This is the market sectors research conducted by Whatdahack?! and first time shared on the webinar “Web3 Tech: The Future of Sports & Entertainment” and also presented as a YouTube video “Web3 Tech: The Future of Sports & Entertainment 🏀🎬🚀 Market Research June 2024 đź“… | Blockchain AI ML”.
As we stand at the cusp of a technological revolution, it’s imperative to understand how new technologies are not just redefining user interactions but are also paving the way for massive potentials in dynamically growing sectors such as Sports & Entertainment.
In today’s market sector research we uncover the potential for increased transparency, enhanced fan experiences, and novel revenue streams that Web3 technologies offer. Through our analysis, we aim to provide insights into current trends, identify challenges and opportunities, and forecast the impact of web3 technologies on the future landscape of sports and entertainment.
Since we’ve deeply reviewed the web3 technological shift in other video series you can find on this channel, go and check the description, for this time I want just to highlight the major differences between web3 and web 1.0, 2.0.
Web 1.0, known as the “Static Web” from the early 1990s to 2000s, primarily consisted of static pages for content display, lacking interactivity and limiting users to reading only. It utilized HTML for creating pages, URLs for addressing, and HTTP for server-client communication. User interaction was minimal, as there was no provision for users to engage with or contribute their own content, establishing a distinct division between content creators and consumers.
Emerging in the early 2000s and still prevalent, Web 2.0, or the “Social Web,” revolutionized the internet by emphasizing user-generated content, usability, and interoperability. It introduced dynamic web technologies like AJAX for more engaging web pages, RSS for content sharing, and Web APIs for online applications, fostering the rise of social networks, blogs, and wikis. This era significantly enhanced user interaction, transforming users from passive consumers to active creators, sharers, and collaborators, marking a significant shift in the internet’s evolution towards a more interactive and participatory platform.
Web3, arising in the 2020s, marks a leap towards a decentralized, secure internet, leveraging blockchain and AI to offer privacy and meaningful digital connections. It introduces a semantic web for smarter content organization, enhanced by spatial computing and the metaverse concept, blending digital with physical experiences in diverse applications beyond gaming. This integration not only boosts security and personalization but also revolutionizes digital interactions, providing immersive, trustless environments. This evolution represents a significant milestone in the internet’s progression, fundamentally changing how users engage with digital content.
Want to learn more about the technological shift? Check out our in-depth review on the subject from this article "Web3 As A Future Of Internet" published on Whatdahack?! website.Doing this research we could not find any finite and trusted web3 technologies taxonomy, so I decided to take this responsibility and provide the first in the market web3 tech landscape as we see it at Whatdahack?! I want to highlight that many consider web3 as a technological landscape built on blockchain solely, though we want to summon other modern technologies under the term web3 also as we see that only together they categorize and define the technological shift from the previous internet epoch. Thus we see five foundational pillars that together present the backbone of the technological construct. Each pillar addresses a different aspect of the Web3 experience, ensuring that the internet of the future is more equitable, efficient, and immersive. Let’s review these five pillars in some detail.
Personal Data Full Control (Blockchain)
Blockchain stands at the forefront of personal data control within Web3, instilling a framework where privacy is not just a privilege but a fundamental standard. This pillar empowers users with unparalleled management over their digital identities, ensuring that the control over online presence, data, and financial transactions remains firmly in their hands. It redefines the very nature of data ownership and transfer, making it a peer-to-peer exchange that is direct, transparent, and without the need for intermediaries. With blockchain, the transfer of money becomes just as fluid and user-controlled as the transfer of information, enabling secure, instantaneous financial transactions across borders, with the assurance of full ownership and reduced reliance on traditional banking systems. This level of control and autonomy not only enhances security but also ensures that users have the unfettered ability to manage and monetize their personal data and assets as they see fit in the Web3 economy.
Tokenization of Illiquid Assets (Blockchain)
In the sports and entertainment sectors, blockchain’s asset tokenization unlocks the potential of a vast array of previously illiquid assets. This includes not just physical goods but extends to the very essence of these industries: the performers and athletes themselves. For instance, an athlete might tokenize future earnings, allowing fans to invest in their career progression, while a movie franchise could tokenize and sell digital collectibles related to its cinematic universe. It also embraces non-tangible assets such as broadcasting rights or musical royalties, offering a piece of the revenue to supporters in exchange for early or enhanced financial support. This shift empowers creators and performers to harness their success potential directly, with blockchain ensuring transparent, secure, and equitable transactions, inviting fans and investors alike to engage with the sports and entertainment worlds in a novel and direct manner.
