Last week we took a quick break to catch up with some top European clubs (Ligue 1, Premier League..), Olympic organizations and national teams to get a pulse on the latest sports tech trends impacting those sports organizations. We had numerous meetings with top coaches, athletic trainers, head of sports performance and science, and heads of digital and innovation. Without getting into specific of who the sports organizations were, here are some key takeaways based on our conversations during our European trip:
1. Most clubs are still in early days of their Metaverse & Web 3.0 strategy:
Based on our conversation with clubs, national teams, and Olympic organizations, it is quite clear that most of them are still trying to figure out their metaverse strategy, how to implement it, and when to implement it. Some clubs seem to have a hard time understanding what the metaverse actually is. As we mentioned in our sports metaverse analysis, in our view the metaverse is nothing new. Instead we believe that it is essentially AR, coupled with VR, social networks, super maps, AI and NFTS. Or the metaverse can sometimes be associated with Fortnite/Roblox type experiences. Now you have to remember that most clubs are not experts in the metaverse or NFTs/crypto space so it is understandable that many of them are still in their early days. But one thing is clear: The clubs and sports organizations that we talked to do not want to be left out and want to bank on the metaverse opportunity. They have the reach, large fan base but they want to take the time to do it right in order to get a solid ROI.
2. But some clubs want to be pioneers and have a first moving advantage while other clubs want to wait and see.
Based on our conversations last week, there are three clear camps among sports organizations. There is the first camp comprised of clubs that are proactive and intend to become pioneers in the metaverse space. Those clubs have a clear roadmap on what they want to execute on. Then there are the second group of sports organizations that are still in the early days of their reflections towards their metaverse strategy. Then there is the 3rd group of clubs that are in no rush to adopt a metaverse strategy. Their goal is to wait and see how the metaverse shapes out and then they will enter the metaverse space with a highly differentiated strategy. Think of them as the Apple of the world in the world of elite sports. In our view every situation is different. There is no right or wrong for the clubs right now. Most clubs will make mistakes but they will learn tremendously along the way. They just have to do what’s right for them and pick the right strategy and partner with the right entities to successfully enter the metaverse space.
3. The Metaverse is nothing new but just a new marketing tactics to drive more revenue:
As we pointed out earlier and in our sports metaverse analysis the metaverse is nothing new. Some sports executives even pointed out to us that back in 2011 some companies like Nike, in association with We Are Interactive, were already selling virtual footwear. Back then Roblox type experiences also already existed. For example in 2008 Sony launched PlayStation Home which had over 17M users but failed to gain significant traction. So how are things different this time around? Well to begin with most of the sports and tech companies (Facebook/Meta, Nike, Adidas, Microsoft, Google, etc..) are now entering the metaverse. The hype is much greater than back in 2012. We are also seeing the emergence of new technologies like AR, VR, NFTs, crypto….that are getting a lot of attention. Now whether or not some companies focusing on those areas have a real and solid business model, is a different issue. We are also seeing the emergence of virtual platforms like Roblox (500M users), Fortnite are also gaining significant traction and are becoming great vehicles to reach young demographics.
2. Crypto and NFTs are among the new drivers
Most clubs that we talked to also recognized that areas such as crypto and NFTs are among the new drivers in the metaverse space. Every week we are seeing new clubs announcing new crypto deals and launching their NFTs. This is a key driver as part of the metaverse movement.
3. But there is still a way to go due to phishing attacks to make Metaverse and NFTs fully secure
That being said based on our conversation with sports organizations, there is an increasing number of clubs that are concerned about the security issues in the NFT space. This is a legit concern based on the recent incident on NFT marketplace such as OpenSea where some tokens were stolen. Those stolen token had an estimated value of more than $1.7 million. OpenSea initially said 32 users had been affected, but later revised that number to 17, saying 15 of the initial count had interacted with the attacker but not lost tokens as a result. This can be partially explained due to the fact that the NFTs sold on OpenSea are not vetted before being sold on the platform. In our opinion this is a major issue as many NFT platfoms still do not vet their NFTs on their platforms. This needs to be addressed.
