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Athlete-Direct-to-Fan: The Future or FAD?
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This Week’s Deep Dive: Athlete-Direct-to-Fan: The Future or a Fad?
The way fans interact with sports has changed an incredible amount over the past 20 years.
We’ve seen broadcasting, social media, streaming and such all impact the way fans consume the sports they love.
The future of fan engagement is always a hot topic because things are always changing, of course.
And whilst I’m not an expert on this market as a whole, there is one thing specifically which has interested me. Something that I’ve been pitched multiple times, and whilst never being fully convinced, understanding that there is something *there*.
That something is Athlete-direct-to-fan offerings leveraging Web3.
The overlap here is logical because selling to your fans in a frictionless, small-overhead, global way without having to ship anything physical is a very attractive proposition for someone with rights to leverage.
Of course, rights holders have found this, on the whole, a tougher task in reality.
Whether it’s been the wrong proposition, over-estimation of demand or simply working with the wrong vendor or consultant — numerous sports brands and athletes have fallen at a variety of different hurdles.
Where the athlete lies within this emergent space, is very interesting to me.
I wrote about product market fit for Athlete NFTs over a year ago, and if I’m honest, not much has changed.
Parking the Web3 side of things for a minute — there has been a bit of friction over the last 10 years more broadly.
Remember when Zlatan Ibrahimovic and Gareth Bale joined forces and tweeted about why FIFA Ultimate team was able to make so much money from their image and likeness, without them seeing too much in return?
That power struggle has led some agents and players to believe that Web3 provides something more equitable for them.
The market has shown us that athletes looking to create their own NFTs for example, doesn’t work.
Zlatan himself of course, was part of an art NFT project. A successful one called The Laws of Adrenaline curated by acclaimed Italian artists.
But this was a one-and-done situation for Zlatan.
Some platforms are trying to create situations where the likes of Zlatan and other athletes can create longer-term digital activation using Web3 and create fan clubs, of some sort.
Spencer Dinwiddie’s company Calaxy for example has raised a significant amount of capital to create a platform that allows for content creators, athletes and celebrities to go direct to fans in the same way that Onlyfans and Cameo do — but by leveraging blockchain. They want to help creators monetise, especially those in the middle who find it hard to get strong advertising revenue or brand deals. Think of fan clubs that leverage tokens as access to a variety of activations.
There are a few things going on here that I think determine how this specific subset of Web3 in Sports that is direct to fans will pan out:
Standalone Athlete NFT/Web3 propositions
Enrique & Neuer
The overvaluation of Athlete Rights in isolation
1) Standalone Athlete NFT/Web3 Propositions
In my opinion, there is no product-market fit here for athletes, yet.
What I mean by this specifically is that athletes who try and create NFTs themselves, that are sold to fans, don’t work and that’s because there’s no incentive for athletes to do this, and also sustain value to those NFTs.
I was asked by a friend in the industry: Why would [Name of Footballer Redacted] want to do this? What is in it for them?
It was a great question.
My answer was: There isn’t much
Athletes want to leverage their image for commercial opportunities. Any consultancy trying to pitch direct-to-consumer NFTs or a Web3 proposition will probably fail.
Fans don’t want isolated propositions from specific players — unless they are in the 0.01% of athlete brands in the world.
There will be exceptions to this, but imagine having a different application for every athlete you follow? (foreshadowing)
2) Enrique, Manuel Neuer and Joao Felix
When Luis Enrique told the world he was going to stream live on Twitch during the 2022 World Cup, it was a bit of a ‘WTF’ moment.
The national team coach of Spain at the time announced he would be doing so, and accrued ~ 70k followers in the days that proceeded. It was met with criticism by some of his colleagues, however, with former West Ham and Manchester City coach Pellegrini stating:
“It is a complicated relationship being a national coach. He has a lot of people against him because of his decisions. Seeing yourself exposed on social networks, where it is fashionable to discuss things… He will have had his reasons. Personally, I think it will bring more problems than benefits.”
But Enrique went on, attracting huge audiences with every stream.
In this example, this was direct to fan, but using a platform where fans were or could easily access — Twitch.
There was no new platform or proposition created solely for Enrique.
Goalkeeper Manuel Neuer on the other hand, created his own app — called Manu Interacts.
Now - it got a decent reception on launch - but I’ve not heard anything from Manu Interacts, since.
In an age where you’re competing with Twitch, TikTok, IG and Twitter — bringing audiences to an entirely new application is very difficult unless it solves a distinct problem for them.
Now, we can talk about athletes wanting sovereignty over their following and so on, but I just don’t think the time is now for something along these lines.
Listen, do I think the Lionel Messi or LeBron James app would have millions of downloads?
No doubt about it. But once again we’re talking about the 0.01% of athletes *ever*, let alone right now.
Just today, I saw Joao Felix trying to create a ‘giant group chat’ for his fans on Instagram:
Has he been hacked? I’m not sure. But somehow I doubt that the future of direct-to-fan engagement is via a gargantuan Whatsapp chat filled with 10s of thousands of fans who speak different languages.