In the context of sports and entertainment, blockchain’s decentralization paradigm transforms traditional structures of authority and power. It enables the formation of decentralized autonomous organizations (DAOs) that can govern leagues, teams, or entertainment collectives, where decisions are made collectively rather than by a select few executives. This could manifest in fans voting on team decisions, plot directions in interactive media, or concert locations for musicians, effectively giving stakeholders a direct voice in the inner workings of the industry. Furthermore, decentralization through blockchain could facilitate more equitable distribution models for revenue and recognition, ensuring that the creators, athletes, and performers who are the lifeblood of sports and entertainment are rewarded fairly and transparently. It sets the stage for a collaborative and participatory future where the lines between creators, performers, and consumers are blurred, creating a more engaged and invested community.
Operational Automatization (Blockchain Smart Contracts, IoT, Computer Vision, Big Data, ML, AI, GenAI)
The sports and entertainment industries are poised to benefit greatly from Web3’s emphasis on operational automatization. For example, smart contracts on blockchain could automate ticketing processes, eliminating fraud and ensuring authenticity, while IoT devices could enhance live events through improved security and personalized fan experiences. In the realm of sports, computer vision and machine learning algorithms could analyze gameplay to provide real-time statistics and insights, improving coaching and player performance. Similarly, in entertainment, AI could tailor content distribution to viewer preferences, automate royalty payments via smart contracts, and use Big Data for predictive analytics in marketing strategies, leading to more successful launches and campaigns. GenAI might further revolutionize content creation by generating personalized media, like customizing a game or show’s difficulty level or plotlines based on user interaction, creating a highly immersive and customized experience. This blend of technologies streamlines operations, making the sports and entertainment sectors more responsive, user-friendly, and innovative..
Integrating the latest in spatial computing, the Metaverse, and BCI/BMI with the expansive potential of Web 3.0 and GenAI, we’re on the brink of a revolution in user experience across sports, entertainment, and education. These technologies allow for immersive VR experiences for fans, interactive virtual worlds for events, and thought-controlled digital interactions, enhancing engagement to unprecedented levels. Furthermore, they facilitate immersive, AI-customized sports education environments and BCI/BMI games, offering seamless integration of thought and action. This amalgamation promises a future where digital and physical experiences are not just blended but indistinguishable, offering personalized and deeply engaging ways to learn, play, and interact.
These five pillars of Web3, as outlined, offer transformative insights for the sports and entertainment industries. Blockchain empowers users with control over their data and finances, while tokenization opens investment opportunities in previously illiquid assets like athletes’ earnings or digital collectibles. Decentralization shifts power, enabling fan-driven decisions in teams or entertainment content. Automation through smart contracts and AI streamlines operations, enhancing efficiency and personalization. Lastly, spatial computing and BCI/BMI* technologies promise highly immersive experiences, revolutionizing how fans engage with sports and entertainment, ensuring a more interactive and personalized future.
*A brain–computer interface (BCI), sometimes called a brain–machine interface (BMI)
Let’s start with the most recent and overhyped use case in Sports & Entertainment, let’s start with digital collectibles or memorabilia minted on blockchain and well known as NFTs. I bet that most of you are familiar with the term NFT and its application, however I want to bring it up once again, so we are on the same page. Here is the term explanation from Wikipedia.
“A non-fungible token (NFT) is a unique digital identifier that is recorded on a blockchain and is used to certify ownership and authenticity. It cannot be copied, substituted, or subdivided. The ownership of an NFT is recorded in the blockchain and can be transferred by the owner, allowing NFTs to be sold and traded. NFTs can be created by anybody and require few or no coding skills to create. NFTs typically contain references to digital files such as artworks, photos, videos, and audio.”
“A non-fungible token (NFT) is a unique digital identifier that is recorded on a blockchain and is used to certify ownership and authenticity.
Despite the fact that the digital collectible market has been experiencing a dramatic drawdown, according to Statista it will recover with 0.19% of user penetration in 2024 to the expected 0.20% by 2028 and the projected revenue to reach US$2,378.0m in 2024.
NBA Top Shots stands out as a notable example, showcasing a successful partnership between the NBA and the FLOW blockchain. This initiative allows fans to buy and trade video highlights from NBA games, illustrating the potential of NFTs in enhancing fan engagement. However, the excitement around NFTs is not without its challenges. The current common misconception that owning an NFT grants secured access to digital art or assets, despite the ease of duplication, poses a significant hurdle. In fact, almost all NFT existing in the market can be easily downloaded and copied and thus it makes the whole idea of value transfer insecure and creates a risk of fraud and unauthorized content usage on the secondary market.
