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Maddening Square Garden
How the business of live sports is undergoing a slow, yet un-ignore-able transformation.
Remember the time when Travis Scott did a concert inside the Fortnite arena?
Yes. For my agenda this time, I have decided to remind you of the wild ride that was a kaiju-sized LaFlame performing cuts from his last (and mesmerizing) album, Astroworld. It arrived at a time when the world was disrupted by the first wave of coronavirus. Never mind the fact that the concert was censored to the T. That was a cruel display of what a metaverse is, and what it could be.
(At least the metaverse doesn’t have stampedes.)
Metaverse. Yes, that word you keep seeing everywhere. The stuff of movies (or books) like Ready Player One. The Matrix, minus the idea that killing someone on screen would result in their actual death. I’m sorry that you’re being forced to see another newsletter talk about this literally-otherworldly concept, but I assure you it’s with extremely legitimate reason. And it’s part of a larger argument I want to make.
The reason I’m talking about this now omnipresent word is because last year, something weird happened to sports leagues. The NBA moved to, of all places, the Orlando Disney World. LeBron had to bear seeing Mickey Mouse all day, while making a movie with the Looney Tunes.
More disgustingly, though, there were MS-Teams faces that were placeholders as spectators in the seats during each playoff match. In short, there was either no crowd at the stadiums, or you saw faces of people at homes looking blank at their favorite superstars.
Since I started writing this article, a shitcoin boomed to infinity, and Facebook rebranded itself into a metaverse company. I think there’s a bunch of plays Meta can go for with this direction: video e-commerce, new forms of exchange (remember when Facebook launched Libra?), changing how we work (like this initiative by Oculus), and a host of other things that are for now beyond my understanding. This has also been a long time coming, the entire data controversy was just a stutter step for them. However, the focus of this piece, is still live sports.
If you go to the comments section of an average sports highlights video, you’ll see a YouTube user lament about taking sports crowds for granted. I don’t normally agree with YouTube comments, but this one hurt for sure. Crowds make insane sports moments legendary. The scream across Etihad when Aguero scored that championship-winning goal. The applause that raptures on Centre Court when Roger Federer hits an iconic tweener. The 28 year-old let-out across India when we won the ICC World Cup in 2011.
The issue is that those screams largely moved online owing to the pandemic. Delayed reactions in sports are a nice trigger for FOMO, because you want to be there when it happens. You certainly don’t want to celebrate your team’s victory alone in your room, that’s just depressing. This is why group pub sessions have become a thing in India when it comes to Premier League matches. More importantly, tickets to watch matches can be expensive as hell. A standing room-only ticket a finals game at the Milwaukee Bucks’ home this year was more than $550. A physical seat cost upwards of $770. In fact, the trend for the past few years does seem to be a little worrying:
Actually, there might be a better visualization of how finals prices have evolved. This might be indicative of something, maybe? Note that these are secondary market prices:
But what if you could be part of any live match at once? What if you can less-vicariously live a match without physically being there, or draining huge amounts of cash?
That is effectively the next evolution. Sports ticket prices will likely continue to rise. In the US, it’s not affordable enough for a middle class family to go to a baseball or basketball match (I know what you’re thinking, and I’ll come to that). I doubt it’s possible to get a decent, comfortable seat at an IPL match either. This has caused founders to look into ways to reward fans for their undying beliefs, and make sports more accessible to them. Somewhere along the line, they also realized that this whole metaverse thing could really aid them big in that process.
I’ll also clear one thing here: this is still never replacing the feeling of being in a stadium. But it’s also opening new doors to new stadiums.
Before I begin delving into the question of rewards and accessibility and digital universes, there are a few questions. How do you segment the live sports market? Who are the fans, what are their viewing habits, and how do they engage with other sports fans? Do they want to be rewarded for being such loyal fans? How do they want to be rewarded (and by that, I may also imply some form of ownership)? Can sports lead to other forms of engagement for them? If so, what are those?
And to answer all those questions, like always, I have a raw (I can’t draw to save my life) flowchart ready, explaining how I think most ventures in this space can get bucketed (note that this doesn’t include e-sports; as much as I believe e-sports are real sports, it warrants a whole other rabbit hole):
This categorization came after some research, and I was very surprised to find startups trying to engage even passive sport-watchers in their products. My favorite example is a startup called Buzzer. Left a match because your team was losing, only to find out they’re pulling off a wild comeback? Buzzer duly notifies you just when it thinks it happens. It was the brainchild of ex-Twitter employee Bo Han. Twitter, as you know, runs a fun sports account of its own (called Twitter Sports), with its own banger tweets. There are also players who don’t necessarily cater to the end consumer, but another party that does that - for example, Sport Buff, that allows content providers to further gamify the content. Or India-based edisn.ai, that helps identify players on-screen, shows relevant stuff about them in real-time, and is using that as a springboard to be a full-stack platform covering merchandise, social media, and fantasy. edisn.ai was acquired by Fubo TV only last month, while this piece was being written.
