Sports Web3 Predictions 2024

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Introduction 🔌🔧

👋 The last Sporting Crypto of the 2023! It’s been a wild one…

The year has gone extremely quickly and has been a difficult one for the crypto industry. That being said, we have also seen a resurgence of market activity and enthusiasm in H2 of this year. The green shoots of the last few months may well be here to stay and start 2024 off with a renewed sense of optimism for this nascent market.Before you get into the newsletter…

🔌 Listen to the latest episode of the Sporting Crypto Podcast with the CEO of Animoca Brands, Robby Yung! Listen here or watch on YouTube

🔌PSA… this is the last newsletter of 2023. We will also have Episode 11 of the podcast launching on the 14th of December, and return with the newsletter on the 8th January.

The Sporting Crypto Newsletter is supported by The HBAR Foundation.

In this newsletter, I outline my sports Web3 predictions for 2024.

For my 2023 predictions, I was safe and probably didn’t make enough predictions to go back and point to.

This time around, I’ve gone for a) more predictions and b) some slightly more out-there ones.

Even in a bear market, there were things that you would have never anticipated happening in 2023.

If I’d written at the start of this year, that Disney would announce an NFT platform, Nike partner with Fortnite in an NFT activation, and that a sports NFT game had 3 million mobile downloads… you’d have thought I was crazy.

So it’s safe to say Web3 will wow us again in 2024.

Discussed in this Newsletter, Sporting Crypto Predictions 2024:

1. Rights Holders Struggle with High Minimum Guarantees2. Partnership Failures due to Price Points and ‘Fan Market Fit’3. Web3 Sports Sponsorships4. Free-to-mint and cheap products dominate the Sports Web3 market5. Broadcasters/Streaming Companies Venture into Web3 Rights6. Web3 gaming builds on momentum7. Real-World-Assets go from strength-to-strength

🔮 Sports Web3 Predictions for 2024

1) Rights Holders Struggle with High Minimum Guarantees

At this intersection, the commercials have largely taken the approach that many other rights deals do traditionally, minimum guarantees (MGs).

This model, often successful with more mature markets and established industries, doesn't seamlessly transition to Web3. With that in mind, this has still worked very well for some, namely the likes of Dapper Labs and Sorare.

For Dapper, NBA Top Shot was a bet made by a very forward-thinking rights holder at the cutting edge. That exploded, allowing Dapper to drive strong revenues and then raise at incredible multiples in a bull market.

Sorare concentrated on smaller rights deals after raising capital and then began to tap up top-tier IP after volume surges and further large raises of capital.

For most, however, these deals will gobble up profit margins and development budgets. For these smaller, less capitalised companies, survival becomes precarious when large portions of their budget are tied up in these licensing costs.

How do you develop something that fans want, from that position, at a reasonable cost?

The economics don’t stack up for the upstarts unless the MGs are reasonable. And even then, what if you just don’t have traction? You’re still on the hook and your margins are nil from the start.

I don’t see a lot of sports brands getting the high MGs their commercial directors want from Web3 companies in the future. There will still be expensive sponsorships, and there will still be collaborative efforts to create propositions.

But the era of really high minimum guarantees in sports and Web3 is gone, in my opinion.

2) Partnership Failures due to Price Points and ‘Fan Market Fit’

A consequence of some of these high MGs is expensive content for the consumer. Which obviously, won’t stack up.

Web3 has a tough time convincing sports fans that this isn’t a scam. So good luck convincing them it isn’t a scam AND getting them to part with hundreds of dollars.

This is a global issue but is particularly seen in Europe — where sports fan spending culture is just not the same as it is in Asia or the USA.

Sometimes, this happens because the creator of the proposition or partnership doesn’t understand sports fans, and other times, it happens because there is pressure to sell at a specific price point to recoup enough revenue to pay high licensing fees.

I think 2024 will see many Web3 Sports partnerships fail because they’re simply too expensive for the consumer.

The crypto market might be coming back, but retail consumers do not, for obvious reasons, want to spend ludicrous amounts of money on digital content. They want to play, experiment, feel and touch what this thing is. They don’t want to go from zero to a hundred — an obvious failing for many of these projects in retrospect.

3) Web3 Sports Sponsorships: 

Web3 partnerships in sports were prevalent even with so many ‘grey’ actors in this space.

So I expect that regulatory clarity and clear rules will make some sports brands more comfortable shopping their inventory to crypto buyers. Especially, if those buyers are some of the only entities that have the cash to pay.

Interestingly, some friends in the industry have said that a lot of their partnership leads are starting to come from incumbent organisations who have not been as exuberant with their spending as high-growth tech companies have over the past 5-7 years.

Perhaps 2024 sees a fight between the well-capitalised crypto companies and incumbents on sports sponsorships?

As long as these entities remain financially stable and legal, the demographic overlap between their audience and sports enthusiasts is just too great to not see partnerships.

I think 2024 will see crypto sports partnerships hit the levels we saw at the last peak of the bull market in 2021. Perhaps not quite to the level of an FTX acquiring the naming rights of the Miami Heat stadium for 19 years, but close enough.

It seems as though the worst of the macro tailwinds economically are over, and with crypto flourishing in a high-interest, and quasi-recession/recession market — it makes me think that there will be some mouthwatering amounts of money tied up in sponsorship deals in 2024.

4) Free-to-mint and cheap products dominate the Sports Web3 market

Even though we are beginning to see green shoots in the broader crypto market, I strongly believe that sports brands will lean heavily into the free or cheap models that have seen success in 2023.

The likes of McLaren Racing, Manchester United and Reddit’s partnership with the Super Bowl drive very strong levels of engagement amongst sports fans. Although the revenue isn’t huge (yet), the ability to showcase innovation as a brand, engage millions of fans and execute something novel — creates KPIs away from revenue that define success.

