On July 31st, 2019, the NBA, NBPA, and Dapper Labs announced their planned partnership to launch NBA Top Shot, a competitive online game where users can garner unique digital collectibles whose integrity is kept through the use of blockchain technology. Dapper Labs is known for their creation of CryptoKitties, the uber popular crypto-collectible game that once stalled the Ethereum blockchain due to its insane popularity at launch.
NBA Top Shot will explore a different approach to crypto-collectibles, creating a new digital experience to enable fans to engage with their favorite players and teams. The core of the experience has a social focus, where fans can collect and exchange digital goods that are recorded to a blockchain ledger.
This is complimented by a fantasy-sports-style game, where users craft their ideal NBA roster “built by acquiring live in-game moments from the NBA season,” per the press release from the NBPA (National Basketball Player’s Association).
NBA Top Shot is not the first blockchain project to come out of the sports entertainment industry. In this post we’ll explore the overall goals for blockchain in the Sports Entertainment industry, look at a few ongoing projects and dive deeper into some of BlockApps’ favorite use cases.
Why is the sports industry interested in blockchain?
In an increasingly digital world, sports franchises are trying every play in the book to attract and retain fans. While marketing and digital revenues are increasingly important, event ticket sales – and season ticket sales in particular – are the largest source of revenue for the sports industry.
With the challenge to enhance fan engagement both on and off the field, Sports Entertainment companies are turning to blockchain technology to:
Why are sports entertainment companies turning to blockchain to achieve these goals? In general, blockchain technology has a few unique capabilities that unlock new opportunities:
Sports Associations Using The Blockchain
The sports entertainment industry has already begun bringing blockchain technology into their operations. Below are some of the most-notable projects from organizations around the world.
1. NBA Top Shot
As mentioned above, NBA TopShot is a collectibles platform where fans can purchase, own, and sell digital assets – namely “moves” like “Kevin Durant’s 3-point shot or Joel Embiid’s dunk.” Fans can compete against each other with rosters of these moves.
NBA Top Shot plans to take advantage of the ability to create unique digital assets that can’t be copied or counterfeited. Like other collectible efforts (detailed below), this capability is designed to increase fan engagement and give them a sense of true ownership of a specific moment in NBA history. As of now, not clear whether moments like “Joel Embid’s dunk” will be a single asset, or one with a limited supply – but either way, these “moves” will not be available for everyone to own.
On top of this, NBA Top Shot plans to use the smart contract capabilities of the Ethereum blockchain to create a fantasy-sports-style game where fans can pit a roster of moves against other fans’ rosters. While details are not disclosed yet, we predict each move asset coming encoded with various attributes.
These attributes could be game-style stats (e.g. power, speed, defense), or tied more directly to player statistics (e.g. shooting percentage, blocks per game, VORP). In a head-to-head matchup, these smart contract attributes could be quantified, compared, and used to determine a winning roster. From there, winning matchups could be rewarded with in-game currency, redeemable for more “moves” or for real-world memorabilia.
The project was announced in July 2019 with no updates at the time of writing. The digital collectible experience is set to launch this fall, presumably right in time for the start of the 2019 season. The full game is scheduled to launch shortly after in early 2020.
2. MLB Championship
While the NBA Top Shot experience sounds to be unparalleled in fan engagement, it isn’t the first major sports association to try their hand at digital collectibles on the blockchain. Earlier this year the MLB announced its own blockchain-based game, MLB Champions, which also timed its launch to coincide with the start of the 2019 season.
MLB Champions is similar to NBA Top Shot, in that fans can buy unique digital collectibles. These collectibles then reward users with additional goods based on player performances or specifically triggered events (e.g. a real-world home run).
MLB Championship has created digital collectible players (similar to good old baseball cards) by recording their ownership on a blockchain. Putting these collectibles on the blockchain will make them limited-supply assets, making them a collectible item to be coveted by fans.
What’s more, the collectibles are also available for transfer (purchase and sale) within an online marketplace, suggesting they should be seen as both a unique collectible item and store-of-value, much like their analog predecessors.
MLB Championship also takes advantage of automatic smart-contract execution based on real-world events in order to create a game based on the collectibles. Collectibles accrue in-game currency based on real-world game events like home runs, no-hitters, and grand-slams.
This in-game currency can be used to purchase more collectibles, but could also be used for redemption of real-world rewards (e.g. tickets, memorabilia) at some point in the future.
The platform is live for the second year after having success in 2018, selling more that $18.9 K of collectibles through over 300,000 transactions. The team appears to mostly be working on new UI and game features.
3. Football Clubs (Soccer) Fan Tokens
Association football clubs are unique in that they are sometimes fan-owned, with some teams’ shares listed on equity exchanges. Through their ownership, fans sometimes have voting power on organizational decisions, empowering and connecting the fan base to the team.
