The year 2022 will go down as one of the most challenging for the web3 space, especially given how the last few months of the year saw the space tremble with the vast amount of scandals, failed initiatives, or the evolution of the crypto & NFT markets. In fact, Blockworks reports that the NFT market during November dropped 20%, reaching a sales volume of $394 million, which is the lowest figure in the year.
Are there still “reasons to believe” though? Is this shakeup necessary to clear all the bad projects and speculation around the space? Or was it just “hype” all along?
Can web3 projects become key contributors to growing revenues for football clubs in the future?
During the year, at World Football Summit events we have given the spotlight to industry experts who have delivered insights and wisdom on the potential that web3 could have for football organizations worldwide. What is the underlying conclusion? Sports businesses need to adopt a long-term mindset but also be conscious that mastering “the basics” today is what will lead to success tomorrow.
In this article, we will summarize their best quotes from WFS speakers so you can get a glimpse of what the future of web3 might look like and how the football industry can use it as a powerful lever for business growth.
The metaverse is a long-term play for football properties
The first thing to understand is that web3 initiatives will not lead to short-term revenues, football properties must be more strategic about it and consider it a long-term play.
Kike Levy, Southern Sports Lead at Meta, is also of the belief that before embracing the Metaverse and other web3 technology, mastering the fundamentals must come first.
“The metaverse is more a vision of 5 to 10 years, but there are things that you can do now and I think it’s key to use the tools that you have available at the moment and then start preparing for what’s coming. Sometimes when I talk to football clubs or partners, they immediately want to build the next big thing in the metaverse and they want to always think very big, but I think you have to start with the basics and make the things that are possible today right to then start thinking about what will come in in the future.”
During an exclusive conversation with WFS Digest, Kike laid out the pillars that football properties must focus on. Build an audience, monetize and then innovate.
“Firstly, audience development, which is how clubs can generate their content to build their audience, build their community and provide the opportunity to create a digital experience to interact with fans.
Once that audience has been built, monetisation strategies can be considered, and this comes mainly from three different avenues: monetisation through video content to generate direct revenue through advertising; the second avenue, which clubs are not exploiting as much as they could, is the eCommerce part which includes merchandising sales; and the third is branded content, how to use the distribution that clubs have and how to generate quality content to generate value for sponsors and that the returns on investment that sponsors can show are greater than those of shirt sponsors or billboard sponsors in the stadium. The biggest opportunity for branded content is that the inventory is virtually infinite.
The last pillar is innovation and thinking about strategies on the metaverse or other new products and how to invest to be at the forefront of all these technologies.”
At a similar level, Mike Glijer, Founder & CEO at Zetly, also urged football industry leaders in Africa to embrace the long-term as well. Web3 will not be a quick win.
“Everyone believes there is a one-time entrance to Web 3.0; come in, release fan tokens, make money and leave. This is not true – it is forever. It is a strategy for 10-20 years to engage your fans – it needs that kind of commitment.”
On that same panel, Tim Mangnall, Co-Founder at Capital Block, a web3 consultation agency that works with clubs like AS Monaco or Galatasaray, among others, believes that the key is to simplify the concept as much as possible so that the fan can understand it.
“A new digital product can bring fans together globally. A whole world of opportunities is there for the taking. The challenge is, however, making it accessible and understandable. We need to simplify it. It is a digital product and let’s sell it in the same way.”
How will the metaverse transform the football industry?
The reality seems to be that web3 technology, and the metaverse, in particular, could transform the sports and football industries from many different angles.
Fred Antunes, CEO at Real Fevr and who joined Kike on the stage of Football Innovation Forum, described the three main areas which will be greatly transformed as web3 becomes more widely accepted.
“There are three major things that we are doing:
The first one is a transformation of the merchandise. Merchandising sales today are limited, you know, the jerseys, the caps, the shoes, wherever we can sell it in the physical store for the people that are there physically. But if you want to scale up your sales to other markets, there is a huge supply chain problem and the usual logistic problems which include distributing the merchandising, you need a physical operation. So what “digital” enables you is to sell official merchandising, but just pure digital. So I don’t need to have a physical operation there. I don’t need to have, you know, business developers’ stores, local stores, etc. I can sell it directly to the user inside the metaverse.
