developments

National Outlook

• Do strategies or programmes need amendment/greater emphasis to support participants and organisations facing financial and workforce challenges?

Healthcare

• What steps can be taken to mitigate the challenges for participation in sport and active recreation linked to impaired health and disability services?

Geopolitics

• How should contingency plans be enhanced and what greater resilience can be developed to address disruptions to international travel and events?

Environmental

• Where are the most significant exposures to the risks posed by extreme weather events, locally and internationally?

Artificial Intelligence

• Given the hype, how can the benefits and risks of adopting AI systems be evaluated?

Alignment to future scenarios

Sport NZ’s 2024 future scenarios were developed to help the sector navigate plausible future states by identifying key disruptors (drivers of change) shaping sport and recreation. These scenarios provide a framework for decision-makers to anticipate and respond to emerging trends.

Growth Scenario ("Par for the Course"):

Most current disruptors align with this scenario. Geopolitical risks persist, including the United States withdrawal from the WHO, ICC sanctions, and Argentina following suit. However, there are indications that global dynamics, particularly in Asia, may increasingly disregard the United States actions as its influence wanes. These developments remain consistent with the growth trajectory.

Collapse Scenario ("On the Ropes"):

Climate risks are escalating toward the collapse scenario due to rising threats of breaching Climate Tipping Points. These shifts could lead to irreversible changes, challenging the incremental growth models assumed in the growth scenario. A critical concern is whether a collapse in one domain (e.g. climate) could cascade into others (social, economic, political) due to systemic interdependencies. This highlights the need for a more integrated approach to scenario planning.