Chances are that you, like most of us, are still getting your arms around how to efficiently monetize your access to fan data, and make it a scalable business. We’re late, but is just getting started. So, if data is the new oil, let’s plug the pipeline then.
Three key announcements recently define that the playing field has changed, and it is not coming back to the old ways:
The National Basketball Association and Sportradar have signed a new eight-year deal that will give the Swiss data firm the exclusive rights to distribute NBA data to sportsbooks worldwide.
Crypto.com has secured the naming rights for 20 years to Staples Center in Los Angeles.
Nike is opening its NIKELAND immersive world experience on Roblox.
While we see here encapsulated two macrotrends -sports data, and the blockchain & metaverse-, it is very much recommended to see these holistically. For simplicity, will break down the two in the rest of the article, and will give some insight into why both overlap.
The possibilities of a robust sports data framework, far exceed the consumption by stat-focused consumers or bettors; the statistical construct of a competition has applications not only on performance analysis, but also for brand marketing and communications.
On every sports fan’s mind on the planet, there is a piece of stat that carries the weight of their memories, as if it was a stamped seal on the emotions involved at that particular game, match or race. Furthermore, sports data is the lifeblood of a burgeoning global industry like sports betting; the ability of making real-time markets based on live performances sustain a great part of a global industry (sports betting and lottery), that is projected to account for US$ 211 billon by the end of 2021, through 31 thousand businesses involved, employing more than 197 thousand people (source: Statista).
But there’s much more than the raw data. There are global companies, that are behemoth service providers that take the raw data and live streaming feeds provided by the competitions organizers, and productize them to be able to sell data feeds, live streaming, integrity solutions, and more recently immersive brand experiences to multiple takers across the globe. The leading pack is comprised by Sportradar, IMG Arena, Genius Sports, and STATSPerform. Mostly multinational, publicly-traded companies, which are first and foremost fully enabled technological companies.
If data is the new oil, those are the drilling companies. The amount of investment capital and scaling capabilities make virtually impossible for a sports organizing body or company, no matter how big, to be able to build those capabilities in-house. And with the scarcity of viable options, each rights cycle there’s an ever increasing bidding war that shows no signs of slowing down.
“The big market opportunity at the moment worldwide is in the United States, from a sports betting perspective. It’s the fastest growing market, but the market is still tiny at the moment compared to many other established markets. Right now, it’s not even a third of the size of the Russian market, in part because of the state-by-state [pathway to regulation] in the US.” — Carsten Koerl (Founder and Chief Executive Officer of Sportradar AG)
The next frontier in sports betting, while the European and Asian markets are more mature, is the conquest of North America, with the United States as the prime target. The main -and obvious- reason is that the US legal sports betting market is projected to grow from US$1bn in 2019 to US$23bn by the early 2030s, and the value of that “oil” is worth extracting. Despite the regulatory pace, the appeal is of an unified 330 million inhabitants market, where according to the U.S. Census Bureau in 2020, around 258 million (about 78%) are 18-years of age or older. The key is that 46% of American adults have at least some interest in sports betting. That equates to 106 million people (Source: Nielsen).
Never before have we witnessed such a rapid market rampage, like with cryptocurrencies and its ecosystem. On the back of Bitcoin’s price jumping nearly 230 percent in the last 12 months to around $60,000 a coin, from the sports & entertainment industry we are sitting at the tables were the subjacent battles unfold: the war for user acquisition.
Much like the betting wars of over a decade ago in Europe, where in a fairly unregulated space, the big sports wagering providers battled for vying the interest of potential customers, banking on the inclination those have for engaging with data to live through the raw emotions sports provoke. The major caveat we face now is tat with the decentralized nature of cryptocurrencies and blockchain technology, it is a fairly global affair. With its opportunities, and its major risks. According to Statista, as of November 3, 2021, there are more than 7,500 crypto coins out there. That’s 268% more in a short two years span.
Despite that it is believed that the top 20 cryptocurrencies make up nearly 90 percent of the total market, the truth is that all coin action happens on the exchanges. Coinbase, Binance, Kraken, FTX, Crypto.com, Bitstamp, Bitfinex, Bittrex, Huobi, or OKEx, are some exchanges names that you have probably heard by now as they are the ones that are driving the crypto chatter up.
Coinbase with the NBA, FTX renaming the Miami Heat arena, Binance with SS Lazio in Italy and FC Porto in Portugal, and Crypto.com renaming the Los Angeles Lakers and L.A. Kings arena, are just some of the recent major sponsorship deals designed to capture the attention of the audience, and introduce them into the crypto world. If done responsibly -like with betting before-, every deal will have a huge education component to it so to avoid any friction and potential catastrophic outcomes for the untrained eyes. All in all, not a bad strategy (sports and entertainment sponsorship) for an industry that amasses a US$ 2.7 Trillion market capitalization today (Source: CoinMarketCap).
Top 10 Cryptocurrencies Exchanges. Source: CoinMarketCap ranks and scores exchanges based on the following: Web Traffic Factor; Average Liquidity; Volume, as well as the Confidence that the volume reported by an exchange is legitimate. Weights are assigned to the above-mentioned factors and a score from 0.0 to 10.0 is given to the Spot Exchange.
