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Fanatics sells 60% stake in Candy Digital amid ‘imploding’ NFT market
Play Today invests in digital golf, Hockey India enters metaverse, plus more top stories
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📲 By the numbers
The sports betting market had about $1.5B in revenue in 2020 and is poised to grow to almost $6B by 2023. (Source)
Esports players in India doubled from 300,000 in 2020 to 600,000 in 2021, with esports revenue growing by 29% from 7.5B in 2020 to 9.7B in 2021. Esports players are anticipated to reach 1 million, of which 20% are women. (Source)
The sports technology market shows no long-term signs of slowing with expectations that it will register a compound annual growth rate (CAGR) of 16.8% from 2021 to 2028. Sports fans are also relentlessly looking for sports content, with 53% of survey respondents in 2021 believing in a growing opportunity to respond to demand for always-on content. (Source)
📫 News & trends
Sports merchandiser Fanatics is selling its 60% stake in sports-focused NFT firm Candy Digital to a group led by financier Michael Novogratz’s Galaxy Digital, according to a CNBC report that cited an internal email.
While the terms of the deal are still publicly unknown, the internal email of Fanatics founder and executive chair Michael Rubin revealed that divesting their ownership stake was a “favorable” outcome for investors, particularly in an “imploding NFT market” seeing “precipitous” drops in its transaction volumes as well as prices. Rubin said the move allowed them to ensure investors can recoup most of their investment through cash or additional Fanatics shares.
Galaxy Digital established Candy Digital alongside entrepreneur Gary Vaynerchuk and Fanatics in 2021, when the sports NFT market was booming. In October that year, Candy Digital raised $100M in series A funding at a $1.5B valuation.
Sports leagues are exploring the potential use of decentralized autonomous organizations (DAOs), NFTs, and the metaverse as part of the ongoing digital transformation of the sports industry. The adoption of these new technologies, however, may face roadblocks, as highlighted in Deloitte's 2022 Sports Industry Outlook report. There will be an increased blending of the real and digital worlds as well as growing markets for NFTs and immersive technologies, which could lead to greater fan engagement, the report added.
The importance of fan engagement for the sports industry cannot be overstated as it is a crucial aspect that ensures revenue from sponsors, ticket and merchandise sales, and the overall popularity of the sports league. Additionally, with the help of technology, sports fans are looking for ways to form deeper connections with sports leagues.
Karate Combat, a full-contact martial arts sports league, announced recently the formation of a DAO to transition its governance to fans and athletes. The entire league, as founder Rob Byran told Cointelegraph in 2022, was sold to a foundation serving as a legal wrapper for a DAO, effectively eradicating equity holders of Karate Combat and enabling fans holding the league’s token to govern and control the league.
Virtual reality is likely to go mainstream and one day become an important piece in the sports world, believes Tori Ortiz, a track and field runner at Oklahoma State University. Ortiz recently participated in Meta’s Metaverse Culture Series (MCS), a series intended to spark conversations around technology and underrepresented communities including discussions on VR metaverse. He envisions athletes being able to use VR in the not-so-distant future, likely as a technique app for track as the field is about speed, endurance, as well as learning technique. "I think that's the way it would be really enjoyable, to take the track world and just everything with virtual reality, and put them together and just help athletes develop at home," Ortiz said. There’s an emerging push to weave VR into areas like sports: the app Win Reality, for instance, already offers baseball players a virtual field to participate in batting practice, while other apps deliver VR workouts.
Experts in sports, technology, and AI at a gathering in London's Olympic Park have cited the potential of sport as a driving force for the development of the metaverse, a three-dimensional virtual reality where people can interact with digital objects and images to explore alternative worlds. The conference, organized by Loughborough University and MIT and featuring notable figures in the sport industry such as former UK Sport high performance chief Peter Keen and former England Cricket leader Ed Smith, discussed ways in which technology can be integrated into sports. Sports have been a key driving force behind many technological advancements in the past, such as radio, television, mobile phones, and social media - that will also be the case for the metaverse, noted MIT Sloan senior lecturer Ben Shields.
Tech entrepreneur and investor Clive Mayhew has poured $1.2M into Play Today, a web3 company that connects players worldwide through a digital golf experience. Play Today has created a digital wallet integrated into a golf scoring app, an NFT marketplace, and a golf metaverse, touted as a world first in using web3 technology to link the physical game of golf to digital wallets and an immersive online community experience. The Play Today digital wallet provides a variety of perks to members, such as access to an exclusive online community and additional features accessible via blockchain.
