The state of sports NFTs and where they are going

Transcript

GM GM welcome to another episode of web3 Academy where we're together we're breaking down what business models are winning in web 3 and exploring and keeping you on the Forefront of blockchain and web3 Tech I'm jay bird and today we are talking about sports nfts did you know that a sports nft just sold last week for 113 eth what I bet you're wondering why you've probably seen it and you're thinking what's going on in the World of Sports nfts and as always we're here at web Theory Academy to keep you up to date and ahead of the game when you think about sports empties

at physical trading cards and other sports merchandise which are hugely popular with fans and collectors and one example is Mickey Mantle's 1952 baseball trading card which sold for 12.6 million dollars and while Sports nfts haven't reached that level yet they might be on their way with the recent record of a so rare nft of Giannis antenna kupo who's an NBA player selling for 113 East which was 187 thousand dollars at the time so the question is why what makes physical trading cards and their digital counterparts so popular to answer that question we have LG Doucet the founder of the first mint and a top web 3 Sports

Community podcast and newsletter who's here to share his knowledge in this deep dive so today we'll be covering the state of sports nfts the main Platforms in the space the larger macro stories of the Sports World some potential trends that will shape the future of web 3 and sports and sports nft areas that you should pay attention to moving forward let's dive in but before we do let's take a minute to hear from our sponsor the future of social media is here and that future lives in web3 on top of lens protocol web 2 social platforms are broken and right for disruption you see the epicenter of social media is the creators and yet they are the most neglected web 2 platforms like Facebook

Tick Tock and Instagram are all essentially robbing creators of their worth creators are a new type of entrepreneur forming new types of businesses yet with web 2 platforms creators don't own their content to their profiles and that's their product in business instead they are tied to the platforms they choose to create on well just like how crypto is freeing us from Banks web3 is freeing us from these centralized platforms on lens protocol creators own their content own their profile and even their social graphing followers in the form of nfts this allows you to move freely from one social application to another with your content profile and followers moving along with you lens protocol enables self-saverty for your social graph and interoperability across the internet at

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licensed Sports nfts brought in about 100 million in primary sales in 2022 and roughly 700 million in secondary those are not small numbers and yet they are actually smaller than the previous year when we saw 150 million in primary and 1.06 billion just over 1 billion in secondary sales in 2021 whoa now most of that was led by Dapper labs and the NBA top shots which took just went crazy in 2021 so the sports nft Market actually saw a drop of 31 year over year from

2021 to 2022 and when we say that the story of web Three Times sports revolves around Top Shot you can see that we aren't kidding top shirt alone did 75 of secondary sales in 2021 but it's since cooled off allowing for a more clear picture of the industry in terms of users we take the monthly unique buyers as the measure of retention and the marker of regular customers on the platform and that story tells a very interesting tale as well so rare is the clear winner here as the only platform that actually grew in 2022 and recently broke 50 000 monthly buyers a new record for the platform now despite Sports nfts arriving in 2021 many of the platforms

are relatively new to the scene having joined right before or just after the big crash in the spring of 2022 hence the smaller platform terms really joined around early 2022 belonging to NFL all day UFC strike and Candy digital they never really got a chance to take off because they've only really been around for the bear Market of 2022. now it's also important to note that DraftKings rainmakers is a pretty big player here but their Marketplace data is largely inaccessible so we're not able to include it in this piece now there's really two companies and two ways to play so at this point we can point and laugh at the numbers of Top Shot in 2021

but to understand where this is all going we need to look at the two types of products being built here first fantasy sports and second Collectibles and naturally the two biggest players in this space so rare and Dapper Labs dominate their prospective product classes so first fantasy sports the daily fantasy sports component of nfts is very similar to the current applications in the main mainstream market here's how they work you pick a player for upcoming games selection is restricted by a budget that weighs plays on skill a strategic approach is rewarded so in the case of so rare and DraftKings rainmakers they function fairly similarly however the web 3 part that is that users own the game pieces