An attempt to solve the problem was taken by the authors of the Barcelona Football Club NFTs case. A well known club together with Sotheby’s auction house conducted a closed auction where the auction house provided infrastructure and resources to maintain secure access to the physical files and their transfer. However the auction house contract outlined that, beyond the authenticity guaranteed by the seller, no further representations or warranties are made about the NFTs. This includes no guarantees about copyright status, the technical aspects and condition of the NFT or associated content, the absence of digital vulnerabilities, the uniqueness of content, the functionality and compatibility of the NFT with various systems, or the correction of any defects.
Digital art has been prevalent since the inception of digital media, yet the advent of NFT technology hasn’t fully addressed pre-existing issues. However, to tackle these challenges and help our customers realize their project to the full extent, we employ advanced detection and secure storage technologies, enhancing the integrity of NFTs. Our approach leverages a fingerprint mechanism and digital signatures to assess NFT authenticity and rarity. Using deep learning, we create an ‘NFT fingerprint vector’ for each piece, featuring over 10,000 distinct numbers, compared against a vast database to establish a rarity score (0% to 100%). Computer vision aids in detecting slight differences among digital collectibles, enhancing the precision of our authenticity checks. As centralized storage presents hurdles like higher fees and data loss risks we promote decentralized storage solutions, providing better control and minimizing data loss risks. This shift towards decentralization overcomes traditional storage drawbacks, ensuring the security of digital assets in the NFT domain within a concise framework.
If your business may benefit from applying NFT technology either for audience engagement, asset value transfer or authenticity, we are to serve you as technical partners at all stages (research, discovery, development and integration). Amidst skepticism, with some art industry leaders dismissing NFTs as baseless hype, brands like Nike are pioneering the integration of these blockchain-based tokens into their products, marrying digital art with physical goods. Adidas, in collaboration with BAPE, launched a limited edition of 100 virtual sneakers in August 2023, blending digital presence with tangible value. This initiative allowed participants to trade or redeem their NFTs for an exclusive pair of sneakers, demonstrating the high value placed on such items, with bids reaching nearly $4,000.
Despite the nascent stage of generating substantial revenue, companies are exploring innovative applications of NFTs in marketing, overcoming the initial barriers associated with crypto asset acquisition, such as the necessity of browser extensions, crypto wallets, and digital transactions. Beyond marketing, the use of NFTs and NTAG 424 DNA NFC Tags introduces a novel approach to authenticating physical items, such as artworks or collectibles. This technology combination validates the authenticity and ownership of physical goods through digital verification, offering a robust solution against counterfeiting and bridging the digital-physical divide. This innovative melding of NFTs with physical authentication methods signifies a forward leap in securing and valorizing digital assets in tangible forms.
Ticketing and loyalty systems, while serving distinct primary functions, share several key features that underscore their utility in customer engagement and business operations:
Both systems facilitate a form of value exchange between the customer and the organization. Ticketing grants access to events, services, or venues in return for payment, while loyalty systems reward customers for their ongoing patronage with points or rewards that can be redeemed for discounts, products, or services.
Both systems typically involve a redemption process — whether scanning a ticket for event entry or exchanging loyalty points for rewards. This process necessitates robust infrastructure and clear rules to ensure fair and efficient transactions.
Today, I aim to explore the integration of blockchain technology with ticketing and loyalty systems, and discuss why it may not be the comprehensive solution many anticipate.
Blockchain in ticketing can address issues such as counterfeit tickets and scalping, and provide a more secure and transparent system. However, attempts by major brands have yielded mixed results. For instance, consider Ticketmaster’s acquisition of a blockchain ticketing solution called UPGRADED. Despite initial excitement, progress has stalled, with the startup’s website now defunct. Similarly, ventures like FanDragon Technologies have dissipated, casting doubt on the viability of blockchain in ticketing.
Regarding ticketing and loyalty systems, it is crucial to highlight two blockchain applications designed to enhance existing experiences and create new ones for event organizers and attendees: NFTs and their derivative, POAPs.
POAP NFTs, which are still in the early stages of development, are not widely recognized. A POAP—Proof of Attendance Protocol token—primarily verifies event attendance or marks a significant life moment as a digital collectible. The concept of digitally bookmarking life moments may seem peculiar, but let’s investigate its validity and whether it is merely another speculative venture by the cryptocurrency community.
