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…
🔌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 Guarantees
2. Partnership Failures due to Price Points and ‘Fan Market Fit’
3. Web3 Sports Sponsorships
4. Free-to-mint and cheap products dominate the Sports Web3 market
5. Broadcasters/Streaming Companies Venture into Web3 Rights
6. Web3 gaming builds on momentum
7. 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....