The second thing that makes the whole difference is the experience with the players themselves. Because today, if the Chief Marketing Officer of the club says I want to do an activation with a dinner with the man of the match but if you ask the player to do it in the metaverse through his avatar, it does not have the physical risk to be with people that he does not know. And then you can scale up the experience beyond your creativity as long as the player is committed to his avatar.
The third one, which is a bit more challenging, is broadcasting. People on the other side of the globe, have the right to have a complete social experience without the need to come to the stadium to watch the “beautiful game.” And that’s one of the things that into the metaverse we will be able to explore so OTTs will be on a completely next level when we integrate them into virtual reality.”
You can watch Kike and Fred share their insights in the following video from Football Innovation Forum.
Nick Marullo, CEO at Cinco, envisions the adoption of hybrid experiences and not an “either-or” approach, as he explained in an exclusive interview with WFS Digest.
“Frankly, nobody’s going to go 100% into the metaverse, it will be a hybrid world where we are going to engage live when it is possible and in virtual worlds when we cannot be there. But those two worlds are going to be connected, bringing life and the digital experience together to create one connected experience. We need to stop thinking it is going to replace anything.”
Nick also spoke at Football Innovation Forum where he argued that the real value of the metaverse resides in the context it will give to web3 technology.
“The metaverse will give us context. Right now, NFT, and blockchain are concepts. They’re just tools. But the metaverse will give us context.
I walk around an event, there’s a door, the door is locked, and I need to buy an NFT to unlock the door. So I’m doing something that I understand that to cross that door, I need an NFT.”
Ralf Reichert, Chairman at ESL, believes in the potential of digital ownership to drive fan empowerment, which along with “ownership,” could be the crucial concept to understand if your sports business wants to develop a web3 strategy.
“Digital ownership is probably the most far-away version of Web 3, but it’s by far the most important.”
Reyes Bellver believes that the scope of possibilities that the blockchain enables is very wide and certainly can go beyond fan engagement.
“I believe there are a lot of opportunities, yes, for fan engagement, but also for smart contracts, anti-doping, and even salaries. It’s really important to create something for the athletes to understand the value of this data, and the medical reports, and to have this transparency and protection.”
Why web3 technology will become a major source of revenue for football properties
Potentially, and assuming football properties are willing to adopt a long-term strategy when analysing possible web3 initiatives, this technology could become a major source of revenue within their commercial model.
Fabien Arneodo, CRO at eShot Labs, explained an interesting flywheel on the World Football Summit podcast and on the WFS Europe stage that describes how NFTs are tied through revenue through content.
“NFT at the end of the day is a digital asset created with “content.” And content drives discussion which drives greater engagement, which ends up leading to revenue.”
Elfried Samba, from IOCONIC and former Head of Social at Gymshark, has a similar train of thought as the one Kike Levy outlined above, as he explained in this exclusive conversation with WFS Digest.
“Keeping the community at the heart of everything you do is imperative. Web 3 is the ROI of community-building efforts made in Web2.”
Perhaps the most optimistic view was shared. by Michael Sidgmore, Founder & Partner at Broadhaven Capital Partners, who has invested in teams like Angel City FC, and is confident that web3 can become the fourth major source of revenue for sports businesses.
“I think web3 represents a new monetization stream in addition to the four traditional channels of sponsorship, ticketing, broadcasting revenues, and merchandise, right? So web3 enables players to connect their communities, enables teams or leagues to monetize through blockchain-based games, and NFTs, token-gated access to fan engagement. I think that becomes another revenue stream.”
Luis Vicente, Chairman at Apex Capital, who has backed Fred Antunes and the team is of a similar opinion as Michael Sidgmore.
“Digital monetisation is definitely there and, with maturity, I believe it can become the biggest engine for monetisation in sport.”
We could not end this article however without understanding what you believe is the real potential of web3. The results of the poll we ran on our LinkedIn profile are unmistakable; more than 60% of the people who answered the poll believe web 3 will become a major source of revenue for football clubs in the future. So, despite the current uncertainty surrounding the space, there is general optimism for the future of web3 in sports.
At World Football Summit we will keep welcoming the experts that are shaping the future of the football industry around the web3 space as well as bringing you the most relevant updates, trends, and initiatives so you can maximize the opportunities they will bring to your sports business.
This report features in the latest edition of WFS Digest, our insider’s guide to the latest and most relevant thoughts and practices from within the football industry. You can subscribe to WFS Digest HERE.