Candy Digital & MLB Engage Fans Digitally
Candy Digital have been at the mercy of the Web3 market over the past 18 months but their latest moves with MLB are engaging the masses
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As headlines are held captive by SBF’s trial in NYC (which I discusses on Pete Townsend’s MNS podcast which you can listen to here!) the rest of the Web3 world from a news perspective seems to be slipping into nothingness.
And yet, there’s still a lot of ‘stuff’ happening across pretty much every industry vertical — from entertainment to finance.
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Candy Digital & MLB Engage Fans Digitally
The Sporting Crypto Newsletter is supported by The HBAR Foundation.
The wildly speculative NFT bubble from between mid 2020 to early 2022 is long gone.
The mania we saw was 90%+ speculative.
As the market has dropped 90% - we’ve seen speculation inverse from being 90% of the proposition, to 5-10%. This is particularly the sweet spot for mass consumer brands, or sports brands with fans, who want to appeal to a big audience - not just a crypto enthusiastic one.
I’ve talked about this a lot, but Reddit are a fantastic example of maintreaming when it comes to NFTs.
As you can see in this chart, as the numbers for sales have dropped 90-95% for NFTs on the whole, between May 2022 and May 2023, and unique buyers have more than halved.
In that period — Reddit added 15 million collectible avatar holder — and at this point that number sits over 20 million.
NFTs are dead? The more likely answer is that they’re just getting started.
But even the likes of Candy Digital, who raised $100m at a $1.5bn valuation almost 2 years ago to the day, are looking at how they can develop propositions and engagement mechanisms for their sports partners — where the primary function is not to sell NFTs.
Discussed in this Newsletter:
🍬 Candy Digital
⚾ Their MLB Activation
🧠 Concluding Thoughts and analysis
🍬 Candy Digital
Candy Digital were generating 7 figures in monthly NFT sales volumes between October 2021 and September 2022 during the last crypto hype cycle.
They were early movers and took advantage of this frenzied environment by brokering various entertainment IP deals. One of these was with Major League Baseball, a deal that lasts until 2025.
Those volumes, like the volume from the broader NFT market, have plummeted since, anywhere between 90-95%.
The turbulence in the market from Q2 2022 onwards saw one of Candy Digital’s biggest investors pull out. In Jan 2023, Michael Rubin’s Fanatics announced the divestment of its 60% stake, citing that:
NFTs will most likely emerge as an integrated product/feature and not as a standalone business: Over the past year, it has become clear that NFTs are unlikely to be sustainable or profitable as a standalone business. Aside from physical collectibles (trading cards) driving 99% of the business, we believe digital products will have more value and utility when connected to physical collectibles to create the best experience for collectors.
Rubin was right and wrong with his reasoning.
Some companies will, and have proven to be able to drive profitability selling digital items.
This will become *even* more common the more digitally native people become. Roblox make most of their money via… digital items. It’s not a huge stretch to imagine not only profitable, but extremely profitable businesses that make most of their money from selling digital content on a blockchain.
Whilst the connection between physical goods and digital ones is exciting, the entire point of NFTs is to make digital items act like physical ones. Phygital items will be a subsection of this, not the main facet of it, in my opinion.
With that said, his point on a ‘feature not a product’ for most businesses hit the nail on the head, and it’s happened sooner than I had anticipated.
⚾ Their MLB Activation
So far, Candy Digital’s partnership with MLB has been multifaceted, with one one of the core features of late being commemorative tickets.
🔢 Here are some stats:
Last year in the 2022 MLB season, nearly 200,000 collectible tickets were redeemed by fans who attended games.
In the 2023 Regular season, more than 41,000 MLB fans redeemed commemorative digital collectible tickets.
Last year in the 2022 Postseason, 24% of all fans who entered the stadium with their mobile tickets also redeemed free commemorative digital tickets.
This offering has continued into the 2023 Postseason, also with 28.9k tickets redeemed across 18 MLB Postseason games
The most popular game in the 2023 Postseason was the Miami Marlins vs. Philadelphia Phillies NL Wild Card Series Game 2 - where more than 3800 digital tickets were redeemed.
Candy will also look to offer digital content featuring current and historical MLB highlights. Plays of the Week collectible packs drop each Monday throughout the Postseason, featuring the top 10 plays from the previous week.