There are much more milder strategies, that look for a phased introduction into the crypto pipeline through the so-called “Utility Tokens”, which aren’t considered financial assets for transactional gain (as the cryptocurrencies, for example) and are gaining popularity as a result of the different sports sponsorship deals being announced recently. The Fan Tokens, as they are referred to, aim to introduce traditional sports fans into crypto trading with a lower risk scheme, as they buy into a blockchain-minted coin (like the currencies), in a proprietary or externalized platform (like the exchanges; in fact some of the major crypto exchanges carry Fan Tokens as well), and the tokens in turn give them certain privileges and access on the underlying sports property.
While there’s a financial transaction needed to obtain such token, if the marketing communications is done truthfully the consumers will be warned of the fluctuational nature of that asset, which will definitely pose a very low risk as the main purpose of the offer and acquisition is to actually engage with the underlying sports property in a predetermined way. The potential increase in value of the token, and the subsequent transfer for gain, will mainly be dependent on the popularity of the sports property, and the capacity that marketing partnership will have to create critical mass (demand) for such asset.
While crypto exchanges of all sizes and locations are venturing into the Fan Token arena, especially until the wider regulatory framework is ironed out, the market consensus is that Socios.com (with is proprietary exchange, Chilliz) is the category king, and its more than 80 sponsorships & advertising deals across the globe are a testament of that, including 24 NBA franchises, and several football clubs -notoriously Paris St. Germain of French Ligue1, that awarded Lionel Messi a welcome package of Fan Tokens worth several millions.
That leaves us with the Metaverse. In a very simplistic way, it is the space in which either via full immersion (an avatar or through Virtual Reality), or via mixed reality (with Augmented Reality) one can socialize, get entertainment, and even productively work.
“The word “metaverse” is often traced to Neal Stephenson’s 1992 dystopic, cyberpunk novel Snow Crash, and many see a more recent inspiration in the dazzling warren of experiences at the heart of Earnest Cline’s 2011 novel Ready Player One. However, the metaverse is far from the stuff of sci-fi. It’s not even new.” — Peter Allen Clark (TIME Magazine)
Without getting into the complexities, what has thrusted the metaverse into the mainstream recently is the irruption of another form of tokens, the non-fungible ones or NFTs, which based on blockchain technology can mint anything into a unique, potentially high valuable asset, and by itself unlock another set of opportunities predicated that there’s a community that assigns value to it (i.e. demand). The virtualization of everything, even the self, is the accelerant for this bonfire that is consuming the attention and financial interests of almost everyone.
The data doesn’t lie. Sports fans are more keen to get familiar with crypto and its applications, and given their predisposition to consume advanced sports data sets, makes them twice as likely than the rest of the population. According to Morning Consult, in a poll to 2,200 U.S. adults, 72% of sports bettors and 66% of avid sports fans are familiar with cryptocurrencies. The crypto brands that want to gain substantial market share, MUST come to sports consumers through the credible access points that the sports properties provide.
Cryptocurrencies, mostly due to the explosion on buzz after the pandemic and the acceleration of marketing by major international brands, are gaining popularity amongst people that are more adept to invest as part of their wealth and revenue diversification strategy -even ranking higher than traditional investment options like ETFs or Private Equity, but that a re far less accessible than logging into an exchange and buying some cryptocurrencies.
Lastly, but I consider more importantly, is that the positioning and penetration of your sports property -if appealing to a younger fan base, comprised of more higher earning and less traditional consumers, is much more effective and useful for a top crypto brand that wishes to engage your audience. As can be seen in the case of the United States, as polled by Morning Consult, the more traditional properties -with much more traditional customers- are less savvy due to lack of familiarity, thus only able to offer a longer adoption curve.
Pay attention. Leverage your sports data partnerships to productize engagement and immersive experiences, and be willing to experiment with the tailoring of such experiences so it is useful to newcomers into the sports industry (i.e. blockchain technology companies), while keeping your compliance processes up to date to ensure a safe space for your fans and your sponsors to transact. Not that this is the first time we are in this rodeo. Remember sports betting.
Dídac Lee (Galdana Ventures) | Overcoming the unknown and working towards fulfilling your life dreams
Our guest for this special episode is Dídac Lee. He is the Co-Founder and Managing Partner at Galdana Ventures, a venture capital fund with over US$1 billion invested across Silicon Valley, China and Europe. Dídac is a seasoned entrepreneur with more than 25 years of experience, having funded or co-funded, and managed companies in the internet space, education and retail. He materialized his childhood dreams of becoming a board member for the team of his life, FC Barcelona, being on the Board of Directors for 10 years, and heading the Club’s most ambitious business process in decades: transforming its digital output and putting in place a self sustaining content production structure, Barça Studios, that fuels FC Barcelona’s global digital engagement ambitions. A proud Figuerenc, Dídac talked with Rayde about his origins as one of the first Catalan children of Chinese descent born in the province of Girona, and how his journey has shaped his World view, and his mission in life and in business.
Clip from the Webinar, speaking on the approach to Direct to Consumer ("DTC") and how sports betting factors in. Speaking on behalf of Strategic Consultancy client, Euroleague Basketball. Full webinar: https://www.sportbusiness.com/2021/08/webinar-replay-beyond-ads-and-subscriptions-monetising-next-gen-sports-streaming-services/