NFTs, It's in the game: EA Sports to Add Nike NFTs to Future Games

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Introduction 🔌🔧

This lull in Web3 enthusiasm is eerily similar to 2019 in which we saw a frothy, exuberant retail market in late 2017 and early 2018 crash 85-90%.

In those depths, in 2019, we saw DeFi, NFTs and other blockchain-based applications built by enthusiasts who stuck around.

It feels very much like this is the ‘sticking around’ analogue to 2019, but instead of it just being a small community of crypto people — the big brands are here to stay.

It’s Nike. It’s Adidas. It’s F1. It’s Reddit. It’s Starbucks.Not all of them will be successful, but these brands are investing heavy resources in making Web3 a meaningful part of their businesses.

🔌 PS. If you’re hiring for any interesting roles in sports, entertainment, gaming or media that touch Web3 - please email me back at this email address! I’m creating something cool I’d love you to be a part of :)

EA Sports to Add Nike NFTs to Future Games

The Sporting Crypto Newsletter is supported by The HBAR Foundation.

It’s in the game. Quite literally.

The headline of the year landed last week, coming from Nike and EA Games announcing that they were working together to make .Swoosh (Nike’s Web3 platform) virtual items available in future EA Sports games.

In November 2021, EA boss Andrew Wilson said in an earnings call:"I think that in the context of the games we create and the live services that we offer, collectible digital content is going to play a meaningful part in our future. So, it's still early to tell, but I think we're in a really good position, and we should expect us to kind of think more innovatively and creatively about that on a go-forward basis."

And perhaps, cynically you could say this was a response at the time to the rising interest in ‘play-to-earn’ games such as Axie Infinity. But seemingly, EA are ready to venture seriously into the Web3 realm.

In this newsletter, I discuss:🌎 1) NFTs, It’s in the game👚 2) Cosmetic NFTs and interoperability🎮 3) Will gaming drive mass adoption?

So just why is .Swoosh NFTs being available in EA Sports games such a big deal?[PS. I’m sorry for writing about Nike again, but there is just no running away from this one…]

🌎 1) NFTs, It’s in the game

Last week, after Nike’s Web3 platform .Swoosh sold almost 100,000 OF1 boxes (their first drop) to over 50,000 people and drove almost $2 million in revenues, they decided to drop the biggest sports related Web3 headline I think we’ve ever seen.

Attaching this teaser trailer, the .Swoosh Twitter account posted: What’s In The Game? Only time will tell…

EA Games and Polygon followed up with their own social blasts, and the official announcement from EA’s site read:

Ron Faris, GM of Nike Virtual Studios, said:

And Andrea Hopelain, SVP of Brand for EA Sports & Racing said: 

As we don’t have much information as to what is to come here, let’s try and read between the lines…Before we do, here are some notes for the uninitiated:

• EA’s messy divorce from FIFA means every soccer game produced going forward will be called EA Sports FC

• Blockworks have previously reported that .Swoosh is already working with top athletes such as Cristiano Ronaldo, Lebron James, Michael Jordan and Serena Williams.

• EA Sports’ Ultimate Team game, generated $1.62bn from 2020-21. 

Two key snippets here: “…a new partnership aimed at enhancing and personalizing the virtual sports experience for fans all over the world.” and “…will lead to all new ways for members of .SWOOSH, Nike’s new digital community experience, and EA SPORTS fans to express their personal style through play.”

“personalising the virtual sports experience” and “…express their personal style through play” are key indicators for me here.This to me (and I’m speculating here) shows EA are going to go the same route as NBA 2K, whereby there are more open-world, multiplayer platforms as opposed to simply playing the game in the future.

Nike are in a great position here because, feasibly, you could have an amazing artist collaborate with Cristiano Ronaldo, creating virtual apparel that is then useable in EA gaming titles. Which is pretty cool.

And being able to get exposure to .Swoosh virtual items to the 150m-200m FIFA 23 players currently playing the EA Sports title on a daily basis is quite something.

It’s also a good deal for EA, who don’t have to do any of the heavy lifting on the creation side — beyond making the items actually useable on a technical level inside their game or future virtual worlds.

Why is this exciting?

It’s exciting because it makes sense.

That seems a weird thing to say but branded digital cosmetics have seen great demand in the past few years. What do you think happens when you allow people to use those branded cosmetics in virtual worlds and games, seamlessly?

That demand will grow.

Gamer Pushback

Of course, there has been pushback from some of the gaming community.

Take this tweet, who seemingly thought NFTs were dead, complaining about people being ‘stupid enough’ to buy these NFTs that EA will likely bring in from the .Swoosh ecosystem.

Here’s another tweet, this time from someone claiming that the ‘collection’ Nike released in May 2023 made no money and has no interest, and that’s the reason they’re attaching them to games, to try and ‘squeeze’ money from gamers (because they’ve made no money!) and gain some attention.Of course, the image referenced is the free .Swoosh Nike ID membership of which over 365,000 have been minted, and requires a waitlist to join, which led to Nike generating almost $2m in their first drop, all of which are primary sales. Pretty decent by any metric.