Hockey India has become the first national sports federation to venture into the world of metaverse by launching Hockeyverse, a virtual experience for global hockey fans to visit and experience their favorite sport from the comfort of their home. The Hockeyverse features a replica of the newly built Birsa Munda Hockey Stadium and an attraction called The Time Machine, designed based on time travel elements and showcasing Indian hockey’s history. Upon entering, fans can create their own virtual avatar and explore the virtual world using just their keyboard and mouse. They can use the Photo Booth to take selfies with players, bond with key players at the Trophy Room and Team Room, and proceed to a site where they can buy hockey merchandise.
How do you describe a landscape that’s seen cryptocurrency climb extreme highs and drop to deadly lows? From smashing new sponsorship deals to rock-bottom crashes, sports saw it all in 2022. In sports sponsorship, what could be hotter and more controversial than FTX, with its biggest deals including Miami Heat’s arena and the MLB jersey patch? Nike might also be the runaway winner in sports brand deals with its acquisition of RTFKT. Prominent athletes were named in lawsuits following the FTX fallout, while Tom Brady’s NFT platform Autograph spent its first full year. Sports collectibles remained interesting, with a few six-figure NFT sales (and even nine-figure deals) of NFT sports cards throughout one turbulent year.
Football fantasy game Sorare: Football is introducing two new weekly competitions that focus on Italian football's Serie A league. The competitions, called Serie A Challenge and Serie A Challenge Pro, will run for three weeks starting on January 13th. They will challenge managers to build their best lineup using Serie A players and compete for Serie A cards and other prizes. Both competitions will have their own private league, and the top managers on the leaderboard for these leagues will be rewarded with match tickets and merch.
NFT-powered fantasy football game DraftKings Reignmakers has announced that players now have a chance to get their gloves on a Genesis pack, with guaranteed top-ranked fighters to compete for $12M in 2023 Collector Rewards. DraftKings Reignmakers allows players to build a collection of gamified NFT player cards through pack drops, auctions, and secondary marketplace and be able to use the players from their collection to draft a lineup into Fantasy Sports-style games on a weekly basis.
The Philippines’ top-tier sports league has teamed up with web3-focused platform Virtualness to launch an NFT venture. The NFT project will exclusively enable basketball fans to discover, explore, collect, trade, purchase, and own “memorable, once-in-a-lifetime” moments in the basketball association’s games through branded digital collectibles. It is anticipated to unlock unique fan experiences in the Philippines, where basketball holds a sacred place in the nation’s culture and psyche.
Impakt, a company that specializes in body tracking and analysis software, has announced the launch of its virtual sports platform vSports, an AI-driven fitness app that combines competitive athletics with the convenience of at-home workouts. The app harnesses Impakt's advanced computer vision technology to identify the human body, body positions, and movements, allowing the platform to act as a virtual coach and guide users through sets of exercise routines while providing real-time feedback for proper exercise execution and counting. The app also features a range of exercises and virtual sports games.
Blockchain technology, whose adoption is expected to reach $7B by 2024, can revolutionize supply chain management in the sports world, slashing cost, inefficiency, and fraud incidence. Using blockchain in the industry can eliminate fake tickets, making it easier for fans to prove the authenticity of their purchases; forge better contracts for sports merchandise with the increased transparency; secure contracts for athletes; and intensify fan-based content, offering fans direct access to their favorite teams and the ability to track their progress across platforms.
💸 Finance buzz
A CNBC report, based on an internal email from sports merchandiser Fanatics founder and executive chair Michael Rubin, disclosed that the company is considering selling its 60% stake in sports-oriented NFT firm Candy Digital due to concerns about the “imploding NFT market.” (Source)
Dubai-based venture builder Crypto Oasis invests in and partners with metaverse startup MO:ME:NT, which will tap into the former’s talent and capital to boost its branding and growth. MO:ME:NT has released NFTs and built metaverse spaces for brands such as the Erste Bank Vienna Open (ATP 500) and is soon launching NFTs for Dutch football team FC Twente, a metaverse space for TCL for the NFL Playoffs, and a Kia metaverse space for the Australian Open. (Source)
🗣️ Quote of the week
“Web3 is the internet with true ownership, as it provides a built-in layer that makes it easy to hold and transfer value. For sports leagues and their fans, web3 can be a game changer in building direct relationships, aligning incentives and enabling true ownership and influence.”
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All content on this newsletter is for informational purposes only and does not aim to serve as or replace expert investment advice.
If you are a startup building in the metaverse / web3 ecosystem and are raising capital, please reach out to Sfermion. Sfermion is an investment firm focused on accelerating the emergence of the metaverse.
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