Fantasy Sports: Crypto’s Next Consumer Application

Digitally native ecosystems will experience the most immediate synergies with cryptonetworks. In the sports industry, this means crypto will first intersect with the esports world and – the physically adjacent – fantasy sports industry. While the peak culmination of esports and cryptonetworks waits for improvements in emerging technology and 5G connectivity, blockchain-based fantasy sports are poised for consumer adoption.

Macro Outlook: Crypto and Fantasy Sports

At a macro level, the climate for fantasy sports is primed for aggressive growth. The drastic reduction of viewership revenues due to COVID-19 has catalyzed the digital acceleration of sports as large organizations are now rapidly searching for new and additional revenue streams.

According to PWC’s 2020 sports survey, of existing revenue streams, betting and fantasy sports display the greatest potential for growth with an expected growth rate of 7.2% over the next 3-5 years. Licensing and merchandising come in second with a 3.4% expected growth rate over the same time period. U.S betting markets have grown immensely since the lift of the federal ban in 2018, with the biggest beneficiaries being DraftKings and FanDuel (acquired by Flutter Entertainment). The expansion of sports betting will likely also grow the market for fantasy sports since 75% of sports bettors also played fantasy sports in 2018.

With expectations that large indoor in-person audiences won’t be possible until at least 2022 (potentially later) organizations will be forced to consider new ways to increase revenues from fans amidst flat ticket sales. When it comes to new revenue streams, PWC’s survey ranked enhanced fan experience and the creation and monetization of digital assets as the top two potential areas for growth, respectively.

Fan Engagement

Blockchain-based games and applications present unique opportunities for increasing engagement by enabling more robust experiences and incentivized participation. The holy grail of improving fan engagement in sports lies in the creation of fan profiles (blockchain identities) that can track engagement across touchpoints. Non-fungible tokens also possess the potential to be distributed for various occasions. Finally, Chiliz Fan tokens already provide a glimpse into what the future of fan engagement holds. Chiliz partners with sports franchises like the UFC and FC Barcelona to offer exclusive events as well as enables fans to vote on franchise-specific proposals such as which players will start in an exhibition match.