Why the Sport Industry must be aware and understand the Metaverse?
"Real-time 3D content”— will account for almost half of all visual digital content by the end of the decade” - This is John Riccitiello’s prediction about the future. When the CEO of Unity Technologies (the game engine that over 70% of ALL mobile games/apps is built on) says such a thing, one should listen to it. This is in comparison to what he estimates at only about 3% today. The easy availability of 3D rendering today will allow for more immersive digital experiences, now indistinguishable from photorealistic. And this will bring us one step closer into the Metaverse.
Never heard about “Metaverse”?
Also called Magicverse (Magic Leap), Cyberverse (Huawei), or Planet-scale AR (Niantic). It is presented as the next version of the internet, a kind of immersive game-like world. Think of the metaverse like a massive virtual world where you can go to work, learn, create art, shop, watch concerts, hang out with friends, and do dozens of other real-life activities. And the least we can say is that this pesky Covid-19 has brought us right into this new era, much more faster than it was expected.
For the sport industry and its current revenue streams, this is nothing short-term to be worried about as current business models with TV rights and Telco giants are here to stay. But in an omnichannel and multiplatform experience, sports organizations must look at it to reinvent their business models and best leverage opportunities on how their IPs are living in these worlds. So far, we are not thinking about direct monetisation here but rather how you create stories and love for these stories. Sport has been doing it for decades now, and to continue doing so in a much more competitive world, this is one of the opportunity to remain relevant and avoid losing one generation.
This is what Juventus FC owner Agnelli allude to when he says: “And now the most alarming percentage: 40% of children between 15 and 24 years old have no interest in football. We need a competition capable of opposing what they reproduce on digital platforms, transforming the virtual into real.[...]. Let’s leave out the effects of competition from the various games like Fortnite, Call of Duty, etc., authentic catalysts of the attention of today's kids destined to be tomorrow's spenders."
Defining the metaverse
We will not spend too much time defining the Metaverse. You can search on Google, look at Wikipedia’s definition explaining that it comes from the prefix "meta" (meaning beyond) and "universe", or even better read this great article from Matthew Ball, but be aware that you will need some time and concentration. In brief, what you need to know and understand is that the Metaverse refers to all the alternate digital realities where people work, play, and socialize. Here is a two-minute video that gives you a glimpse of what the Metaverse could be - Video starts at 2:01
Defining the Metaverse as a new “virtual economy”, a new “virtual UGC platform” or a “game”, a “virtual world” is not sufficient - It goes way beyond this. According to Matthew Ball: “what’s important is to recognize the Metaverse isn’t a game, a piece of hardware, or an online experience. This is like saying ‘World of Warcraft’, the iPhone, or Google is the Internet. They are digital worlds, devices, services, websites, etc. The Internet is a wide set of protocols, technology, tubes and languages, plus access devices and content and communication experiences atop them. Metaverse will be too.” The metaverse is being built today and simply put, we need to think of it as the next big tech platform, relying on augmented reality, whereby our physical reality will merge with the digital universe to create a “phygital” world as we have been naming it.
Metaverse will exist when we will have an always-on virtual environment that can seamlessly layer into our real world with millions interacting with it.
Why it matters?
The metaverse will transform how we work, play, and learn. It is the next big thing.
This is not about short-term benefits or actions. Here we are talking about long-term transformations that will impact us in the years and decades to come. But as much as the internet and new technologies have transformed our economies and society at large, the Metaverse is of the same scale.
“Even if the Metaverse falls short of the fantastical visions captured by science fiction authors, it is likely to produce trillions in value as a new computing platform or content medium. But in its full vision, the Metaverse becomes the gateway to most digital experiences, a key component of all physical ones, and the next great labor platform.” Matthew Balls said.
If you think about the GAFAs of this world, none of them possess the Internet today. But as drivers of it and not a simple participant, you can easily see that the leading internet companies rank among the 10 most valuable companies in the world. Metaverse comes with the same economic opportunities and one may even claim that it can be bigger than the Web if people spend more time on it.
The COVID-19 pandemic has acted as a catalyst and every expert claims in his/her own field of expertise (health, engineering, sport, etc.) that “it is not something new but the pandemic has accelerated things”. Shopping online, meeting friends online, living somewhere else, etc.; we are just starting to see the impact of this shift. The Fourth Industrial Revolution - a way of describing the blurring of boundaries between the physical, digital, and biological worlds - has started to become a thing. The metaverse is the next frontier for online interaction. Just like social media revolutionized the online marketing landscape, so too will the metaverse.
Think about what already exists around you: Fortnite, Roblox, Minecraft, and Animal Crossing are games now but they already have big user bases, detailed worlds, and user-generated content. Facebook is also positing itself towards the metaverse with its virtual reality social media platform, Horizon (currently in beta), and Live Maps. Niantic, Magic Leap, Microsoft and many others are working on it too. What Epic Games is currently building needs to be analysed, especially through its online video game Fortnite: while it hasn’t quite reached Metaverse status, it is showing promise because of its popularity. The game generates a lot of cash — nearly $2 billion in 2019, according to Nielsen -- and makes money from seasonal Battle Passes, sales of virtual money called ”V Bucks” and in-game items such as skins.
