KEY POINTS

  • An ESPN report earlier this year claimed the sudden termination of sporting events will wipe off at least $12 billion in revenue from the $100 billion+ U.S. sports industry. 
  • Sports analysts predict the creation and monetization of digital assets will drive 82.9% growth in the coming years.
  • Immersive technologies like Facebook’s Oculus or Microsoft HoloLens, which will enable fans to experience games live from any place of their choice, are being evaluated by various leagues and content providers across the globe.

The way sports events are organized will never be the same again. New digital technologies and platforms will determine how we attend and interact with sporting events.

COVID-19 has changed the world in many ways. Global economies have suffered, and entire industries now face the daunting task of updating to a new, more virtual standard of practices or becoming obsolete. Today’s sports events are now being played out with only a virtual audience in attendance.

A Champions League football match between Spanish club Valencia and Italian club Atalanta on Feb. 19 has been named “Game Zero.” The match was blamed as the major reason behind the spread of the novel Coronavirus over Europe. It was held in Milan’s famed San Siro stadium, and a third of the population of Bergamo (where Atalanta is based) traveled to watch the match live. Two days later, on Feb. 21, the first COVID-19 case was reported in Bergamo.

As athletes tested positive and curbs imposed on social gatherings, the sports industry suffered. Major sporting events were canceled or postponed, disrupting revenue streams that depend on in-stadium physical matches. An ESPN report earlier in May claimed the sudden termination of sporting events will wipe off at least $12 billion in revenue from the $100 billion+ U.S. sports industry. 

The most telling blow was arguably the postponement of the 2020 Olympic Games; the previous occasions when this had happened were all in the wake of the World Wars.

The Global Reset for Sports

Football leagues across Europe are hosting matches with 0% live in-person attendance. Other sporting fraternities followed suit, as events started making a slow, steady comeback worldwide.

We are witnessing a paradigm shift in the sports industry. Gone are the days of jam-packed stadiums. Today, we are dependent on digital media – live TV broadcasts, internet streaming, OTT content – for our daily dose of live sports.

Blockchain-based Digital Assets are the Next Big Thing

According to PwC’s Sports Survey for 2020, the COVID-19 situation has provided an unprecedented opportunity for the use of digital assets to increase revenues in the sports industry. Sports analysts predict the creation and monetization of digital assets will drive 82.9% growth in the coming years.

Deloitte’s recent report on Blockchain Trends puts blockchain technology at the fore for issuing, storing, or transferring digital assets. Metamask, one of the most popular applications used by enthusiasts to interact with decentralized applications (DApps), has reported year-on-year growth of over 400% in October 2020, confirming the exponentially growing interest in blockchain-based applications. 

The advent of the Non-Fungible Token (or NFT), used to represent unique and irreplaceable collector items on the blockchain, has been one of the major forces driving this growth. NonFungible, the go-to website for any data related to NFT markets, has reported sales volumes of $2 million in every week of October and November, with the CAGR for 2020 being about 50%.

Platforms like F1 Delta Time, a fantasy game where users can collect and trade unique NFT-based Cars, Drivers, and Components, has seen players pay upwards of $100,000 for one of the digital Cars. TradeStars, a stock exchange like platform of blockchain-based fantasy stocks whose values are influenced by real-life performance statistics of famous athletes, is going up against established fantasy sports applications like the popular cricket game Dream11 and DraftKings.

Blockchain technology offers unique advantages to drive the next stage of fantasy sports: 

Data recorded on a decentralized blockchain is immutable and transactions on the blockchain are transparent, so verifiable

NFT assets issued on a blockchain are by nature unchangeable, existing forever, under the complete, exclusive control of the owner. So digital assets of a platform like TradeStars maintain their value. No chance for fraud like what happened in 2015 when FanDuel and DraftKings were separate entities. At the time they were involved in an insider gaming scandal. With TradeStars, every transaction is visible via the Ethereum blockchain, making any questionable practices open to scrutiny.

Smart contracts increase efficiency, by cutting out middlemen

Transactions are settled seamlessly on blockchain platforms through smart contracts (the simplest explanation of a smart contract is that it is just a piece of computer code), so purchasing, selling or trading assets with other players is hassle-free. With blockchain enabling near-instant transactions, winners receive prizes immediately instead of waiting a week or more on incumbent sites. Unlike centralized systems using fiat currency (dollars, pounds, euros), like DraftKings, NFTs do not need intermediaries to ensure transfer of funds. Blockchain networks like TradeStar’s may then reduce fees by more than 50%. 

A decentralized ledger system such as a blockchain offers heightened security through its design of no single point of failure through node verification

Fantasy gaming sites process millions of funds daily and store great volumes of private user data, all valuable and sensitive. In order for a hacker to breach a decentralized network of servers, they would need to know exactly where information is held at any one point. This is virtually impossible on a decentralized blockchain network with distributed nodes like TradeStars. On a centralized system like DraftKings, a hack is always a threat.

Immersive Technologies are Merging with Sports Broadcast

Immersive technologies like Facebook’s Oculus or Microsoft HoloLens, which will enable fans to experience games live from any place of their choice, are being evaluated by various leagues and content providers across the globe. This sets the stage for a transition from passive to active sports viewing, which can change the entire broadcasting ecosystem. 

Once sports fans feel the ambiance of a stadium right in the comfort of their living room, no one will ever venture out to the arena again. As per the PwC report, 86% of industry leaders believe that live sports viewing will become significantly immersive and interactive with time.

Teams and Athletes are Resorting to Digital Technologies 

Players started to connect with their fans through live sessions on Instagram and Twitter during the lockdown. Earlier, fans had to be almost entirely dependent on news outlets for news updates about their favorite athletes, but now digital platforms are connecting players with their followers in a more personalized manner. 

Portuguese football star Cristiano Ronaldo has reportedly made a whopping £1.9 million through his Instagram posts during the lockdown period from March 12 to May 4 alone.

Some teams and leagues have taken a more radical (and digital) approach to stay engaged with their audience. Their efforts are greatly appreciated by fans.

In March, NASCAR organized the e-NASCAR iRacing Pro Invitational Series, a real-life simulation where competitors raced virtually around numerous tracks. The first race of this series became the most-watched esport event on TV. NASCAR went on to better their own record with over 1 million viewers in the second race of the event. 

The same month saw the baseball video game series “MLB The Show” host an online player’s tournament with four of the biggest names in the industry. The experimental event was attended by over 6,000 fans. 

The Future of Sports Consumption 

In this new lifestyle where social distancing is the norm, sports consumers rely on their devices more than ever. This creates a huge opportunity for content providers and sports broadcasters to implement new strategies to keep the existing consumers engaged and attract new fans. We are witnessing a growth in digital media platforms as a means of connecting the global sports industry with its consumers. COVID-19 might have been the harbinger of this transformation, but the innovations are going to stay for good.

Enterprises that provide the best and the most unique "digital" experience for sports fans will ultimately shape the industry of the future.

Constantin Kogan is Managing Director at Wave Financial Group and a partner at BitBull Capital. He has been a cryptocurrency investor since 2012. He has over 10 years of experience in corporate leadership, technology and finance. He contributes to the digital asset space as well as the sharing and value economies.