In 2024, I expect to see more of this. 

Whether it’s from sponsored activations or self-funded ones, the idea that we see the casual fan spend thousands of dollars on digital content is not realistic.

The aim here should be for Web3 to be additive to the fan experience, not a financially driven, speculative, exploitative strategy to drive revenue.

Many early sports x Web3 projects, some now being termed ‘SportFi’, will not be the ones that take this technology mainstream and add to the fan experience. The clue is in the name. If something is shorthand for ‘Sports Finance’ (as De-Fi is Decentralised Finance) — it’s not going to pull at the heartstrings of fans globally. Sports fans don’t want to be ‘financialised’, they just want their fan experience to be better, support their team and talk to their friends about their favourite players.

5) Broadcasters/Streaming Companies Venture into Web3 Rights: 

Probably the most out there and likely incorrect prediction, but ever since I wrote about TNT's successful Watch-to-Earn trivia game, I’ve felt that this market is ripe for broadcasters to leverage in a way that boosts engagement.

My prediction is that free/cheap digital assets will be what dominates this intersection. Therefore, one must look at who has the funds to leverage ‘Web3 rights’ to yield non-direct revenues in the form of product sales (Amazon, Apple, Etc.) or subscriptions (Netflix, Disney etc.).

Maybe it doesn’t look like a ‘Watch-to-Earn’ concept. The value add is perhaps something more abstract — but the ability to utilise this technology to create a more coherent ‘engagement’ program as a broadcaster or streaming entity must be tempting.

Particularly as the latter begin to venture into gaming more…

6) Web3 gaming builds on momentum

Speaking of Gaming… it’s having a real sunshine moment in Web3.

The best example of this in sports is NFL Rivals, who have had 3 million mobile downloads in 2023…

And, their revenue numbers are strong, incentivising users to play, own and collect by utilising blockchain.

What’s not to like?

The inevitability of blockchain and gaming is something I’ve not felt strongly about, especially when looking at games that have tokens attached to them. To me, it makes little sense that a crypto token can be traded on the secondary market by someone who doesn’t ‘play the game’, thus rendering the price to unnecessary volatility.

Is the promise of interoperability worth the volatility of a free market?

Game economies are hard as they are, so adding crypto into the mix doesn’t scream “this will work” to me.

But I may well be proven wrong, and the green shoots of 2023 in this intersection - have been best seen in sports, as per the NFL Rivals example.

The thing about NFL Rivals, however, is that the concept isn’t alien to consumers. 

1. It’s a game on your phone

2. You buy in-game currency

3. You buy in-game assets (but this time they’re NFTs!)

Here, the blockchain creates an additive experience in a game that people love playing, which seems like the most sensible, and short-term - the best solution.

Another clever example was Fortnite by Epic allowing you to connect your Epic Games account to your Nike .SWOOSH account, therefore allowing you to mint a commemorative NFT.

There have been smart activations like this that don’t incorporate every advantage of a blockchain, protect the walled garden of the publisher, and add value to the consumer.

In 2024, I expect Web3 Gaming to hit heights we haven’t seen, and perhaps in ways we don’t know yet.

For sports, we already know this will have a huge impact because Gaming itself has such a big impact on sports and vice versa.

These worlds will continue to collide, and I predict we will see several NFL-Rivals-like success stories.

7) Real-World-Assets go from strength-to-strength

Last but not least, let’s talk about Real World Assets (RWAs).

The generic idea here is that real-world assets can benefit from being on a blockchain.

This will become a monstrous market in 2024, and I think that sports memorabilia is going to be a big part of it.

There are two angles to this:

1. Secondary market trading of memorabilia and sporting items

2. Direct-to-consumer products that are sold as NFTs but are physically backed

There are many reasons why the blockchain is an effective distributed database, but perhaps the greatest advantage it gives you in this scenario is the proof-of-authenticity and fraud controls. Add that to near instantaneous settlement of assets, funds and contracts — you have a huge advantage in markets where efficiency can disrupt. Assets in the real world are one of these markets.

Real-world assets are coming to a chain near you, and sports won’t be left out. Memorabilia is a big enough market that this will be a big use case in the sports industry.

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More Sports & Web3 Stories

• Project Worldwide Expands Sports, Web3 & Entertainment Capabilities with Investment in Talisman (Read more here)

• From SBJ: Kanpai Media focused on creating original content for MMA and combat sports fans (Read more here)

• Futureverse & Reebok Announce Exclusive Partnership (Read more here)

• From Coindesk: Ron Faris at Nike Is Running With Web3 (Read more here)

• OKX To Co-Host Taiwan McLaren F1 Fans Event with McLaren Formula 1 Team at Taipei on 14 December 2023 (Read more here)

• Mythical Games break down the success of NFL Rivals with a great blog post (Read more here)

• MeetKai, Meta-Stadiums Launch FIFA Sports Metaverse (Read more here)

• Nike .SWOOSH introduce Month of Giving (Read more here) 

General ‘Stuff’ that Could Impact You

• Decrypt Media and Rug Radio Merge to Create Global Web3 Publishing Company (Read more here)

• Leading NFT project Pudgy Penguins have launched Pugdy Worlds Alpha (Read more here)

• Flipkart, the largest e-commerce and one of the largest payments companies in India, is launching an ecosystem chain with Polygon (Read more here)

• eBay have filed a patent for the tokenisation of collectibles (Read more here)

• Société Générale to become first big bank to list a stablecoin (Read more here)

• Coinbase rolls out money transfers via links (Read more here)

Thanks for reading the latest edition of the Sporting Crypto newsletter. I’m happy to see so many people enjoying and sharing it with their networks.

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