Considering all this, it’s no surprise that Fortnite has become an entertainment icon. So much so that Netflix considers the game its biggest competition, not HBO or Hulu. It exists as an interactive social network offering much more than a traditional online game.
What does this have to do with sport?
Let’s go back to the next internet analogy. Today, nearly every company has a webpage. And soon, they will all have a real-time presence in the metaverse. Just like we are also starting to explore the Audio/Voice world, organisations and companies will have to build and maintain digital versions of themselves into the Metaverse. For example, Amazon will design and fill the “Amazon Mall.” Disney will create its virtual theme parks. Netflix will likely have a bunch of digital movie theaters.
Epic Games’ CEO Tim Sweeney told Venture Beat on the metaverse that: “If you are a car manufacturer, your brand presence in the metaverse isn’t going to be a bunch of advertising for your cars. It’s going to be a place where you can actually drive the cars around and feel the experience of it…We have an opportunity for much, much more interesting interactions.”
If you think of sports organisations as media and entertainment companies, you need to remember the basic principles of how an entertainment business at its core operates. Quoting Matthew Ball, an entertainment business does only three things:
Create/tell stories
Build love for those stories
Monetize that love
From that angle, Sport which can be seen as an IP business - just like any comic books, video games, or film franchises - will be fueled by love and monetization feedback loops. And those who do it best and most will win. Problem and opportunity for sports organisations is that the threshold is going up and competition will only intensify.
This is why sports organisations need to understand this shift to make sure their IP, their stories can live within this world and continue attracting millions of fans.
As much as brands and athletes need a “virtualization” strategy, sports organisations must think of their brand and IP within such virtual environments;
As the Metaverse becomes more and more a reality, consumers and sports fans will be more immersed in virtual spaces. It's where sports organisations, alongside their athletes/players and partners can stretch their virtual imagination as to what content and new type of stories they can provide and how to best do it. Digital goods and monetisation would then follow.
Taking again the example of Fortnite, they have recently partnered with multiple sports organisations to feature them in the game. In 2021, the NBA announced the creation of the “crossover event” with NBA outfit skins, tournaments, creative mode, personal players lockers, etc. Likewise, UEFA and EURO 2020 has also be featured in the game during the tournament in June 2021. Prior to this, the NFL formed a partnership with the video game developer, bringing franchise’s uniforms to the game which players could acquire through the in-game shop. And IMG signed deals with 23 football clubs globally to be part of Fortnite.
These activations are still (baby) first steps today. But as we just explained, the opportunity lies in the capacity of gaming to be a social experience, whereby you can have multiple players coming together to experience but also create new collective storytelling.
This is crucial as game publishers are not licensing their IP for TV/film adaptation to monetize, but instead to grow love for their content through new types of stories.
The future for sports organisations?
Future looks bright for sports rights holders. Its value proposition to any new entertainment platforms over the last decades -- and especially live sport today in the streaming war -- is so much of a differentiator for what used to be TV giants and now OTT services that its future looks bright. However, the capacity of sport to remain practiced and watched by millions is key to remain relevant and such a differentiator. With other forms of entertainment and ways to engage, it needs to make sure it does not lose one generation.
From that perspective, sport IPs will need to learn how best to live in the game and ultimately in the metaverse. In other words, sport IPs will need to look at how they can become less rigid and protective, allowing content creators and ultimately Fans to play with it. However, to maximise this new opportunity and revenue streams, rights holders will also need to adapt to their current model by being more in the driving seat with platform providers and brand partners. Just like any other company, they will need a strategy for dealing with their intellectual property in the virtual world.
For this to happen though, sports organisations will need to rethink their IP strategy and start from a blank page when it comes to their strategy for dealing with their IP in the virtual world. For a long time, they have been very cautious and defensive about their IP and the rights given to third parties and fans. However, they must change and adapt in this new upcoming era where fans want to have more skin in the game, more reward and more opportunities to take part in the discussions, decisions. As first steps and looking beyond the sport industry, here are some actions and projects that sports organisations need to consider for their future development.
Develop Avatars Commerce Strategy
Your product strategy now needs to include commodities for use by consumer avatars. As the metaverse grows, they will become as important as their physical counterparts. Start by following Teespring's lead and bundle digital assets with physical merchandise.
Enable Off-Platform Engagement
Access to metaverse-like virtual worlds is limited by hardware – not everyone has a VR headset or a powerful gaming console. Enabling secondary engagement via live and on-demand video streams is crucial. Off-platform metaverse will become a new channel: Travis Scott’s Fortnite performance has been watched 100 million times on YouTube.
Invest in Virtual Launches
Investing more in virtual launch events is now a vital strategy for entertainment brands, enabling deeper engagement with storyworlds. Take a cue from Amazon and build festival-like digital experiences around your narrative as a way of turning a promotional activity into a key entertainment destination.
Empower Creators
For successful metaverse engagement, activate its creative communities. Empower collective creativity – as we saw with Gucci and the Sims modders – and integrate reward systems that turn fans into prosumer brand collaborators. Check Mobilising Online Micro Communities for more.