and can trade them freely hence users can profit from predictive performances users can exit the product by selling their cards and the platforms can manage Supply and revenue based on demand it's exactly what fantasy was meant to become and as a result it has drawn a healthy audience of people that like to bet on Sports let's talk about the second function is Collectibles collectible nfts also mirror their current mainstream application of physical Collectibles packs are sold to collectors packs have varying supplies of rare cards and top players which is basically a lottery system and cards trade on the secondary Market however the possibilities of web 3 collectibles

outweigh those of physical ones with digital collectibles the secondary Market is far far faster and better than that it's online it's on chain so it's much more liquid the product quality is consistent whereas sports cards tend to need to be graded or certified and the platform can alter metadata to correct misprints make upgrades Etc and of course the biggest advantage of all collectibles can be videos which is Dapper Labs bread and butter with their trademark nft moments this class also includes candy digital and Panini and a variety of other small players who have purchased collectible

licenses from the big Sports leaks however despite its clear potential this Market has struggled as of late as it has had been the victim of the same pitfalls as in the 1990s when baseball cards had an issue and that was because of oversupply Top Shot famously over supplied their Market back in the spring of 2021 and to make matters worse they continued this practice through 2022 and have seen their monthly buyers drop from 64 000 in Jan of 2022 down to just over 11 000 in January of 2023. their counterparts have fared no better NFL all day halted their supply release just

six weeks into this past season and Candy digital did the same last spring the issue of oversupply isn't complex it's driven by one main factor lack of new users mainstream interest has dropped off for sports collectible nfts and the web 3D gen crowd has moved on due to lack of profit potential as a result we're left with a fractured community and the platforms are shrinking however these are tech companies with tons of funding and Runway they will figure it out the product Mages look very different by the time they do let's talk about the big stories in sports now that we've got a snapshot it's only fair to look at the bigger picture and understand where

slash how web3 fits in although Sports is a place where there are constant new narratives there are a couple of big macro Stories We want to highlight first sports betting is taking over America second Sports keeping cable slash broadcast TV alive and third Saudi Arabia's massive play in the space so let's talk first about sports betting Taking Over America there's been an ad that we've all seen lately where Jamie Foxx is promoting MGM bets next Sunday or actually when you hear this recording then we'll all have just sat down to watch the Super Bowl and we will likely be greeted by Sports gambling commercials the way we used to be inundated by crypto ones this is the

culmination of the industry's decade-long Takeover of North America there's a longer story here and to understand that you can go check out a great article about how sports betting industry quietly consumed America here's the tldr for you we'll link to the article in the show notes but here's the tldr in 2008 Sports gambling was banned but allowed games of skills such as fantasy sports overnight FanDuel and DraftKings were born there are enormous profits caught the attention of sports leagues the League's lobbied to legalize sports betting and succeeded in 2018.

now the League's Bank make Bank huge bank and in 2021 the NFL made 12 billion in betting Revenue crazy and in that story we cannot underscore enough the role fantasy sports really played as apps like FanDuel propelled their popularity fantasy sports Grew From half a million players in 1988 to over 55 million in 2015. the average time spent consuming Sports in 2015 was 18 hours per week 50 of which was on fantasy sports the industry banked 21 billion alone in 2021 in this expected to double that by 2027. now there is an incredible

appetite for sports gambling in the American public now you might be asking do Collectibles factor into fantasy sports they do not this is the so rare Turf Dapper labs and crew on the other hand are part of an even bigger industry which is sports memorabilia which currently sits at around 26 billion per year and is expected to grow to 227 billion per year I think in the next five years so you're talking about autographs cars bobble heads game ticket stubs and yes nfts Nostalgia is a far greater emotional turret than wagering and these figures alone are a good reason to stay bullish long term on the Dappers of the world next let's talk

about the trend of sports keeping cable TV alive the next major macro Trend maybe a hard pill to swallow Sports is the last form of truly unscripted live entertainment and each league organically renews the main characters and narratives year after year if you need a sense of just how much Sports is keeping traditional TV alive 82 out of the 100 top us broadcasts of 2022 or NFL games 82 TV matters to the leagues the NBA is set to rake in 2.6 billion this year on their TV deal which accounts for roughly 26 percent of their revenue tickets merch Jersey ads none of those come close to broadcasting rights money

