Digital Collectibles Can Survive ‘Crypto Winter’ Better Than Before – Sportico.com

Today’s guest columnist is Miheer Walavalkar, co-founder and CEO of LiveLike.

As the global industry rallies to survive the ‘crypto winter’, what must we do to set ourselves up for a vibrant crypto our that leverages everything we’ve learned since the market around non-fungible tokens and Web3 first heated up?

NFTs were originally known for their ability to provide digital scarcity, but can we use them for more than that? Given the recent gloomy news cycle for cryptocurrencies, the answer may be surprising: For those who figure out the right formula, the possibilities are endless.

As we look towards the next phase of Web3 and its place in our digital economy, it is important to maintain a focus on interactivity and utility – and sports fandom explains why. Currently, most digital collectibles in sports go to the highest bidder and do little to entice higher fan engagement or retention. But what if they were used to reward fans who truly engaged with the events, teams, athletes and sports brands?

We have now seen what did not work. Take for example the case of FTX, a crypto exchange that planned to buy a jersey patch on MLB uniforms, then backed out due to the current market conditions. Top Shot, one of the original sources of excitement around digital collectibles, saw a 68% drop in sales from April 2021 to 2022. Liverpool entered the NFT game with the launch of the LFC Heroes collection on Polygon. Despite the initial excitement at launch, Liverpool only sold 5% of its token holdings, disappointing fans and investors.

A deeper dive into why these initiatives struggled highlights the importance of building better experiences to solve bigger problems. Teams and leagues that made an initial push into Web3 need not worry about missed goals or miscalculated expectations; instead, now is the time to focus on creating deeper experiences and communities.

There is ample evidence of the potential of digital communities in sport. Some forward-thinking organizations have embraced engagement, such as NASCAR, the Golden State Warriors and NCAA March Madness, to name a few. At the core of our mission at LiveLike has been to continually develop technology that empowers groups like these to bring interactivity and community to their fans, encouraging engaged customers who are rewarded for their loyalty.

However, the overall sports business is missing an opportunity. They can learn a lot from industries like airlines, hotels and retail brands that have proven to be the best at building loyalty and leveraging community. But instead of embracing the opportunity to revolutionize fandom, sports organizations rarely go beyond season ticket sales to encourage loyalty.

In addition, sports properties to date have often ceded control of their fan communities to third-party platforms. Most communities are fan built – from Facebook groups and subreddits to Discord servers. Web3 must be based on membership analogous to airline miles and hotel points, but with a layer of owned transferability.

So what should sports brands do to capture the opportunities of Web3? Look at the Green Bay Packers or any club in the Bundesliga that has public ownership. While this is a very analogous concept, the overall point is the same: a sense of ownership empowers fandom. Web3 offers the opportunity to extend the fan experience far beyond what is standard and a chance for clubs to bring this concept to the digital space.

Companies like Socios do this exceptionally well, partnering with the most forward-thinking clubs, taking advantage of the opportunity in sport to engage directly with fans. Incorporating Web3 into a fan engagement strategy allows teams to cultivate loyalty on their platforms and provide incentives for fans to rally around their IP.

The industry needs to take back ownership of its communities, and Web3 is making that happen. Technology trends tend to regress, offering lessons to those willing to look back and study them. Web2 platforms like Reddit and Facebook have given fans ways to build communities and connections, while Web3 allows teams to take the conversation and data out of the walled garden and back into the open domain where they can retain more control over their fandom.

Given the sports industry’s early lessons from Web3, we now know that fans yearn for more: By adding utility to tokens, they can gain value beyond simply sitting in the fan’s digital wallet. Owning the token can be an identification of elite fandom that gives access to special experiences where only recognized hardcore team supporters gather, for example. Or a fan token could be a key to discounts on new merchandise, exclusive watch parties with players or VIP opportunities inside or outside the stadium.

Rather than just a digital badge that has some financial value if sold, digital collectibles with added utility can allow them to become personal access codes where teams can engage their most passionate fans and reward them for their loyalty.

It’s time to prepare for the next phase of Web3, which isn’t going anywhere. But when you do, it’s worth asking: What is more likely to be embraced by a sports fan – an opportunity to buy a “non-fungible token” or being part of a private fan club that provides access to exclusive offers and experiences?

It’s 100% a rhetorical question and we all know the answer.

Walavalkar is the co-founder and CEO of LiveLike, a technology company that creates customized social experiences with leading industry partners, from Canal+, FloSports, FOX, Sky Group and WarnerMedia to the Golden State Warriors, LaLiga, NASCAR and the NBA.