Football clubs Juventus, Paris Saint Germaine, West Ham and Roma have signed on with Socios to offer token shares to their fans. These tokens are purported to be used for access to exclusive content, memorabilia, as well as for voting on organizational decisions such as jersey design.
These football clubs aim to take advantage of the ability to create a digital token of their own in order to offer a unique piece of club ownership. In this case each club will have its own token (purchasable with other currency) of which there are a finite amount. Transfer of these tokens will be stored on an immutable blockchain ledger.
Each team token will also take advantage of customizable blockchain governance rules in order to control aspects of how the tokens can be used. For example, in order to prevent majority ownership issues this platform will have an upper-limit on the number of tokens a single individual can own.
Finally, this platform plans to capitalize on the automated voting capabilities and mechanisms made available through the blockchain. On this platform, fans can use their tokens as votes towards organization decisions (e.g. jersey color, favorite player). These votes are recorded on the blockchain and made immutable, providing a highly verifiable count of the result.
The rules for voting systems like this can be customized and are made visible to all members, providing a high level of power and transparency to fans. This platform, for example, is taking advantage of this blockchain capability to offer two types of votes – binding and non-binding – where binding events must be carried out by the club, while non-binding events will not.
4. Other Industry Projects
In 2014 Overstock.com excited technology enthusiasts by being the first major retailer to accept cryptocurrency as a form of payment. Since then other companies have followed suit, including some sports franchises.
NFL’s Miami Dolphins are now accepting LiteCoin as a form of payment for raffle tickets in their 50/50 benefit.
In August 2018, seven clubs accepted bitcoin payment from eToro for advertising space.
Here at BlockApps we know partnerships are crucial to the success of projects. Sports franchises are offering their marketing presence in exchange for efforts to make blockchain work for their needs.
The Cavaliers and their eSports arm Cavs Legion partnered with UnitedCoin in July 2019.
Top Use Cases on STRATO
STRATO is built with enterprise needs in mind. It already has specific features that help overcome some of the challenges sports entertainment companies may come across as they build a blockchain solution.
1. Smart Event Ticketing
Problem: Counterfeit & fraudulent secondary-market tickets for events are a growing problem for ticket sellers
With the rise of mobile ticketing, distributors are struggling to keep track of ticket ownership while also providing the tickets on-demand to paying customers. This creates both financial and operational problems for ticket sellers, and a brand trust issue for the sports team / venue.
Blockchain Solution: Digitize event tickets and store them on a blockchain
Blockchains are very good at keeping track of transactions and asset ownership (see Unique Asset Tracking). If tickets were stored on a blockchain, there would be a single source of truth for ticket ownership. Ticket distributors and consumers alike would be able to instantly verify ownership and authenticity. Tickets stored on the blockchain could also be marked as ‘scanned’ upon use, rendering them inert for duplication and enabling better analytics capabilities for ticket providers.
Relevant Industry Members
Venues & Stadiums
Key Challenges & STRATO Solutions
We love this use case because we’ve already done it! Together with Upgraded (a Ticketmaster company) we built a mobile event ticketing solution.
STRATO was a great choice for this solution because it addressed some key issues with managing tickets stored on a blockchain.
1. Providing real-time ticket information
While blockchains are good at keeping track of ownership, information is only updated once a new “block” is created and validated. This process can take minutes or longer – for example, the Ethereum network takes about 13 seconds to validate a block. Traditionally, as more users are added to a network, this process will take longer and longer – not ideal for someone standing at the gates of a stadium.
Furthermore, traditionally blocks are only added to the chain once a certain number of transactions have occurred. This means if the volume of transactions on the network is not high, ticket holders won’t see their tickets for hours, or even days!
The Upgraded team utilized STRATO’s customizable Governance & Scalability capabilities to configure a low block size and limit validation requirements to nodes (accounts) run by themselves and their trusted partners – not every user on the network. Utilizing this setup, both block creation and validation occurs in seconds.
2. Fast & Accurate Mobile App
How do you read information from the blockchain on your mobile device? How do you find the information you need? On the Ethereum network, EtherScan provides a free front-end view of network activity for anyone to use. Yet for a private blockchain solution, the front-end doesn’t just magically appear.
Ticket holders need a quick and complete access to their information without any programming knowledge, and app developers shouldn’t have to learn a whole new language just to get the data they need!
Companies may therefore find themselves heavily reliant on blockchain developers for changes as simple as a data field update, making both the app designer and blockchain expert’s lives more difficult and slowing down project progress.
The Upgraded team utilizes STRATO’s API to both read and send information to the blockchain. The API accepts standard HTTP GET requests, making it very easy to build a mobile app that selects and shows relevant chain information (e.g. ticket number, purchase price) without any blockchain coding. The API also accepts POST requests, allowing a mobile app or external enterprise system to send updates (e.g. ticket scanned) directly to the blockchain – again without any advanced coding.
