Curious how the blockchain will impact sports teams and their fan bases? Wondering what types of sports-related NFT business models are emerging?
In this article, you’ll discover how sports will onboard more people to Web3.
How Sports Can Move Fans From Web2 to Web3
One of the things turning a lot of us off of Web3 is that so many people are trying to fit NFTs into places we don't necessarily need NFTs, at least not yet.
Another is the difficulty of understanding the value proposition of one NFT versus another NFT.
But there are a lot of valuable use cases with the potential to vastly enhance our lives and experiences, especially when paired with the pervasive culture of fandom and collectibles. Let’s look at sports…
No matter how loyal a fan you are, there’s always someone who says they’ve been going to games longer than you have which makes them a more loyal fan.
You counter their assertion by saying you have every single bobblehead from the team’s lineup during a specific era.
“I was watching the game where X happened.”
“Well, I had field-level tickets for that game.”
Talk all you want but neither of you has incontrovertible proof.
NFTs have revolutionized loyalty and proof of fandom because they provide a transparent and immutable record of your engagement with a team. NFTs can show which games you had tickets for and where your seats were, which collectibles you own and how long you’ve owned them, and more.
Someone interested in basketball might not understand the difference between a Bored Ape NFT and a Crypto Punk NFT, but they do understand that a Giannis Antetokounmpo trading card is more valuable than a card for a garden variety bench warmer.
It’s through that familiar connection that sports fans from traditional fandom are entering Web3-enhanced fandoms.
Sports-Focused Business Models in Web3, Today
Let’s take a look at how the sports industry is successfully onboarding fans to Web3 today.
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#1: Digital Collectables: NBA Top Shot and NFL All Day
In July 2020, the NBA (National Basketball Association) partnered with Dapper Labs to launch an officially licensed collection of digital trading cards (NFTs) that highlight athletes and commemorate pivotal plays as well as other moments: NBA Top Shot.
Then, in August 2022, the NFL (National Football League) partnered with Dapper Labs to launch NFL All Day, a platform that lets fans collect digital assets for key plays, virtual versions of Super Bowl rings, and more.
Dapper Labs has similar partnerships with the UFC (Ultimate Fighting Championship), LaLiga, and England’s Premiere League.
#2: Fantasy Sports: DraftKings and Sorare
In DraftKings, players purchase NFTs to make up their roster and choose their athletes for each contest from that roster.
DraftKings releases groups of athletes' cards in packs (similar to blind packs of baseball cards) and the NFTs are split into three tiers of rarity: common, rare, and legendary. Players can also buy and sell athlete NFTs in the DraftKings marketplace.
The pay-to-play aspect is also tiered. If you’re spending $20k on cards, you’ll compete with other people spending that same amount of money and the payout is reflective of that investment.
With a simple onboarding process, DraftKings has amassed a player base of millions.
Sorare differentiated its fantasy play by integrating an experience point accrual mechanic.
For example, if you play an NFT in 100 contests, you get a 5% boost every time it scores points. It’s great for retention and keeps OG players engaged.
To incentivize people to buy new NFTs from the latest season’s release, Sorare artificially imbues the current season’s tokens with a similar boost, but that artificial boost is removed when the season ends.
#3: Cautionary Tales
Autograph is a company founded by Tom Brady and Dylan Rosenblatt to sell digital collectibles (NFTs)— autographed by major athletes, that come with access to private meet and greets, AMAs, and other perks.
In 2021, the company raised $200m of funding, and then Tom Brady announces he is retiring from football to work full time on Autograph. The business model was very successful and continued to attract many more legendary top-tier athletes. Then, Tom Brady decided to play one more season of football.
Since that time, the company experienced a rough patch. It's had trouble fulfilling the utility promised to its holders. Meet and greets were reportedly moments where holders see the athlete walk by and wave, and at least one AMA in Discord was reported to have been attended by someone other than the genuine athlete. Still, the platform is still delivering and top-tier athletes are there.
Not nearly as disingenuous but just as damaging is the way NBA Top Shot decided to mint to demand. Top Shot minted millions of new NFTs for a user base of less than 10k monthly buyers. They essentially oversupplied the market.
For context, this is congruent with the way Topps oversupplied the printed sports trading card market in the ‘90s, and how Funko over-produced $30m to $36m worth of Funko Pops in 2022.
It happens to many major collectibles, and the collectible NFT market is not immune.
Future Web3 Business Models for Sports and Other Industries
The sports industry has demonstrably embraced Web3 within the areas of collectibles and fantasy sports. But what comes next? How will the sports leagues with millions and millions of fans worldwide move forward further integrate Web3? And how might these future models apply to other industries?
This next round of integration will focus on loyalty and ownership.
Loyalty: Tickets and Watch-to-Earn
There are two parts to loyalty: collectibles and attendance.
The sports industry has demonstrably embraced Web3 within the areas of collectibles and fantasy sports. So, how will attendance be addressed?
Dapper Labs piloted a beta program with Ticketmaster for 100 NFL games this past season. If you went to one of these games, you were able to claim the NFT version of your ticket online.
Ticketmaster issues something like 500 million tickets a year for events that cover sports, music, and other forms of entertainment. Many of those tickets are already digital and are presented for entry via a mobile device.
So we already have the infrastructure in place and fans’ acceptance of digital tickets. If NFTs become the new norm for ticketing, it would be very easy for sports teams, bands, or other entities to reward their most loyal supporters with VIP experiences.
The more game ticket NFTs you own from each season of play, the more extravagant or specialized the VIP experience.
What if you can't go to games? The second part of loyalty is watch-to-earn.
The First Mind is working with Bleacher Report on a project called Watch to Earn with NBA on TNT. NBA on TNT is a long-running show hosted by Shaquille O’Neal and Charles Barkley.
While you're watching the show, a QR code pops up on the screen. You scan the code to visit a website where you answer trivia questions, and earn NFTs from participating.
You’re never going to be more loyal to a sporting enterprise than if you have an ownership stake in it. And it's happening for fans in Web3…
Krause House DAO is operating toward the goal of owning an NBA team. They currently own a Big3 team and were close to becoming minority owners in the Phoenix Suns when it sold. LinksDAO is operating similarly, intending to own a golf course.
What Will Move the Needle on Mass Adoption of Web3 by Everyday Users
Companies like Dapper and Ticketmaster will be instrumental in moving average people to trust and use NFTs in their everyday life, by meeting those people where they already are with solutions that make sense.
Some of the seeds are being sown right now by Starbucks and Reddit.
For sports to maintain a stake in the onboarding to Web3, the promise of revenue will be key. Sports is a money-making business, after all.
Other Notes From This Episode
- Connect with Michael Stelzner @Stelzner on Instagram and @Mike_Stelzner on Twitter.
- Watch the interview and other exclusive content on the Web3 Business YouTube channel.
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