There Is Another World Out There

Today’s Meet The Team piece comes from iSportConnect’s Chief Strategy Officer Sandy Case. Sandy looks at the metaverse, the trends surrounding it and the importance of paying attention to it, and not sticking your head in the sand, as it continues to grow.

I have to preface this article by saying there are many smarter people than me in the blockchain/crypto/metaverse space, but it is crucial that we all start to understand the impact it is going to have, and it forces me to learn and dig around for my own personal growth. Over the last couple of years, I started investing small amounts into various coins to make myself read articles and be better informed. I’m still very much a novice but fascinated in what it all means but here is my take on where we are and why we need to pay attention.

Any of us alive today has only been aware of the one world that we’ve ever known, and it’s been there for billions of years. But there is now another world – a digital online world or more precisely – the metaverse. Nothing new here for anyone who has been paying attention to any news.

“We can do much of what we do in the physical world in the metaverse. We can exchange products, buy things, offer services and connect with others.”

But what does metaverse mean? In the digital world we can go ‘beyond’ which is the literal Greek meaning of “meta”.

A metaverse is effectively a parallel digital world that allows us all to interact with each other digitally. We can do much of what we do in the physical world in this metaverse. We can exchange products, buy things, offer services and connect with others. The metaverse is changing the way we traditionally look at society and also sport, which is obviously what we are interested in.

Sport means many things to many people, but we have to accept that Esports is now a huge factor within, or alongside, the traditional sporting landscape and gaming is obviously a major part of Esports. So what happens in gaming changes Esports and then this impacts the traditional world of sport. It is all linked and since the metaverse has strong links to the gaming world then the world of sport needs to pay attention.

The landscape is changing…….fast.

Pay-to-play is now play-to-earn

A new frontier in gaming is emerging through crypto technology, with a lucrative principle behind it based around the concept of play-to-earn, player-owned ecosystems. The gaming world is very much leading this charge and predominantly in Asia where gamers compete and earn serious (or not so serious depending on your expectations) money. 

You often hear this referred to as “GameFi”. This is where platforms work to turn regular users into decision makers. It is essentially a player-owned economy in the trading of NFTs (non-fungible tokens). Systems are implemented through governance tokens, which give the player the power to take part in the games’ development and fund allocation in a transparent system. The tokens derive their value from their usage in gameplay. Players can also receive a share of the game’s revenue.

This decentralised system has recently become popular in places like the Philippines, where normal people begin to live off the play-to-earn model. Ordinary folk earn between $200 and $1,000 per month or even more.

“Traditionally, businesses have developed through pay-to-play structures with revenue being brought in from players buying games as well as making in-game purchases.”

Similarly, there is a simple game called Tezotopia where you can buy parcels of virtual land that is currently generating 30% pa based on the latest pricing and you don’t have to be active to get this. You just have to enter the game and sit still. You don’t even have to be an active participant. So you can quickly see the appeal for ordinary people and why they are looking at the space for not only speculative reasons but also as a genuine earning and investment opportunity.

Let’s also look at how this is flipping many business models. Traditionally, businesses have developed through pay-to-play structures with revenue being brought in from players buying games as well as making in-game purchases. With play-to-earn, gamers participate in the development of games, earning money simply through playing them.

The point here is that traditionally a company such as EA Sports will keep 95% of profits and distribute 5% to shareholders, whereas crypto’s ‘play-to-earn’ might retain 5% of their profits and distribute 95% to players and the community. In my view we are at the very beginning of this new world where people can earn, build wealth, and participate in online digital communities and economies.

Digital vs Physical

To create earning potential you need assets to buy and sell – virtual assets. A common mistake is to dismiss a virtual asset as a gimmick. Younger generations put just as much value on the trainers that their avatar wears in a game as they do on the trainers they wear in public. After all it’s all about showing off to your friends and if your peer group are gamers then why not create that status within a game they are all playing? Kudos is kudos wherever you get it…

RealFevr have recently released Cristiano Ronaldo’s first competitive goal of his career while at Sporting Lisbon as an NFT.

Additionally, the latest Damien Hirst experiment where he produced and sold 10,000 digital prints and at 3pm BST July 27th 2022, owners have the choice of retaining their numbered print in either digital or physical form – he will destroy the other version – promoting the question of which will trade at the higher price – the digital or physical print?? We shall see. I think we will be surprised at where this all settles. The point here is that we must accept that digital ownership now has meaning in society.