2. Digital Collectibles
Challenge: Generating revenue from digital assets and exclusive content
Sports fans are notoriously obsessed with team merchandise – more specifically authentic team merchandise. In 2015, the licensed sports merchandise market was valued at $23.63 bn and is expected to grow about 6.4% each year.
Currently, this value is driven almost exclusively from physical merchandise. Digital merchandise is not perceived as valuable because it can be easily copied with no way to tell what asset is original or authentic.
Blockchain Solution: Cryptographically verify digital asset authenticity
For fans, authenticity and rarity are very important and blockchain technology allows companies to make truly limited-supply digital assets. A blockchain ledger can also be configured to reveal supply information publicly verify authenticity.
These assets can be exchanged in an online marketplace just like their analog counterparts would on eBay, allowing fans to freely buy and sell the assets that they care about them.
Furthermore these assets can change characteristics over-time – just like what’s being done the NBA TopShot and MLB Championship projects – based on both prescribed (e.g. expiration date) and real-world events. Such characteristics can make these assets more than just “something to look at” and increase fan engagement (check out our trading cards post for more details on this).
Relevant Industry Members
Sports Teams & Associations
eSports Teams & Companies
Key Challenges & STRATO Solutions
We’ve been a fan of this use case ever since the proliferation of Cryptokitties – and based on the success of MLB Top Shot, it’s clear the industry is as well.
As an highly consumer-facing use case, however, the dual-mandate of creating a platform that is both fan-friendly and fully functional in the long-term presents a major challenge for companies that are just entering this brave new world.
1. Making the platform fan-friendly
Nowadays fans expect a seamless experience regardless of what device they’re using – this has presented a significant challenge for companies in many industries, and is further compounded by the challenge of connecting traditional web programming languages to a highly secure and immutable blockchain database.
From the first sign-on through day-to-day app loading time companies may find it challenging to offer a modern user experience to their fans and risk losing brand trust in the process.
STRATO’s Identity Management capabilities make signing in to the blockchain simple and offers compatibility with traditional oAuth providers, meaning fans could use their existing accounts (e.g. Google account) to sign into the platform – ensuring a quality user experience from the start.
From there, STRATO’s Analytics Engine capabilities offer a great opportunity to ensure faster loading times. The analytics engine uses tried-and-true SQL-style queries to access information from the blockchain, allowing apps to load and present network information much faster than a direct blockchain query, significantly reducing the wait-time for app users.
2. Managing payments and long-term digital asset value
Fans buy physical memorabilia because they have confidence that what they purchase will still be useful (and potentially more valuable) five years from now. Digital assets present a new realm of value in terms of transportability, but fans need confidence that they collectible they’re buying will maintain value and remain easy to exchange.
While there may be an underlying token (i.e. in-app currency) that represents value on the platform, companies must make sure to translate this value into more-familiar currency values (e.g. USD) and reduce interactions with unfamiliar currencies for both purchase and sale. More specifically, fans shouldn’t need to worry about converting currency and should be able to buy and sell assets in whatever denomination they prefer.
The STRATO API provides a simple way to ensure credit cards and bank accounts can be connected to the platform and offers companies a flexible set of options for interacting with existing payment platforms (e.g. Stripe). This capability not only improves a fan’s experience, but also reduces payment friction and accounting complexities for the platform owner.
Whether it is one or five years down the road, companies may also find the need to modernize their platform or change a core infrastructure component. In some cases, the easiest way to do this may be to create a new blockchain and port existing data into. For this complex task, companies rely on STRATO’s Data Migration (ETL) capabilities to easily import existing network data of any size into the new platform. This allows companies to be more agile and flexible with platform improvement, and also provides assurance to fans that their assets won’t be lost or damaged.
Blockchain technology is already revolutionizing the Sports Entertainment industry and our one-of-a-kind STRATO platform has the features and tools needed to get the job done. In addition to the use cases detailed above, BlockApps also sees great potential for even more industry use cases, some of which are already detailed by our partner Consensys.
Physical Asset Authenticity
Fractional Team Ownership
Athlete Crowd Funding
Decentralized Fantasy Sports
Have an idea for a solution? Want to learn more about our favorite use cases?
BlockApps was the first company incubated out of Consensys in 2015 and has created several industry innovations including the launch the best, easy-to-use, most powerful Blockchain as a Service (BaaS) platform on the market called STRATO.
Since launching STRATO on Microsoft Azure in 2015, BlockApps has become first blockchain company to partner with all major cloud platforms (Azure, Amazon Web Services, Google Cloud Platform) and is a founding member of the Enterprise Ethereum Alliance (the world’s largest open standard blockchain organization).