The advent of blockchain technology and the resulting proliferation NFTs and crypto have greatly impacted the world around us and the sport business landscape in what feels like the Gold rush at best and Tulipmania at worse, but it’s important to take stock of what’s really happening rather then get caught in the positive or negative hype. This is especially important for professional sport clubs because making a poor decision could create unnecessary risk, stifle long term innovation and limit opportunities with blockchain technology.
As is the case with any explosion of new business opportunity or technology it’s important to ask four key questions:
- Why does the technology exist and what does it do?
- What is the form factor?
- How does the technology create or take away value from our current business?
- What are the new rules? (Assuming you know the old rules.)
Why does the technology exist and what does it do?
Blockchain exists because a niche group of coders decided to try to rewrite the internet, but to do so in a secure way where every bit of data and information could be verified. Put in simplest terms, if Facebook and other social media platforms had been written on blockchain technology 15 or 20 years ago when they first launched then what you tweet and your data could not be altered or misrepresented. Basically blockchain allows data to be recorded and distributed, but not edited. It exists because that underlying technology can ensure that your digital work and/or life cannot be hijacked or distorted.
This is important for sport clubs because understanding beyond simply crypto or NFTs begins to unlock the true promise of what blockchain can do for our industry. It can store and secure medical records for athletes, it can create transparency to player transfer fees and/or player movement, and it can prevent any piece of data from being altered. Knowing this allows clubs, athletes, and those who work in sport to think critically about the areas where unalterable data would be useful versus simply latching onto a wave of excitement.
What is the user experience?
The user experience and initial expression of the technology is where blockchain begins to fall apart for most people because it’s incredibly confusing. You can read a great in depth piece on the underlying technology here, but suffice it to say most people don’t understand how websites are coded either except most know that someone does build them by writing that code. Blockchain can be thought of as a form of code that is verified by multiple parties in a chain, and once that code is verified it becomes an unalterable block. Thus that piece of data is secure on the blockchain which really just acts like a ledger written in unbreakable stone. The people who verify a transaction and build the blockchain are rewarded with crypto like Bitcoin for the trouble of providing computing power to the problem. And NFTs are simply digital images or objects built on a blockchain and bought with that same crypto.
Confused yet? Well, the real trouble with blockchain technology, outside of this confusion, is that it is integrated into normal web interfaces and applications that we use today, but it looks terrible and acts funny from a user experience standpoint. Just like the internet in 1998 the form factor of blockchain is pretty ugly and not very user friendly.
And this is another vital piece of information for a club because it tells you two things: (1) That blockchain technology form factor is only going to get better, because (2) It’s still incredibly early in the development of the underlying technology. This is important if you’re a club thinking of selling the rights to an NFT, blockchain, and/or other related company willing to shell out a six or seven-figure sum. Knowing what you know today would you have sold your website rights for a million dollars in 1998? Not one club in the world would – rather you’d invite people to come into your ecosystem to help create new value to make your website and digital experience more valuable overall and this is what can unlock and create a flywheel of innovation for clubs that engage with blockchain technology the best. It’s early still and there is plenty of time and opportunity for all of us to explore.
How does the technology create or take away value from our current business?
Because blockchain is a new type of digital and data technology it naturally encroaches on current areas of business for most clubs, leagues, and players. The sport trading card and sticker business is strong in sport from Panini to Topps and digital NFTs certainly overlap with that territory. Conversely, NFTs can unlock brand new value by turning digital tickets into evergreen distribution channels for new digital content. The analogs are endless, and the question around value creation and destruction will be wrestled with for years.
But the promise of blockchain for new digital business model innovation is endless because now there is a secure technology that can give fans and club stakeholders clear digital agency and ownership over their engagements with their favorite club and athletes. So whether a club sells a small percentage of itself via an NFT offering or it allows fans to select the jerseys for next year there are many ways to use the technology to reassert a genuine relationship between sport and fans — and this is the ultimate promise of the technology.
What are the new rules?
Lastly, the final question one should ask about the technology before they implement it is “what are the new rules?” The introduction of a new technology into sports always unleashes unintended consequences. FC Barcelona used to hold practices at the old training ground in front of fans who would strain to catch a glimpse of their favorite players through the fence. And then camera phones, social media and the “instantification” of sport turned genuine club and fan interaction into an invasion of privacy that led to closed practices. Technology always changes the rules, and it’s certain that new rules will be written in sport business as blockchain technology matures over the next decade. Staying ahead of and understanding the new rules will ensure you’re ready for everything that comes your way.
CATEGORY: MARKETING, COMMUNICATION AND MANAGEMENT
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