All of these digital assets are based on blockchain technology and often expressed as NFTs. NFTs can be anything from avatars in pixels (CryptoPunks, Meebits) to footage of infamous NBA basketball moments (NBA Top Shots) or Cristiano Ronaldo’s first goal (RealFevr). They are comprised of unique code that gives them rarity and value. It is important to remember that NFTs generate rewards of in-game cryptocurrency tokens which can easily be moved to exchanges and sold for other tokens such as Bitcoin, Ethereum or fiat currencies such as the dollar or pound. It’s really not as hard as you imagine playing, trading and converting back to a currency of your choice. Ten minutes on YouTube will show you.

Growth

Many metaverses even have their own specific cryptocurrency tokens tied to them, which are available to purchase on crypto exchanges. In the same way you can buy a share in Tesla, BP or Unilever on a traditional trading platform.  It’s very easy and there are multiple metaverses all connecting with each other and running seamlessly at the same time. A prime example of how this is growing is Axie Infinity, the world’s most popular blockchain-using metaverse, which issues its own AXS tokens which reached a $9 billion valuation in late September with two million monthly users.

“You will see sponsors whose aim is to educate people on how crypto works, some who are just creating brand awareness, but whatever the reason the numbers are serious.”

Axie’s growth is off the chart. It generated $800k in revenue in the whole of 2020. In just the month of August 2021, it has generated $364.4 million in revenue. You don’t need to be a mathematician to understand this is a serious rate of growth and this is just one example of how blockchain networks and virtual worlds are creating real-world value.

Money money money.

So where is all the money coming from and who is investing and is money coming into sport? Well the answer is yes. Here are some examples of real-world funds and sponsorship deals that have taken place that are affecting the metaverse.

This is fascinating as we have to remember that no one is actually able to own the metaverse, yet huge, credible companies are willing to commit capital:

  • Berlin-based Bitkraft Ventures, one of the biggest investors in game and esports, launched a $75m fund for blockchain gaming and digital entertainment investments. The fund has already closed six investments and plans to invest in 25 more companies by the end of 2022.
  • Polygon, an NFT platform, also said in July it would offer up $100m for gaming projects. 
  • The Algorand Foundation, an organization dedicated to fulfilling the global promise of blockchain technology launched a $300 million USD fund. 
  • Facebook revealed it will be investing $50 million in global metaverse research to help develop relevant products.

Recent sponsorship deals include:

  • FTX & TSM esports – $200m for 10yrs
  • FTX & RIOT games – n/a
  • Crypto.com & UFC – $175mn 10yrs
  • Crypto.com & F1 – $100mn 5years
  • ESL & Coinbase – n/a
  • MLB & FTX – n/a
  • FTX & Miami Heat – $135m arena naming rights 
  • SA Rugby & Luno – education around crypto
  • Southampton FC & learncrypto.com  – education around crypto
  • Binance & Lazio – $30m
  • Socios & multiple football teams: Inter Milan, FC Barcelona, Arsenal, Manchester City, Paris Saint-Germain, Atletico Madrid & Juventus

These are some very strong trends that have thrived and accelerated during the pandemic. You will see sponsors whose aim is to educate people on how crypto works, some who are just creating brand awareness, but whatever the reason the numbers are serious. Alongside this, bigger, institutional players will improve the quality of these games, as Japanese video gaming company Taito has taken an interest in NFT gaming, and Atari, pioneers of the gaming industry, is now getting into NFTs with Atari Blockchain.

Conclusion

Some predictions put the metaverse at a $250bn (£183.8bn) to $300bn market cap by 2025 which means it is attracting the attention of the biggest corporates in the technology industry. This is hugely relevant to us not only societally but because we know that the gaming world is leading this charge and now intersects directly into the sports world – we need to pay attention. These are huge financial numbers, and this will create change. It is too big not to. Sport is evolving and the businesses that thrive in its ecosystem are changing. Blockchain will be integrated into many aspects of our everyday world and sport will be similarly impacted.

The trick is not to worry about understanding the underlying technology or how it works. I don’t know how the internet or email work – but I do know how it changes my life. So instead, we only need to understand how it will impact the sport industry as the rise in popularity of the blockchain and the metaverse is happening and we all have a choice to make in whether we want to engage or let others engage.

“You may find the idea of virtual money trees having an impact on sport rather ridiculous, but I would encourage you to embrace the unbelievable nature of it and accept that it is real.”

An Esports Olympics anyone? Change is already coming with the announcement of the Futurous Games in Russia 2023. I think it’s a brilliant concept and I’m excited by this despite admitting I don’t quite understand what it will end up looking like.