Currently, POAPs provide a novel way to engage with NFTs. They do not possess the same monetary value as traditional NFTs traded on marketplaces. POAPs offer unique advantages that differentiate them from other engagement methods:
mmutable Proof of Attendance: POAPs offer reliable, tamper-proof records of attendance, recorded on a blockchain, unlike traditional methods like surveys or check-ins, which can be prone to manipulation or human error. Additionally, a POAP collection can serve as a blockchain-style resume.
Tangible Digital Mementos: POAPs are digital collectibles that attendees can keep as lasting mementos of their participation. Unlike transient engagement methods such as social media posts or email newsletters, POAPs provide enduring value as commemorative tokens that attendees can treasure and display in their digital wallets. For event organizers, this facilitates better community engagement by minting POAPs to commemorate significant moments or achievements.
Exclusive Access and Rewards: As a form of NFT, functioning as a smart contract or unique identifier, POAPs can grant holders access to exclusive content, benefits, or experiences. Issuing special access POAPs can incentivize engagement and reward participation in a meaningful way. For instance, in some communities, possessing more POAPs can grant enhanced privileges, such as increased voting power in polls or DAO project proposals.
In summary, POAPs provide a unique blend of immutable proof of attendance, tangible digital mementos, and exclusive access and rewards. These elements make POAPs an invaluable engagement tool for event organizers, enhancing the attendee experience and fostering memorable events.
However, NFT tickets still face challenges such as reselling, privacy concerns, and the cost of on-chain operations. While blockchain offers promising solutions across various domains, its application in ticketing presents significant hurdles. It is prudent to approach this technology with caution, considering both the benefits and the inherent complexities.
The programmability of NFT tickets enables more sophisticated interactions by various stakeholders, including owners, sellers, creators, and promoters. These features have significant implications for the industry, affecting aspects such as maximum price settings, resale revenue, digital collectibles, and loyalty rewards.
A maximum ticket price can be set, even during resales, which greatly reduces the incentive to buy tickets at face value and resell them at inflated prices on secondary markets. This mitigates the issue of tickets being sold out from the primary seller and only available at exorbitant prices from secondary intermediaries.
Artists, athletes, and event creators can now receive royalties from ticket resales programmed into the smart contract, ensuring they benefit from each transaction. The NFT ticket can also become an aesthetically pleasing collectible, akin to physical tickets from past events.
Finally, a rewards program for loyal fans can be implemented more effectively with blockchain, facilitating seamless collaboration between parties. This contrasts with previous models where companies maintained their data in isolation, hindering cross-organization collaboration.
While blockchain presents potential opportunities to innovate and address longstanding issues within the event industry, notable collaborations and acquisitions by major players involving NFT-ticket startups have not yielded any notable successes since 2022. This observation suggests that mere adoption of raw blockchain technology is insufficient. Instead, a seamless user experience and robust infrastructure are essential requirements that are currently lacking. These elements must be developed and integrated comprehensively for NFT-ticketing and web3-based loyalty systems to achieve widespread acceptance and use by businesses and their customers.Remember the days when websites were mere collections of pixelated GIFs and clip art text? If you don’t, a stroll down memory lane through Geocities archives might jog your memory. GeoCities, the pioneering web hosting service active from 1994 to 2009, offered users the freedom to create and publish their websites, marking the early days of online creativity.
Fast forward to today, where we find ourselves on the brink of a new era in user experience design, one driven by XR (Extended Reality) technology and UX 3.0 principles. But what exactly is XR UX 3.0, and how is it reshaping the landscape of sports engagement?
The transition from traditional 2D interfaces to immersive 3D experiences marks a significant leap in user engagement and interaction. While 3D representation has been lauded for its effectiveness in various fields like education and entertainment, its integration into web experiences has been a gradual process.
The introduction of WebGL technology in 2009 laid the foundation for 3D experiences online, yet widespread adoption took time as browsers gradually incorporated support for the WebGL API. Despite initial hurdles, the potential for interactive 3D websites began to emerge, offering users a glimpse into the future of online interaction.
UX 3.0, also known as Web3 UX, represents the next frontier in user experience design, leveraging advanced technologies like AI, AR, VR, and IoT to create seamless digital experiences. By bridging the gap between the digital and physical worlds, UX 3.0 aims to provide users with personalized, intuitive, and immersive interactions.
Key advancements in technology, including blockchain, AI, and the growth of AR/VR, have paved the way for the emergence of UX 3.0. These innovations have not only expanded the possibilities for user engagement but have also redefined how we perceive and interact with digital content.
In the realm of sports, XR technology is revolutionizing the fan experience, offering immersive viewing opportunities that transcend traditional boundaries. Virtual Reality (VR) allows fans to step into the shoes of their favorite athletes, providing unprecedented access to live events from the comfort of their homes.