Yet another good application that may not be directly involved is streaming. There is, of course, Hotstar, Sony LIV, Fubo TV, the NBA app itself. However, the streaming rights to each league are split, and it’s very difficult to find out who owns what. Much like with torrents/seeding, blockchain is being looked at as a faster streaming technology - multiple users on the same infrastructure hosting different pieces of the same content. For now, Theta Coin is solving for this in the entertainment space, if not sports.
Largely, I think it’s possible to broadly cover the live sports market with two questions:
Is your solution complementing, or, bolder yet, attempting to substitute the stadium experience?
What kind of fan are you catering to?
The market for live sports is no more a land for diehards. You may be any kind of watcher and there might be a product for you. You may watch full football games of your team every weekend. Or you may watch only the last few laps of an F1 race. Or you only like to see 4th quarters of any basketball game. Or you simply like merchandise and hoard stats of players. Or you want to put your money where your mouth is. The sports fan has gone beyond being boxed into being a single ride-or-die mentality.
In fact, I made a meme to display the spectrum of the user personae of such startups. For all purposes, this is only a meme. However, if you think hard enough, most fans are on some level of either extremity. Memes in pitch decks, please?
You can only imagine what a headache it must be to try and curate a sports community with having to prevent banter exploding. On the other hand, though, it’s so evident that the market for live sports is very interesting. And this is just consumer-facing businesses.
So….where does Web 3.0 come into this? It’s trying to cover everything.
I’ll connect that structure I made to Web 3.0, but before that - here’s the interesting thing: a LOT of teams, AND superstar players, have suddenly shown incredible interest in crypto-based applications. Global cryptocurrency exchange FTX is an official sponsor of Mercedes-AMG. The Philadelphia 76ers are sponsored by crypto.com (so now Joel Embiid can mint one token every time Ben Simmons throws a hissy fit). Jokes aside - a lot of franchises are adopting cryptocurrencies in some capacity or the other. I mean, what’s a bigger example than CoinDCX sponsoring a whole T20 series? Which makes you wonder: is this simply just dangerous, unregulated marketing? Or is it part of a larger play to make sports more interactive using decentralized apps?
To be fair, the answer so far is: both. I don’t think I have anything new to add in terms of the perception of crypto as some type of asset, and its unregulated buying and selling.
What I really want to focus on, therefore, is the latter. A few months ago, a startup named Dapper Labs signed a deal with the NBA to create playing card NFTs of iconic moments of hoopers, and called the product NBA Topshot. For example, this late-season killer play by the Brooklyn Nets has a value of $20K. If I’m being honest, it doesn’t look a lot different from….watching the same highlight on YouTube. But it might be easier to visualize Topshot as part of a longer journey.
This is where you might want to ask: what is that longer journey? Dapper Labs is also creating a platform called FLOW, which, from the looks of it, allows the people to create their own digital collectibles/assets/games. Of course, that’d also imply you need to have your own digital avatar to pimp yourself. And why not? It’s positing itself as empowering creators to go haywire and prove how crazy they can be in their fandom, and reward them for it. But more importantly, it’s the possibility of creating interoperable worlds within worlds. Just take a look at this list of projects on FLOW. Not that they all exist in a single interactive world, yet. What if they could, though?
The interesting thought process behind being a sports fan is that at the end of the day, you might want your loyalty to be rewarding in more ways than one. It’s why fantasy sports exist. If you could earn money off of making excellent draft picks, why wouldn’t you? Moreover, true-blue loyalty programs in sports are few and far between, and are almost always initiated by the clubs themselves, like this Arsenal-Barclays partnership. Which also implies that in order to get rewards, you have to spend a ton on the club - official merchandise, season tickets, any and all purchases with the club’s name on it. Not that solving for sports loyalty requires blockchain either when you think about it. We still don’t have a loyalty program for fans in all geographies, across different income classes. It’s certainly not easy to solve for this problem, but fantasy sports and NFTs are currently filling that gap.
And FLOW is one of the first few steps of building an entire digital life, where loyalty rewards are only one of the million different things you can redeem. What’s more interesting that the idea of building a digital life has its key foundation not in the desire to build a whole new world in any shape or form, but in sports and entertainment. Projects on Flow, Theta Coin, Chiliz Coin are all living, breathing examples of the latter.
Look at this image from a platform called Metacast, run by Unity (of the Unity Engine fame). This is a real-time version of a UFC ring created by a technique called volumetric 3D, while also specifically mentioning that it’s NOT video. It’s supposed to be dynamic, pitch-perfect re-creations of real-life sports moments, and it’s expected to help 3 types of stakeholders: broadcasters, leagues/referees, and athletes themselves.