You may find the idea of virtual money trees having an impact on sport rather ridiculous, but I would encourage you to embrace the unbelievable nature of it and accept that it is real. The metaverse changes gaming which, in turn, changes Esports, which will then impact sport and the way we consume and play it.

I’m in…

For other interesting articles written by genuine experts then please see How to use NFTs and NFT basics.

Why I Started iSportLearn

This week you may have seen the launch of iSportLearn, iSportConnect’s all new educational platform for those either looking to enter or further develop their career in sport. iSportLearn CEO Sandy Case tells you more about his idea and vision in the latest edition of Meet The Team.

Many good ideas start from a real-life experience. Mine came three years ago when I attended a very large well known sports industry event. I was still relatively new to the business side of sport and was pretty shocked to find a vast room of predominantly white middle-aged men wearing the customary blue jackets and white shirts with the odd grey jacket thrown in for individuality….ahem….just like me. Not what anyone would say was a diverse and mixed crowd.

Now I do need to say that this is not a solo dig at our industry alone as this is very similar in many other sectors, but this was where I was in the here and now and additionally it had the whole feel of ‘who you knew’ rather than ‘what you knew’. Now I’m not averse to some networking and recognise the importance of relationships helping to grow business but something made me feel distinctly uncomfortable.

I certainly had no clue what I could do to make a difference, but it certainly started to get me thinking. Then I began to notice various senior roles in the industry always being filled by the same demographic. Of course this was the case, as it was pretty obvious the available talent pool for these jobs was dominated by this same single demographic. This went against everything you see when playing or watching sport and more importantly it went against everything I believed in when running any business. Without a diversity of ideas the decision making risks becoming predictable and safe. I have always believed that diversity of thinking generates the best outcomes. I am not a diversity expert but my take on this space is that the current demographic of our wonderful industry is wrongly balanced, and that diversity is not only about race and gender but also about background. 

When Sree Varma (my CEO at iSportConnect) and I first met we got talking about this and the idea of iSportLearn was born. We probably both claim it was our own idea but in truth we were both thinking it, and it just came together. I spent several months putting together the idea, road testing with various senior people in the industry and pitched it back to the wider team with relative success. And before anyone says it – I realise the irony that iSportConnect has built its reputation around networking and connecting and the ‘who you know’ and here I was proposing to go against this and promote more of the ‘what you know’. The reality is they can both work hand in hand, but the balance was currently wrong.

I will let others talk about how we operationally put this together, but I will be the first to admit we took many wrong paths, and I made some bad decisions, but we learned fast and I am incredibly proud that in six months we took hundreds of hours of film, thousands of questions, built a platform and managed to get this to market from scratch.

The driving force behind iSportLearn was to really do two things. 

  1. To change the diversity of the industry by attracting a new talent pool in at the bottom. 
  2. To take a multibillion-dollar industry and work to make it more professional, create better standards and help people’s careers once they get here. 

Of course, I know that there will be doubters but quite frankly, I don’t mind. I simply want us to be a positive force within the sports industry and, despite all the rhetoric, there are no industry standards and there is no industry wide effort to tackle diversity. Lots of great individual initiatives but we want to bring this all together. It’s not about a particular sport – it’s about the whole global industry. And I am more than happy to be the turkey voting for Christmas – the white middle-aged guy standing up on his soapbox bemoaning the fact there are too many people like me around.

iSportLearn launched this week and the ambition is to add another 100+ modules to the 60 already in place. That will mean over 150 senior executives (we call them Playmakers) from 100+ leading brands in the business of sport involved in changing the industry. The really exciting part is that we have created a Foundation that, in time, we hope will generate significant funds to help provide scholarships and access to free courses for all those underserved communities and then we will start creating pathways into the industry.

All the above won’t happen overnight but I am yet to speak with a business that doesn’t buy into the concept or have a diversity hiring challenge themselves. The finished product will be an industry-wide platform developed with the industry and for the industry. I can honestly say that it feels great to be working on something that has so much positivity around it and working with people who also believe in the ambition. I have to say a very public thank you to those that really helped me get this over the line: I don’t have enough room to mention all by name but obviously all the Playmakers involved who bought in to the concept so quickly, the creative team at Cravens for calm guidance and advice, Vowel for putting together the platform and my own team for far too many anti-social hours and putting up with my constant badgering.

Will this be successful? We hope so and have strong belief in it. It definitely won’t be for lack of effort, belief, graft and ambition. So if you want to develop your existing people or find a way to create a more diverse hiring process, then I’d love to be talking with you. If you may have an idea that we can use to help make this happen even faster I’d love to talk as I am fully aware there are many smarter people than me in this space and therefore we need more collaboration with as many other stakeholders as possible to really have an effect.