and the cost for those rights will only increase and now two of the biggest companies in the world want a piece of the action Amazon has started broadcasting Thursday Night Football by the NFL and apple has a deal with MLS and MLB to broadcast soccer and baseball with the rise of AI and its potential to do writers jobs the value of live sports as the last part of providing Human unscripted TV might make it even more valuable still finally let's talk about the trend of Saudi Arabia's massive play what's going on there so alongside with everything else Saudi Arabia has its sites set on Sports domination as part of their Vision 2030 the kingdom has

already invested billions last year they funded Liv Golf and paid hundreds of millions to top golfers to join other moves made by the Saudis include they signed Cristiano Ronaldo to a five-year deal a huge loss for the MLS which has been the destination for Asian eurostars they signed a 15-year contract with F1 in 2018 signed a 10-year 500 million dollar deal with the WWE in 2021 but a 1.1 billion dollar stake in the ticketing giant Live Nation they bid on the 2030 World Cup alongside Greece and Egypt and they're hosting a 15 million Esports tournament this coming summer couple this with the Saudis clear

interest in becoming a massive emerging Tech Hub it's not hard to imagine the incorporation of nfts into the saudis-backed sports Ventures regardless the Saudis are one to watch so where's it all going we've looked at the current state of web 3 and sports and then zoomed way way out to the larger macro stories now where might they meet in the near future the next Bull Run or the end of the decade personally we're bullish on two major factors in digital Sports ecosystem that will be drastically enhanced through blockchain first loyalty many of the platforms covered here have already launched loyalty programs sending tickets merch and experiences to collectors however that's just the tip of the iceberg when

compared to the Starbucks model and barely touches on any of the other Market of fandom outside of nft collections now obviously this will change let's talk about ticketing currently Dapper Labs has a partnership with Ticketmaster to tokenize NFL game tickets on Flow although the program is very much still in beta so ticket stubs are ripe for change they've barely evolved in 100 years tickets are so exciting and could lead to incredible retention and loyalty in sports here's LG2 set's Ideal World he'd like to see a world where if your fandom is tracked across all chains items and events he wants an all-encompassing app that

combines every game you've ever been to every piece of merch you've ever bought every nft slash highlight that you own every game you've watched on TV and other similar marks of fandom in the real world you still can't prove that you're the biggest fan of the team club or player but tokenization can deliver that so here's what to look for in sports and web 3 right now we would never leave you without some action items here that's the web 3 Academy way so whether you're a straight casual or deep into sports here's what's on our radar in the next few months both as a collector and a Trader MLB times so rare the mob which is Major League Baseball

will be starting its full season on the platform in April and so rare is known for going big on marketing full disclosure LG is a holder EPL the Premier League times so rare the long-awaited launch of the English Premier League on so rare has solidified their grip on the soccer World expect so rare to grow even more in Europe NFL all day end of season the platform will be celebrating its first full season and all eyes will be on them as they prepare for an off season of upgrades of all the platforms mentioned here all day has by far the most support from its licensor that's it for now friends if you want to see more of LG's work make sure to check out his Link in the show notes and we'll

see you on Wednesday for the doer Spotlight with the president of Vayner 3 Avery and a Kinney super excited thanks for listening in everybody I hope you're sports fans out there enjoy the Super Bowl this weekend and everybody have a great week I'm out thank you for listening to web3 Academy we hope this helps you along your web 3 journey and if it does please share this episode And subscribe so you don't miss the next one nothing in this podcast was Financial advice crypto and web 3 can be risky you can literally lose it all in fact if you invest on account of what we say you probably will lose it all so don't do that in all honesty the point of this podcast is to remove the noise of markets and price and focus on utility implementation anyway so you should not

take any of this as Financial advice thank you friends and see you in the next one