What’s more interesting is that Unity’s live sports division is headed by a former Liverpool executive called Peter Moore. And this is what he said about his move to tech from traditional sports:
“And at Liverpool it was very simple. It’s a massive global football club, where it was very clear to me from the get-go that 98 per cent of our fans on a global basis would never ever get to Liverpool.
Remember the question about substituting stadium experiences? It may not be fully accurate to say “substitution”, but the metaverse is geared to fill that arena-sized hole in your heart if you need to shell out life savings to get a ticket for one match at Anfield.
Shared immersive experiences with fans across the world seem to be the direction in which ventures like these are heading. Clubs like Barcelona and Liverpool, and brands like Nike and WWE have partnered with Roblox to make in-game content. Digital real estate. Integral to these experiences, of course, is community. Without a strong community (because us sports fans love banter), the metaverse doesn’t serve any purpose. Roblox is a great example of that community (despite the overwhelming number of kids possibly having this level of humor):
Imagine betting exists in such a world. While it might function like betting might in general - if you’re staking your collectibles that cost gold bricks instead, imagine the volume of money that gets pushed every day. And this would ideally be betting without a broker. A metaverse would just hand processes over to the magic of cryptography. Assuming legalities won’t be a problem (which they will), sports betting would become a whole another monster. Bets on Kawhi Leonard dropping 30-piece playoff games, or Max Verstappen drawing up fastest lap will be very possible. You’re watching matches, making bets, interacting with co-bettors, all on one screen.
And why do we limit this to just on-field experiences? The Utah Jazz released an NFT that gives you access to a virtual version of their locker room. So in all probability you get to see what jersey size Rudy Gobert dons every 2 days. In a few more years, if technology allows it, you might get to interact with a live version of the reigning Defensive Player of the Year through that NFT, too. Imagine better behind-the-scenes footage, without the barrier of being rich or having insane connections. The homegrown Ludo Labs is innovating in this area. It allows you to meet superstars, get access to some behind-the-scenes content, if you own a collectible.
And that’s where (as promised) the question of equity also comes along. As Alec Baldwin’s ridiculous cop character from The Departed once said, “Cui bono? Who benefits?” There’s multiple answers to this, depending on what stakeholder you talk about. If that’s sportspersons: NFTs offer them levels (and shares) of ownership previously unheard of, especially in the world of sports. In an industry funded by billionaires, you could now see sportspersons give back and take control from their owners. Who knows, you could see a DAO being organized to bid for the ownership of Manchester United? For both artists and sportspersons, it’s good, in fact, great business.
For the common people, though? So far….it’s expensive. Entry barriers seem to be high, and I’m not even talking about additional fees. The age-old problem of “Why does everything good have to have a top-to-bottom approach all the time for everyone else to wait for trickle-down” also exists with Web 3.0.
I think the debate of the purpose and direction of Web 3.0 is a separate piece altogether, but we’re still quite a way from the decentralization aspect of it. Which is also where I get both the optimism behind and the pessimism against Web 3.0. I was discussing this with another friend who’s incredibly bullish, and we agreed that on paper, it’s another shot at utopia. But, then again, cui bono?
Which is why this piece doesn’t have what I like to call a substantial third act. There’s chatter about how decentralization is going to give back power to the people, and re-organize the way we see finance, voting, community, computing etc. And it sounds very optimistic for sure. But I’m also very skeptical of what it might look like a decade from now. Will all originality be rewarded on the metaverse? How much will it be rewarded? Will the metaverse face the same problem of “too much power with too few people”? Are the current developments just going to be beneficial for those who saw through the FOMO?
These are tough questions to answer, especially for a space like live sports. A number of ventures trying to decode different kinds of sports fans see Web 3.0 as a very solid method of prolonged engagement. However, there’s a very, very long road for a full-stack platform to cover every inch the experience of being a sports fan. Do I think that that necessarily has to involve blockchain? I don’t think so, but it has now become impossible to ignore its involvement in this transformation.
Until next time! And Merry Christmas!
[P.S: I have been writing this for a while now, and the pace at which developments in the space are happening is FOMO-level insane. In that while (and these are just the major ones that I could keep track of):
as mentioned once before - edisn.ai was acquired by Fubo TV,
a piece of land on Decentraland (that’s virtual land, by the way) got sold for $2.4M,
the Los Angeles Lakers’ arena has been renamed from Staples Center to Crypto.com Arena (RIP), and
Adidas Originals signed a deal with the Bored Ape Yacht Club. Reject society, return to monke.
This might be a result of insane market liquidity, but it is still insanely fast.]