Gemba strategy viewpoint
Chances are at this point you’ve either invested in bitcoin yourself or have at least one friend who keeps talking about it. The story of bitcoin is about many things – rethinking how we view currency, eliminating third parties, fearing missing out on the get-rich-quick opportunity. However, the side of the story likely to best stand the test of time is about the underlying technology: blockchain. Forbes said “the current state of blockchain may be comparable to the state of the Internet and World Wide Web in the mid-1990s.” There are numerous examples of blockchain today, albeit not all are as ubiquitous as bitcoin. This got us at Gemba wondering: what impact will blockchain have in the sport and entertainment industry? Spoiler alert: the answer is not just about what will happen in the future, but also what is already happening.
To better understand blockchain, we brought in an expert, Jamie Skella, to provide an overview of the technology. Jamie, the former Head of User Experience at the AFL, has now created a blockchain startup (Horizon State) aiming to revolutionise digital voting and elections across the world. (I won’t go through the overall description of blockchain, as many others have done so already. For a great overview of blockchain, check out Jamie’s article, ‘A Blockchain Explanation Your Parents Could Understand’, which went viral across LinkedIn.) Jamie described the main differentiating factors of blockchain: it can eliminate the middleman, reduce fraud and provide detailed tracking histories, among other benefits. Armed with a solid understanding of blockchain fundamentals, we turned our focus to what this innovation means for the sport and entertainment industry.
When it comes to sport and entertainment, blockchain isn’t just a future possibility, it is also a present reality. Various sport and entertainment organisations are already exploring what they can do with blockchain. Here are some interesting examples:
- Ticketing: Various blockchain startups are attempting to revolutionise the ticketing space, believing that blockchain allows ticketing companies to curb fraud, control the re-sale market and provide a detailed history of each ticket. In October, Ticketmaster acquired blockchain startup Upgraded to help them in this space.
- Digital collectibles: The MLB has licensed its rights to game producer Lucid Sight, which has created a new game called “MLB Crypto Baseball”. The game involves blockchain collectibles of different MLB players, which fans can buy or earn. Fans get rewards based on the real-life performance of their players, which leads to new collectibles.
- Fan engagement and social conversations: Various startups are offering blockchain-enabled points based on fan engagement, such as attendance at events, viewership of broadcasts and discussing events on social media. This model aims to create a win-win: fans get rewarded for their engagement, while leagues/teams/events benefit from additional fan engagement. In Australia, esports league Gfinity has partnered with Incent to provide this type of rewards system.
- Crowdsourced fundraising: Globatalent refers to itself as “the first sports crypto exchange where you can tokenize, trade and support your favorite clubs and sports idols”. It has created a fundraising platform where teams and athletes can sell tokens which represent shares in future revenues. This allows clubs and athletes to get funding needed to grow, and enables fans to invest in their favourite teams and players.
Blockchain is also changing the traditional sports sponsorship space:
- Brand sponsorship: Antpool, a Chinese bitcoin mining company, has become an official sponsor of the NBA’s Houston Rockets.
- Athlete sponsorship: Dutch/Canadian Olympic speed skater Ted-Jan Bloemen recently signed the first ever sponsorship deal that involved payment with cryptocurrency.
As you can see, the sport and entertainment space has already seen significant change due to blockchain. But what will stand the test of time? Our Gemba House View is that blockchain represents a significant opportunity for sports and entertainment organisations due to its unique and revolutionary technology. Underlying characteristics of the technology, such as its ability to eliminate fraud, remove middlemen, and track history, are all factors that have significant applicability to sport and entertainment and are unique to blockchain. We see ticketing as a prime example of this: blockchain has the potential to significantly improve the efficiency of the primary and secondary markets for tickets. Another possible example is micropayments, allowing us to view articles, buy portions of broadcasts, or make purchases in video games. Lastly, blockchain could allow us to improve drug testing, eliminating the ability to manipulate tests.
However, that does not mean all blockchain examples will revolutionise the world. We find that many blockchain examples do not leverage the characteristics that actually make blockchain a revolutionary technology; some seem to just be adding on blockchain to potentially generate buzz or help in fundraising. As with the internet in the mid-1990s, while some examples will flourish, others will not. The ones that will flourish will be the ones that utilise the value-adding fundamentals of blockchain.
In summary, blockchain isn’t just the future, it’s also the present. Sports and entertainment organisations have significant opportunity to leverage this innovation, and how they do so will be key.