Augmented Reality (AR) and Mixed Reality (MR) enhance the viewing experience further, providing real-time stats and analysis that enrich the overall experience. Whether watching from home or in the stadium, fans are treated to a personalized and interactive journey through the world of sports.
Digital twins, virtual replicas of physical objects or environments, are reshaping the way sports organizations plan and engage with fans. By creating virtual models of stadiums and arenas, teams can offer fans a unique and immersive viewing experience, complete with interactive elements and real-time statistics.
These digital twins not only enhance fan engagement but also offer valuable insights for stadium planning and management. From optimizing seating arrangements to improving crowd flow, digital twins are becoming indispensable tools for sports organizations looking to elevate the fan experience.
As we look ahead to the future of sports engagement, one thing is clear: XR UX 3.0 is here to stay. By embracing technologies like XR, digital twins, and IoT, sports organizations can create truly immersive and personalized experiences for fans around the world.
From virtual viewing parties to interactive merchandise stores, the possibilities are endless. As the industry continues to evolve, the integration of XR technology will be key to staying ahead of the curve and delivering unforgettable experiences to fans everywhere.
In conclusion, the convergence of XR technology and UX 3.0 principles is ushering in a new era of fan engagement in sports. By leveraging the power of immersive experiences and digital innovation, sports organizations can create lasting connections with fans and unlock new revenue streams in the process. As we embrace the future of sports engagement, one thing is certain: the best is yet to come.
In the burgeoning landscape of financial paradigms and fan engagement strategies, a novel concept has emerged: talent tokenization. This innovative approach, akin to personal Initial Coin Offerings (ICOs), transcends traditional fundraising methods by encapsulating an individual’s potential future earnings or talents into digital tokens. Such tokens afford investors the opportunity to directly support promising talents, thereby establishing a symbiotic relationship between backers and beneficiaries.
Rooted in the essence of democratized ownership, talent tokenization represents a departure from conventional project-specific funding mechanisms, epitomized by personal ICOs. Rather than tethering investment prospects to singular ventures, talent tokenization broadens the scope to encompass an individual’s overarching career trajectory, thereby fostering a more holistic investment landscape.
Within the realm of sports, the tokenization of club ownership into securities has emerged as a transformative force, offering fans a stake in the financial prosperity of their beloved teams. Through this paradigm shift, supporters transcend their traditional role as mere enthusiasts, assuming the mantle of stakeholders with vested interests in their clubs’ economic success. Moreover, club tokenization injects much-needed liquidity into the sports sector, thereby augmenting financial stability and providing clubs with innovative avenues for capital procurement.
However, the proliferation of talent and club tokenization is not devoid of challenges. Chief among these are the intricacies of navigating the evolving legal framework surrounding tokenization, the specter of market volatility, and the inherent risks associated with investing in the mercurial trajectories of individual careers. Despite these obstacles, success stories such as that of Spencer Dinwiddie, who tokenized his NBA contract, underscore the transformative potential of talent tokenization in fostering financial autonomy and deepening fan engagement within the sports arena.
In tandem with talent tokenization, the advent of club tokenization heralds a new era of fan-centric engagement strategies within the sports and entertainment industries. Platforms such as Socios.com have pioneered the concept of Fan Tokens, which afford supporters exclusive benefits and voting rights, thereby fostering a sense of community and empowerment among fans. Moreover, club tokenization represents a convergence of decentralized finance (DeFi) and sports, offering an alternative to the limitations inherent in traditional financial models.
Notably, the implications of club tokenization extend beyond mere financial transactions, encompassing broader sociocultural ramifications. By bridging the chasm between fans and stakeholders, club tokenization engenders a more profound sense of belonging and investment among supporters, thereby redefining the dynamics of fan-club relationships.
In conclusion, talent and club tokenization epitomize a paradigm shift in the realms of finance and fan engagement. Rooted in principles of democratized ownership and decentralized finance, these phenomena offer promising avenues for supporting emerging talents and fostering deeper connections between fans and their respective clubs. As the journey into tokenization unfolds, it behooves stakeholders to navigate the attendant challenges and capitalize on the transformative potential of these novel financial instruments.
Democratization of Investment: Unlike an IPO, which often requires significant capital, tokenization allows fans to invest smaller amounts, making club investments more accessible to the general public.
Enhanced Liquidity: Tokens can be traded on various exchanges, offering greater liquidity than traditional shares, which are often bound by more restrictive trading regulations.
Flexibility: The terms of fan tokens can be customized, offering various benefits that are not usually part of traditional stock offerings, such as exclusive experiences or merchandise.