Web3 Technology in Sports: Opportunities and Challenges
The story began in 1989 when Tim Berners-Lee crafted the protocols that eventually gave birth to the World Wide Web. This initial incarnation, known as Web1, was a realm of static websites devoid of any significant interaction between users.
The tides began to turn with the advent of the Web2 era, an era defined by centralization. In stark contrast to the "read-only" nature of Web1, Web2 opened the doors to both reading and writing. This evolution saw the rise of dominant companies such as Facebook, Twitter, and Google, which shaped the internet into an arena where users could create content but lacked ownership and monetization rights.
Enter Web3: a proposed solution to the centralization and ownership issues plaguing the current web landscape. This iteration of the Internet mirrors more closely Berners-Lee's original conception - an ecosystem underpinned by open and decentralized protocols. By integrating blockchains, cryptocurrencies, and NFTs, Web3 aims to re-establish the balance of power, granting it back to the users.
Although cryptocurrencies like Bitcoin have been in existence for over a decade, it's only in recent years that the concept of Web3 has begun to gain momentum.
With its steady ascent, Web3 is beginning to permeate various sectors - music, fashion, content creation, finance and banking, supply chain, healthcare, real estate, education, and identity.
The widespread impact of the 2020 pandemic even led the sports industry to recognize the potential benefits of this burgeoning technology.
Now, let's delve into the transformative effects of Web3 technology on the sports industry!
Web3 Technology Applications in Sports
Traditionally, the sports industry has been conservative when it comes to embracing new technologies. But in recent years, several factors, such as mass market appeal, technological advancement, younger demographics, unmatched fan loyalty, and a high tendency towards marketability, are driving the industry to be at the forefront of the latest technology and data trends.
Web3 is the latest technology that has been seeing growing adoption in the realm of sports. This is for a good reason, given that web3 technologies have the potential to create new opportunities for engagement, monetization, and fan experience.
Physical collectibles have seen a lot of success, but with younger people spending more time indoors and online, digital collectibles offer a great way to keep sports fans engaged.
Digital collectibles create new opportunities for student-athletes to monetize their brand and connect with fans in new ways. And as the digital versions of traditional sports collectibles, such as trading cards, jerseys, and game-used equipment, they can also be verified on the blockchain to ensure their authenticity and scarcity.
These digital collectibles or tokens represent players, games, or other elements of a team or league and can be traded on marketplaces where student-athletes earn a significant percentage of each sale.
Digital collectibles are a use case of NFTs, the one-of-a-kind cryptographic tokens that cannot be reproduced. They also present new revenue streams from ticketing, increased fan engagement, and new ways for sponsors to broaden their exposure outside of the context of TV or live events.
Fan engagement platforms also allow users to own NFT assets based on their favorite sports teams and players. For instance: NBA Top Shots, for example, lets players collect NFT video clips of specific moments within a basketball game.
Another way web3 is used is to create decentralized, fan-owned sports teams, allowing fans to become shareholders in the team. This gives fans not just a say in important decisions and allows them to share in the team's success financially.
Sports organizations are also exploring ways to leverage their assets and communities to extend fan interaction and engagement through these
technologies. When it comes to virtual environments, sports organizations get the opportunity to leverage communities that are not constrained by physical limitations, such as the need to be physically present and a limited number of seats available at live sporting events. This can further extend fan engagement and loyalty, making a bold way forward for sports events.
As consumers seek more immersive experiences to interact with their favorite athletes, the industry also needs to deliver new concepts to provide a continually engaging and exciting fan experience.
Unlike Web2, where many athletes don't have control of their data and the way it's used, Web3 makes athletes the owner of their own content, allowing them to actively use their own data to their advantage. On top of it, smart contracts can be used for signing sponsorship deals on the blockchain to ensure transparency and immutability.
This shows that Web3 sports businesses are opening up a whole new world of revenue streams and providing a windfall of income for all stakeholders.
Web3 Technology Benefits in Sports
Web3 applications bring numerous benefits to the sports industry. For starters, everything on the blockchain is transparent and immutable. This way, web3 can be leveraged to record athlete performance metrics and sign sponsorship deals.
By allowing athletes, teams, and fans to easily trace performances, transactions, and activities in sports, web3 makes it possible to get real-time insights into performance as well as access to the most detailed analytics data.
This latest version of the internet also gives ownership of digital assets in an unprecedented way. For example, in a web2 game, the item purchased is tied directly to the user's account, and you lose access to them if the game creators delete the account. Here, Web3 allows for direct ownership through NFTs, which can be traded on open markets.
The uniqueness and verifiability of NFTs mean they can further be used as membership cards to give holders access to a host of exclusive benefits and content. The sports industry can also utilize them to reduce fraud in areas like ticket sales and merchandise authentication.
But more importantly, web3 platforms offer censorship resistance, unlike web2, where the companies in charge decide who can use their platform, needing the user to put trust in them. Moreover, Web3 is permissionless, meaning everyone has equal access to participate in it.