To find out more about iSportLearn, head to iSportLearn.com, or find us on social media by searching for iSportLearn on Twitter, Facebook, Instagram and LinkedIn.

Breaking Down The SPAC: Why Sport Is Becoming A Key Investment Focus

In this week’s Meet The Team piece we take a dip into the financial world, as Sandy Case, our Chief Strategy Officer, provides a simple breakdown into what could be viewed as a complicated part of the sports industry, the rise of SPACs. Much has been discussed about these companies in the past 12-18 months in sport, so read what they are all about here…

One of the interesting areas that is developing in the sporting world is the SPAC (special purpose acquisition company). They have been around for a while and were talked about when I worked in the financial world back in the 1980’s. Many people have seen the word and noticed that Jay Z or Shaquille O’Neal are involved and nodded wisely without really understanding what they are…

It’s actually a very simple concept that could have some drastic outcomes in the sport industry.

“The new world is disruptive and regularly challenges the age old established fee structures. This does that and more.”

With no apologies to the experts I will avoid financial jargon where I can. SPACs are broadly speaking a shell company, with money, that intends to buy or merge with another working business. I’ll explain some of the benefits at the end.

There are normally several phases:

Phase 1: It starts with a group of investors who raise some money and form a SPAC. There is no working business, just an empty shell. That is why you often hear them described as a ‘blank cheque company’.

Phase 2: The management team will normally have an expertise in a specific area and will usually announce that they intend to buy a company (using the investor funds) in a particular sector. They won’t necessarily name the company but just the type of business they would like to buy.

Naturally this is likely to be within a sector that they are themselves knowledgeable about. Currently the hot sectors for growth are EV (electric vehicles), space (travel, exploration, infrastructure), crypto (blockchain business), green energy (hydrogen, solar etc) and tech. All the areas that we read about daily that are going to allegedly change our lives. We’ll come to sport later.

Phase 3: The SPAC announces a target business that it wishes to buy. There’s no guarantee they will get the deal done but if they have chosen wisely and done the right negotiation then they are good to go to the next phase. Clearly this excites the financial press and lots of speculation about intentions arise.

Phase 4: The deal gets done and the SPAC name changes into the target company name. If, normally after 2 years, no deal is done, then the original investors get their money back. This is a pre agreed arrangement to protect the original investors if no deal can be done – you get your money back.

Back to the reason why they go through the above process – well it’s because the process skips having to involve banks and investment firms (who like to charge hefty fees) making the process faster, easier and far cheaper. The new world is disruptive and regularly challenges the age old established fee structures. This does that and more. One other key area is that share prices regularly see large jumps immediately (not always but regularly) after an IPO leaving the selling company pretty frustrated at how much money they have left on the table.

So it’s not “traditional” but that doesn’t make it wrong. Of course not. In fact, I believe that the traditional IPO will die a slow death and that this is how more and more companies will come to the market.

But why sport? Many will remember DraftKings going through this process and there are rumours of a SPAC merging in a deal with Sportradar worth $10bn.

Well in my view sport hasn’t always been a fertile shopping ground for investors but the rise of broadcast fees has meant that now there are many opportunities. For me it is tech that will change business models. Put simply the new technologies that exist today are offering rights holders new avenues of revenue and the world is shifting. No longer does a club, and I’m talking the larger clubs, rely on gate receipts for the primary area of income. In fact it is tiny and it won’t be long before that model changes and people are paid to attend matches. Watch this space. These new revenue streams mean valuations can really start to accelerate so I think we will see a similar acceleration of SPACs being created for investment into the sporting world.

“For me it is tech that will change business models. Put simply the new technologies that exist today are offering rights holders new
avenues of revenue and the world is shifting.”

To back this up: In excess of 80 SPACs have been created in the last 18 months raising an approximate $30bn between them. About half of that has been invested but there is still a large amount out there waiting to be pumped into sport and 2021 is growing at x2 the pace of 2020 so we can expect to see a lot of cash looking to make its way into the sports market. It’s incredibly exciting and therefore of huge relevance to us all in this industry.

In conclusion I realise this is a simplistic overview and there are many nuances to the process. Investment will likely only be in the larger sport businesses. There are also questions around where the money is coming from and if it is only speculative then where will that leave the sport once they have exited. How will long held tradition sporting values be impacted now there are potentially aggressive investors that require an ROI. SPACs are a simple concept and there will be some very disruptive outcomes.

For further listening please do check out Michael Broughton’s simple video
explaining some of his own thoughts here –