Web3 Feels Dead (but it’s just getting started in sports)
Discover more from Profluence Sports by Andrew Petcash
Web3 Feels Dead (but it’s just getting started in sports)
Artificial intelligence is hot right now (especially between ChatGPT and Google’s launching of Bard).
And AI is certain to be more applicable to sports in the near term compared to web3…
But behind the scenes, promising early-stage companies are still building in the blockchain ecosystem.
In just the last month:
Lionel Messi has made two web3 investments
Chiliz plans to invest $50M into web3 sports companies
and Bitcoin is up 15% in March
Web3 feels dead — but it’s just getting started in sports.
Let’s Dive In 👇
The Future of Sports is Changing
While everyone has different opinions on sports betting, it’s hard to argue that it ignited a flame behind sports as we know them.
The renaissance began in 2018, with the repeal of PASPA — an act to prohibit sports gambling under state law.
This did two major things:
created a surge of money into the sports world
provided some of the first digital engagement touchpoints for fans
A few years later, this digital engagement took a leap forward with NFTs, DAOs, and other metaverse collectibles.
All of this is timely as well…
Sports need to capitalize on attention in the digital world and invent new ways to deliver experiences to fans.
Specifically with Millenials and Gen Z audiences.
If they don’t, the future could be bleak…
Sports Fans Are Changing
Sports fans are an attractive niche to go after.
Like check this out…
The average salary of a sports fan is about $95,000/year (the national average is $71,000).
But there’s a MAJOR problem — sports are losing their grip with younger Americans…
Millennials & Gen Z’ers are different.
Ask a 12-year-old to sit and watch a full MLB game and they’ll probably say “It’s too long” or “It’s too boring”.
And even if they do watch — 90% of the time it’s accompanied by a mobile device where they’re on social media or playing a game.
GenZ is also far less likely to watch live sporting events:
If leagues, teams, and media rights holders believe that future generations will sit and watch 3+ hours of live sports packed with ads…
They are in for a RUDE awakening.
Millennials and GenZ need sports to be more active:
social and snackable experience
engagement through social platforms and memes
The gamification of sports (“Sportainment”) is the future that lies ahead of us…
Wagering, play-to-earn, NFTs, AR, and fan leaderboards will become the go-to engagement methods for sports in the 21st century.
We’re still several years away from mainstream adoption (but interestingly enough, AI will help accelerate the process).
Access to Exclusive Content
Prior to the recent F1 race in Bahrain, Tezos and McLaren Racing dropped digital collectibles enticing fans for the upcoming season.
Over 230,000 digital collectibles were claimed — enabling owners the opportunity to receive rewards, perks, content, and insight into F1 + McLaren.
This is not about speculative assets or cartoon pictures — this is about building a new community and bringing them closer to the action (keeping them engaged).
Creators have been making money online since the rise of the internet:
started with subscriptions and paywalled content
moved to ads and sponsorship with the rise of social media
and now looks like it’s headed toward community clubs in web3
Smart contracts within NFTs will govern all aspects of access and rights.
Including access periods (seasons), access type (paywalled content), and royalties for the original creator if sold or transferred to another wallet.
NFTs gate access through the validation of ownership in their digital wallet.
access to the University of Alabama’s Fan Club
proof you attended the Super Bowl or World Cup
recognition that you donated to the Yankees charity
We’ve seen a lot of companies building this model in sports (even in the collegiate space and tying it to NIL).
NFTs as Tickets
The $71 billion event ticketing industry is riddled with nonsense.
3rd party ticket marketplaces & their high fees hurt both sports fans and teams.
NFTs as tickets bring a handful of solutions:
Teams and season ticket holders can institute a smart contract royalty for resold tickets allowing them to participate in any 3rd party sales (5-10% earnings)
NFT ticket-holders can now benefit from airdropped collectibles or other promotions by the teams or the leagues
To me, this is less about showcasing past tickets and more about teams optimizing their revenue.
Last month, Alex Rodriguez and Marc Lore raised a $20 million funding round for Jump, a new ticketing and fan experience business to take on Ticketmaster.
In a statement, they said they hope to make live events more personalized and less transactional — NFTs are sure to be a part of this.
Honestly, the fact all sports tickets aren’t already NFTs is surprising to me.
NFTs for Fantasy Sports
Fantasy sports is a $25B global market as fans look to socialize and gamify their fandom.
The two biggest pain points:
For anyone who has served as league commissioner, the process of collecting money and herding team owners is a pain.
For sportsbooks, acquiring and keeping customers is expensive and their models are under attack by everyone in the ecosystem to exploit to their advantage.
NFTs will help ease the sports betting industry in many ways…
This is why it’s no surprise some of the biggest web3 x sports companies fall into this niche.
Going Forward
AI is already putting a strain on “search” — why use Bing when you can just use an AI tool?
And I think this could have some interesting implications…
An end to search means that the NFT projects of Nike, Adidas, Starbucks, and others could go from being cute ideas to a viable way to monetize and engage fans/customers.
Why?
Humans are very tribal.
This is why we’re losing interest in buying Nike shoes because we see an athlete endorse them on social media (web2).
And we’re gaining interest in buying a Nike NFT because it enables us access to discounts on shoes and social events where we can meet other like-minded people (web3).
Two key points here:
Ownership is key — which is important for web3 but also the same reason why athletes are choosing to invest in companies (and not just endorse them).
Country clubs work for a reason — and sports will have to embrace their digital versions with younger generations (as attention spans are just too short for the current ad-driven model).
Between Web3, NIL, and AI — sports are about to go through a phase of impressive growth.
Exciting times are ahead! 🥂
Podcast 🎙
Today’s guest is Ben Reynolds, CEO & co-founder of Spalk.
Spalk has developed a unique commentary software that allows you to listen to alternative sportscasters with options in over 32 different languages.
You’ll enjoy this episode as we discuss:
differences in the sports league
raising $3M from notable athlete investors
challenges + learnings of entrepreneurship
turning a side project into a global sports company
Check out the podcast episode here.
Thanks for reading (and listening) today!
Another good briefing + podcast coming at you on Friday.
Peace,
AP
Web3 Feels Dead (but it’s just getting started in sports)
On point.