Web3 is guided by the core principles of being decentralized, where ownership is distributed amongst its builders and users instead of being controlled and owned by centralized entities. You don't have to trust a third party here, as web3 is trustless and operates using incentives and economic mechanisms. These features also make web3 an immensely secure platform for sports betting without worrying about the security or reliability of the process.
Besides allowing athletes and fans to own their own data in web3, the concept of decentralized autonomous organizations (DAOs) further allows the members to own the platform as a collective using tokens much like shares in a company.
In a DAO, members coordinate decentralized ownership of a platform and make decisions about its future through voting as well as participate in profit-sharing.
This way, Web3 is enabling athletes and fans to engage with one another in unprecedented ways and foster a sense of community.
Web3 Technology Future in Sports
The sports industry has been using web technology for some time now. For instance, Sacramento Kings partnered with Ankr to explore new opportunities in the NFT and blockchain space, the International Chess Federation (FIDE) is developing Web3 products on Avalanche to create operational efficiencies and improve game integrity, and the World Chess Tennis Association (WCTA) is supervising the creation and distribution of a utility token through a Token Generation Event.
But this is just the beginning. As Web3 continues to revolutionize entertainment and enhance experiences for people worldwide, the sports industry is bound to get deeper into the thriving world of an open, decentralized, and trustless web.
Not to mention, blockchain technology provides control over the secondary market and a greater level of fraud prevention while opening up new revenue streams for event organizers.
This is also an excellent opportunity to create closer connections with fans and generate additional revenue by doing so. In a web3-powered sports world, fans can attend virtual events, interact with their favorite players, and even participate in fantasy leagues with complete autonomy.
As stated above, Web3 is clearly beneficial for the sports industry, but it still has many limitations in the form of accessibility, education, and user experience. The fact is, Web3 is still in its early stages and is quickly evolving. Many web3 companies are building infrastructure to make it a smoother journey, but it'll take time before it reaches mass adoption.
For the sports industry, there is a need for significant investment in infrastructure and personnel as well as regulatory clarity related to the implementation of Web3. But the benefits offered by web3 can't be ignored as it opens new avenues for revenue while allowing athletes to monetize their brand and connect with their fans on a deeper level.
The potential for growth and engagement here is limitless. The industry's biggest players have already started adopting web3, and if athletes and organizations alike don't want to be left behind, they will have to onboard this train.
Simply put, Web3 is the future of the sports industry, and it is about to be revolutionized.
Sports Web3 Technology Trends
So, what's ahead for this intersection of sports and web3? Technology is evolving at a rapid pace and is becoming an integral part of any sector's success. In the sports world, it plays a critical role in the acquisition and retention of fans.
In 2023, Artificial Intelligence (AI) has grown to become the biggest trend, with tools such as OpenAI gaining unprecedented mainstream adoption. As the sports industry continues to embrace technology, we can see more sports brands, clubs, and companies experimenting with new AI tools for a variety of purposes, including content creation and operations.
From generated content for social media to customized reels and newsletters, AI will make the experience even more personalized. Moreover, it will help save time and money while analyzing large amounts of data to provide insights and recommendations for teams and leagues to optimize their operations and make better-informed decisions.
One of the key trends in the Web3 sports industry is the increasing importance of the athlete's Name, Image, and Likeness (NIL). With the recent changes in NCAA regulations, student-athletes can monetize their NIL without jeopardizing their eligibility, creating new opportunities for student-athletes to build their personal brand, connect with fans, and earn revenue. Platforms like Burrst are already helping student-athletes monetize their NIL and connect with fans through custom experiences.
NFTs have already taken the world by storm in 2022. This mania will only grow over the years as more innovation happens in the space and brands and users realize their full potential. Platforms like Sorare are already gaining a lot of traction by allowing players to buy, sell, and trade virtual player cards using NFTs.
As the usage of NFTs grows in the sports industry, we may see clubs and leagues consider creating and offering their own NFTs rather than partnering with platforms like Sorare. This would give them more control over the development and distribution of their NFTs as well as generate additional revenue streams.
In addition, we can expect to see the adoption of other web3 technologies, such as blockchain and decentralized applications (dApp), continue to grow in the sports industry. This trend will likely manifest through partnerships such as Crypto.com signing deals with leagues, teams, and venues in multiple countries and sports.
Teams and leagues may also use blockchain to streamline and automate supply chain processes or to facilitate secure and transparent transactions between teams and other partners.
Goldman Sachs already forecasts Metaverse to be a potential eight trillion-dollar industry, and with the constant evolution of the sports industry, the two sectors make the perfect combination for continued innovation for years to come.
Web3 is shaping the future of the sports industry, with augmented reality and virtual reality being two other major trends in this space that allow players to participate in simulated game scenarios as well as experience a real-world environment interactively.
As we saw, the applications for web3 technologies in sports are many and varied. And as the sports industry embraces web3, we'll get to see a wide range of innovative solutions and use cases emerge.
Overall, the potential for innovation and growth is immense here. It's just that Web3's full potential is yet to be realized!
