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Novak Djokovic has taken many of the headlines in recent days over the controversy regarding his vaccination and visa status ahead of the first Grand Slam of the year. His high profile no vax stance has prompted huge division among sports fans and left Tennis Australia in an highly unenviable position.

However, away from the physical world of COVID and vaccine passports, the Australian Open can be praised for their innovation surrounding the launch of their NFT project AO Art Balls, and in today's newsletter I've decided to take a closer look at another rightsholder that is embracing Web 3.0; The Drone Racing League.

Enjoy! 
TOP STORY

Drone Racing League lets fly with Play-to-Earn racing game

It was announced last week that the Drone Racing League (DRL) and Web 3.0 game developer Playground Labs had tapped into Algorand’s blockchain to create their own play-to-earn (P2E) drone game based in the metaverse. But what does that even mean?
 
P2E games grew hugely in popularity around the world in 2021. And yes, they are exactly as they sound. You earn digital assets, such as crypto tokens or NFTs, in exchange for playing the games, rather than worthless in-game currency such as FIFA Ultimate Team "coins" or Candy Crush "gems". 
 
For example, players racing virtual DRL drones in a virtual environment in the metaverse will earn rewards in the form of crypto token and/ or NFTs. These would most likely be tied to ALGO, the cryptocurrency required to use Algorand. This token has a current market cap of $11.1 billion and can be traded for fiat money via an exchange.
 
According to the World Economic Forum, P2E games, such as the one planned by DRL, are spearheading the convergence of the physical and digital worlds (i.e., The Metaverse). This is because they provide the opportunity for digital assets, experiences, and relationships to be assigned a greater value than that of our physical surroundings.
 
The DRL’s involvement in blockchain is on par with its already hybrid and experimental slate of competition, which includes real-life races with physical drones as well as virtual esports matches. The addition of P2E now means that these physical and virtual worlds can converge (within the Metaverse), and fans can be welcomed in. 
 
Our Take
Blending physical and digital experiences is going to continue to become increasingly important as we’ve seen with the Australian Open’s NFT project.
 
However, the reason that the DRL's deal is so interesting is the added incentive of P2E. This changes the relationship between rightsholder and fan by providing a financial incentive on top of the already strong intrinsic motivations held by fans to play a game (i.e., for the fun of it). The future of fandom will be a lot more interactive.
📚 Further Reading
  • Reddit cofounder Alexis Ohanian predicts play-to-earn crypto will be the only type of games people play in 5 years - Market Insider
  • Play-To-Earn Gaming Is Driving NFT And Crypto Growth - Forbes
  • How Blockchain Tech Unlocks Exciting Opportunities For Gamers Earning Money By Playing Games - Interesting Engineering
THOUGHT FOR THE WEEK 

The New York Times has agreed to acquire sports-media company the Athletic for $550 million, a deal that the Wall Street Journal suggests could help the publisher to expand its subscription offerings and draw in young readers.

The Athletic charges $7.99 a month for sports content, including coverage of teams in all the major sports, competing against sites such as the Ringer, Bleacher Report, Yahoo Sports and ESPN.com.

According to the Times, The Athletic has 1.2 million subscribers as of December. So, acquired at a price of $550m, this equates to just short of $500 per sub. In comparison, Michael Broughton points out that Manchester United has a valuation on the NYSE at $2.47bn despite a reported 467m fans - which is just $5 per fan as a valuation metric. 
 
Broughton, a sports industry consultant & advisor, believes that this deal provides proof that "sports teams are still in the sponsorship business, not the media or digital tech business..." 

He continued, "The business model must change if the valuation metric is to be reevaluated."

What do you think? Let me know by replying to this email. 

📚 Further Reading
  • Unpredictable spend: could the subscription model be a way for marketers to buy creative? - The Drum
  • Why the fitness subscription model is the industry way forward - Arabian Business
  • Pret subscription model: The future of business or a disaster waiting to happen? - 365 Retail
WEEKLY ROUND UP 
NFTs
  • The Australian Open is releasing a collection of 6,776 NFTs that correspond to action on the court and will also host a virtual event for the competition on the metaverse platform Decentraland. Here's a thread on why it's interesting.

    Wondering what The Metaverse is? Here's a good article

Advertising Investment
  • A group of investors led by Serbian media mogul Dragan Šolak have acquired Southampton FC in a deal valuing the English Premier League club between £200-250m including debt, the latest in a series of takeovers of top flight football teams in England amid the pandemic.
Sponsorship
PODCAST
In Episode 7 of Sports Pundit Explains… Sponsorship, Andy and Murray are joined by Dylan Holman, Global Sponsorship Manager at eToro, to discuss growing the investment platform to over 24 million users, adopting a multi-club sponsorship approach, and how DS Techeetah landed a deal by thinking outside the box.
 
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SHARE & SUBSCRIBE
Quick ask. It takes me hours each week to put these newsletters together so if you enjoy them, it would be amazing if you could share them on social (and tag @SportsPunditHQ!) or forward this email to friends and colleagues! Thank you!

You can also follow my personal account (@AndyMarstonSP), which was included in John WallStreet's incredible list of the top 50 sports business twitter follows for 2022.  

Andy 
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