Platformification is still king, even in Web3… for now!
Sorare have leveraged player rights via clubs and leagues to create a fantasy game where all these rights interact with each other.
Those rights in isolation have a lot less value.
Top Shot and Sorare leverage those player rights to drive revenues, and they co-exist. There is not one, without the other.
The gold rush right now is those building the ‘Sorare for X’ and in this edition, we’re talking about direct-to-fan offerings.
Athletes won’t go direct to fans themselves via siloes, such as Manuel Neuer’s app.
They’ll go direct to fans as they have done with social media.
This will see two routes for Athletes:
Platforms (Twitch, Twitter, Instagram) that start offering direct-to-fan, token-gated content that allows them to create their own digital propositions (Fan Clubs?)
Greenfield platforms start with Web3 from the ground up and grow; Vault is an excellent example of this in the Music industry. Calaxy are in this group, as another example.
I wager that by the time 1) is ready, athletes will have already signed with a platform that fits in category, 2) It’s much easier to build something greenfield than it is to iterate something that impacts millions of users that might not care about buying athlete collectables or being part of the Joao Felix fan club.
4) The overvaluation of Athlete Rights
This is by no means meant to be a hot take, but from a lot of people I’ve talked to in the rights and agency world — most athletes and their teams are overvaluing their rights in isolation when it comes to Web3. Just as most sports teams are, to be honest.
This is especially true in the likes of Boxing - for example - where there are no teams and the athlete is the brand.
Now, if you’re trying to do a deal with say — a boxing federation to create an NFT fantasy game — that is incredibly difficult due to having to conjure up deals with every single boxer. Each of them wanting differing deals, guarantees and flexibility on how the rights are used. The rights buyers are then in a sticky situation. We need 100% of the boxers, for this game to work, but 5% of them are refusing to budge on another crazy, unrealistic deal they’ve been offered by another NFT provider — who have infringed on the gaming rights offering we are proposing.
The politics, logistics and process involved in trying to solve something like this are extremely resource consuming and honestly, the ROI isn’t guaranteed to deliver anything close to the level of resource exertion.
You then end up in a situation where said game or platform doesn’t get the rights, and athletes who had already agreed to sign don’t get any money.
Perhaps some of that 5% cohort find comparable deals, but again I think this is for the absolute elite of the elite who have incredible followings and are brands in their own right or are incredibly short term a la the Zlatan Ibrahimovic example.
To conclude — I still don’t think there’s product market fit for athletes.
The rights market for players is expensive, but it’s expensive because very few, well-capitalised players can leverage those rights to generate margins that are sustainable.
This is why there are so few players in the sports card markets and it’s why, comparably, nobody is really competing with Dapper and Sorare for moving image NFT and NFT Fantasy Gaming rights respectively.
The platforms have monetisation capabilities and want to scoop up as many rights as possible in bulk.
And whilst there is still a great opportunity for platforms to offer direct-to-fan routes, I struggle to see it being any different to what we see in the current market with Cameo and OnlyFans, or with YouTube and Twitch. Athletes, if they want to be creators or leverage their image or story in the form of digital assets, will still have to go via platforms that allow them to do so and monetise, whilst taking the laborious parts of it away.
Creating a platform like that, however, and attracting athletes with big followings is also capital intensive and startups that are attacking this market must raise big rounds. It’s then about finding a sustainable model where the margins aren’t gobbled up by keeping your main attractions on the platform.
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More Sports & Web3 Stories
Web3FC are hosting football events globally at big NFT/Web3 events. The next one is at NFT NYC next month… bring your boots!
Andrew Petcash with a great piece here on Web3 in Sports.
Outlier Ventures and Red Beard Ventures, a prominent Sports x Web3 investing fund, have partnered to create a Zero-Knowledge accelerator program.
NBA legend Magic Johnson has filed trademarks for NFTs, virtual stores and virtual clothing & footwear.3. Magic Johnson 🏀 Filed trademarks for NFTs, virtual stores, & virtual clothing / footwearIs #MagicJohnson coming to the Metaverse? The #NBA legend has filed trademarks for his name and "Building. Magic. Together." claiming plans for ▶️Virtual clothing, footwear, sports gear ▶️Stores for virtual goods ▶️NFT-backed media + Metaverse software #NFTs #Metaverse #Web3 https://t.co/GQkD97t2SQMike Kondoudis @KondoudisLaw
More trademark news — Titleist have filed trademarks for NFTs, NFT-authenticated media, and virtual golf gear
Karate Combat have combined the sublime and ridiculous with this promo video…
General ‘Stuff’ that Could Impact you
Reddit are building an NFT marketplace. 7 million users holding 10 million digital avatars — this will be big.
Sony filed a patent that has the gaming industry excited.
Polygon and Immutable have partnered to board more gamers and developers into Web3.
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