Further to these two activation routes, Candy have also created a trivia game called Codebreaker that fans can play during the Postseason.
Questions like: “Most hits this season by a player playing for one of this year's Wild Card teams” will be available for fans to answer in real time via their phone.
The trivia game is completely free-to-play and in partnership with Elias Sports Bureau, the longtime Official Statistician for Major League Baseball.
Participants who complete the codebreaker for days they are launched will also be entered for a chance to win a $250 MLB Shop EGift Card.
Candy also offers a version of Codebreaker that fans can play exclusively with the collectibles they own. These own-to-play challenges allow the opportunity to win exclusive MLB packs as well as points for the Candy League, the platform's rewards program.
🧠 Concluding Thoughts and the future of Candy Digital
In the PR release, Candy Digital pitch themselves as a “a next-generation brand engagement platform that designs and develops officially licensed, premium digital collectibles that connect people to their passions in sports, entertainment and culture.”
Pitching themselves as a brand new engagement platform that can do everything end to end from design, to custody of the digital assets, to creating games for these assets — is a pretty smart move from candy digital.
They raised at a hefty valuation in order to win a lot of licencing deals with partners, many of which will have most likely gone back to the negotiating table due to market conditions.
⚔️ I've talked about this ‘licencing war’ a lot.
Big figures were paid by many vendors and platforms, but they were paid as if they were a category in a very mature market rather than what it was, the inverse; a very immature, nascent one that few in the industry knew the direction of.
As soon as volumes and euphoria dried up from a NFT perspective, a lot of these platforms had very little revenue coming in, and went back to the negotiating table.
Rights holders can't sell at the same rates, but they still want to sell that category to someone that will give them money. There are few vendors right now that are willing to pay money for these rights, but obviously not at the same insane valuations that they were paying 18 months ago.
And these providers are now pushing towards loyalty and creating propositions that engage fans, rather than just simply selling digital content.
The 90% speculation and 10% substance mindset we saw for 18 months is long gone, and has flipped on its head to 10% speculation and 90% substance.
Candy are following that model and are well placed to be one of the first movers, especially with big consumer facing brands.
Whilst they’re still selling NFTs, it’s clearly becoming something that is auxiliary and a feature of their business model, rather the entire business model itself.
⚾For MLB, the multi-tiered offering that includes digital commemorative tickets and free to play trivia game Codebreaker, with both free-to-play and own-to-play tiers creates layers for the partnership, rather than just levearging the IP to sell NFT collectibles.
This multiphase approach with partners is something that will continue to happen in the future.
In summer 2023, Candy Digital merged with PALM, a platform who similarly to Candy Digital, worked with several big names to create digital assets, but lean more on their tech expertise, having built PALM as an Ethereum sidechain. Many of Candy’s products to date have been sold on the Ethereum blockchain itself, which proves costlier as a provider of these assets. So this merger allows the two companies to create a full stack platform, including the underlying tech the assets are issued on, in a more cost-effective manner. This is not too dissimilar to Dapper Labs, who created the FLOW blockhain in 2020 — again to drop their cost basis down on the actual creation and transaction of assets created, as well as create more throughput to scale.
Candy and Dapper have competed in RFPs before, and I’m sure they will do so again in the future. But it seems as though both companies now have quite similar models, as Candy have quietly built out a full-stack platform.
Deeper pockets may prevail but with the market in the state its in, I’m seeing sports rights holders lean toward agencies and platforms who will create the best product and engage the most fans for them, because the market to generate unrealistic amounts of revenue just isn’t there.
Candy’s moves since the Fanatics divestment have been really interesting, and candidly, I think I quite like them. It remains to be seen whether this full stack approach that leans toward engagement rather than paying big minimum guarantees proves successful, lucrative or sustainable in the long term — but they have definitely set themselves up to skate to where the puck is heading.
(sorry, I couldn’t find an appropriate Baseball analogy/pun)
💡 Sporting Crypto Spotlight - Ep. 6 of the Podcast!
In this episode, I was joined by Max Wolfe, Web3 & Digital Licensing at McLaren Racing to discuss their Web3 strategy.
Watch the episode below on YouTube!
Or your podcast player of choice… if you’d prefer not to see our faces!
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