There is still huge pushback from gamers, and some of it is definitely warranted. Gamers have been squeezed monetarily and that trend doesn’t look like it’s slowing down. But the perceptions in the gaming communities about NFTs can often be ludicrous and misinformed. A balanced view cutting through can be found via this Hackernoon post “18 misconceptions Gamers have about NFTs”, by my friend Sillytuna, which I highly recommend you read.

👚 2) Cosmetic NFTs and interoperability

In the above article by Sillytuna, one of the points talked about is NFTs being used across multiple games.

This is complicated from a technical perspective but also from an incentives perspective.

Sillytuna writes:

And, well, bingo - (1) is seemingly coming to fruition.

The technical and incentive alignment issues mean the idea of infinitely interoperable assets across the ‘metaverse’ is a very difficult thing to imagine.

But with Nike, co-branded or permission licensing can make this idea more realistic.

And for their partners, the onus doesn’t have to be on the actual creation, just on the ‘how do we make this asset function in our gaming environment’ part. Which is also difficult, of course.

Someone who co-founded one of the biggest gaming studios in the world said to me today:“How the hell will it actually work where my game assets from one game will work on someone else's game? I love the idea but I'm scratching my head as to how it can ever truly work?”

The idea of interoperability cross-gaming is nice in theory but incredibly difficult to execute from a tech perspective.

And even then, how does the monetisation side of things work? These are important unanswered questions.

But as per Sillytuna’s article, brands can steal a march here whilst gaming studios figure out whether it’s feasible or desirable to share in-game assets. They can create assets that games will then incorporate and augment to fit their environment. Whereas a game created to fit a specific environment, going the other way, is much more difficult.

Nike and other big brands have a leg up here because they don’t need to worry about the technical implications. It’s on ‘others’ to work out how to bring their creations to life in their gaming, metaverse or social environments.

🎮 3) Will gaming drive mass adoption?

Some of the biggest cheques written in crypto since 2021 have gone to game-related projects — whether it be titles and studios, or infrastructure and tooling.

There seems to be momentum in Web3 gaming land, and it’s not stopping.

On the sports front, take this very announcement, or the fact that GOALs raised $20m last month, or B/R’s social game Watch-to-Earn has had ~1m token claims since launching in February, as a signal of things to come. Whether it be AAA gaming, fantasy or social — the future of Web3 adoption may well be gamified.

Epic Games, Fortnite creators, have 5 NFT games currently on their marketplace and are ambitiously aiming to have as many as 20 available by year’s end.

Cross the Ages, a mobile-based game recently surged to the top of the Apple download charts.

Solana-based gaming metaverse platform Star Atlas released its latest version this week, and it looks pretty incredible.

One of the most well-funded blockchain games, Iluvium, raised an additional $10m recently after releasing its latest gameplay trailer.

The real litmus test will be whether these games get the traction that their Web2 counterparts do. At that point, we will know how big an ‘onboarder’ to this technology gaming really is.

I’m simultaneously bullish and bearish on gaming being a massively successful use case for blockchains.

On the one hand, there are some very interesting things happening and a lot of investment is being made in this sector.

On the other, I’ve seen a lot of very bad pitches, a lot of business models that won’t work — and more importantly — some pretty bad games.

🧠 Concluding thoughts

To me, this is the biggest headline we’ve ever seen from a sports x Web3 perspective and everyone should be paying attention. 

Nike are serious about digital and especially Web3, and the sliding doors moment that the EA and FIFA divorce has presented — creates incredibly interesting opportunities.

A couple of things that really interest me here are:1) Legals 2) Monetisation models

On the legal side (1) of things, regulation is moving at a different pace with differing levels of success globally. The EU with MICA and the likes of Ireland and France trying to steal a march on other countries, as well as Hong Kong, Japan and Singapore in Asia. On the other hand, the US, Canada and Australia are shunning crypto and struggling with their own regulatory frameworks — and the UK sways from wanting to be the world’s crypto hub to trying to clamp down on things completely. Either way, these are difficult waters for global brands to be swimming in and they will have to be smart — but also nimble in case the tide of regulation swings a different way.

As I wrote out the above paragraph, news broke that the SEC have sued Binance and their CEO CZ, for US Securities Violations… so yes, operating in this space globally isn’t easy from a legal perspective.

With monetisation (2) — there is this expectancy that gaming studios can just “make in-game assets NFTs” and they’ll make more money.

This is not remotely true in a lot of cases.

For example, FIFA’s very own Ulitmate Team, which I wrote about here.

If you suddenly make specific in-game assets NFTs, it can have huge knock-on effects to a game’s business model. Games studios won’t do this, and it’s more likely they will make smaller bets that protect their existing golden geese. It will take time for traditional game studios to incorporate digital assets into their existing games.

I’m incredibly excited to see where this .Swoosh and EA partnership goes, and beyond that where else EA and Nike respectively look to partner and develop when it comes to their Web3 strategies.

In the last two months, we’ve seen some pretty big headlines, but this one has definitely created the biggest ripples.

💡 Sporting Crypto Spotlight

Brought to you by SEG3: Returning to London June 28/29

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General ‘Stuff’ that Could Impact You

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• FC Barcelona have officially launched a Discord channel (Read more here)

• GameStop Teams Up with The Telos Foundation to Grow Web3 Gaming Strategy (Read more here)

• Epic Games Unveils 20 Epic NFT Titles for Web3 (Read more here)

Thank you!

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