4. Most clubs agree that in 2 year 80% Metaverse startups will be gone
In addition many clubs agree with the believe that within the next 24 months most of the metaverse startups will be gone. Why? As we pointed out in our sports metaverse analysis, many of those metaverse startups do not have a solid business model or are just struggling former AR/VR startups that pivoted to focus on the metaverse space. So in our view it is inevitable that many of those metaverse startups will either shut down in the next 24 months. This is not specific to the metaverse space but it is typical of any overhyped space. And trying to compete against NFT/metaverse startup unicorn like Dapper Labs or Sorare will be challenging for some of those startups.
5. Sports organizations should take an hybrid approach to target a large spectrum of fans and demographics
This was one of the biggest discussion points during our meetings with sports organizations last week. In our view it will be critical for sports organizations to take an “hybrid” approach to launch their metaverse strategy. So what exactly does “hybrid” approach mean here? Put simply sports organizations should not try to primarily offer a “virtual” metaverse experience a la Fortnite or Roblox. Instead what they should do is to offer a “virtual” metaverse experience (Fortnite, Roblox type experience on a PC/laptop or VR experience) in order to attract the younger demographics. But they should also try to offer an Augmented AR experience in order to attract older demographics. This will be key to success in order for clubs to cover most age groups. As shown in the graph below, this consumer surveys (n=12,000 users) recently showed that 65% of consumers do “not” want to live in the “virtual” metaverse experience. Ultimately clubs should not forget that “one size does not fit all”.
Source: Upside Global, Twitter, consumer survey, 2022.
So sports organizations need to be mindful of that. Offering a metaverse platform that is fully open and enable clubs to sell their NFTs across various platforms (OpenSea, Sorare…) will also be critical. This is why we are recommending clubs to work with companies like Dachain.com, in association with Tropos AR, which provides a full end-to-end “white label” platform (wallet, marketplace, NFTs, ARs..) that enable clubs to offer their own branded end to end metaverse experience to sell their NFTs cross platform will be important in the future. In our view, clubs should not try to work with too many “silo” third party companies in order to put together the building blocks (wallet, marketplace, NFTs, etc..) of their metaverse. In the end it will become too complex and costly for most clubs to go that route.
6. VR adoption is still small with 10M users globally. Mobile AR reached mass adoption with 800M mobile AR users, but most Clubs believe they got little ROI from their AR/VR initiatives
Going back to our point about the necessity for the clubs to not primarily focus on a virtual environment we should not forget that VR has not reach mass adoption yet with only 10M VR users globally. Mobile AR, on the other end, has reached mass adoption with 800M users globally. That being said, one club pointed out to us that Pokemon Go, one of the most popular AR game out there, is actually not AR game per say as many Pokemon Go users end up turning off their AR feature. With that in mind we think that while mobile AR has reached a large footprint, there is still a way to go before seeing clubs fully monetize the mobile AR opportunity. Some clubs even pointed out to use that the ROI for their AR/VR strategy has been quite limited compared to the amount of time and effort and financial commitment they have dedicated towards their AR/VR strategy. But we believe that as hybrid AR/VR glasses become mainstream the AR/VR adoption will increase and some clubs will find the right business model and get a good ROI.
7. Fans are back in packed stadiums, and most clubs have a good COVID-19 protocol in place.
We attended two games last week in Europe. Arsenal Vs Wolves in the Premier League and England Vs Wales at Twickenham as part of the Six Nations rugby tournament. Both games were played in London. The atmosphere and the fans were incredible. But most importantly the stadiums were packed. Although we are still in the middle of a global COVID-19 pandemic there is a general feeling that things are getting better on the pandemic front. For example for the general population it is no longer required to take a COVID-19 test when traveling to England. Sports clubs also have a good hand on how to deal with the pandemic as they have a solid protocol in place. From a business standpoint, the clubs are better positioned financially compared to 2020. Back then they had to find any ways to offset revenue losses due to the lack of ticket sales in stadiums. Now with fans back in stadiums they are in a much better situation, which is great news for the world of elite sports and the clubs.
Picture: Six Nations rugby tournament’s England Vs Wales (Left), Arsenal FC Vs Wolves (right)
9. Clubs and national teams are looking for unique sports performance technologies to get that 1-2% performance advantage to get competitive advantage.
Based on our conversations last week, on the sports performance front, it is clear that clubs and national teams are still looking for unique technologies that can give them that 1-2% performance advantage. The reality is that at that level every little details matters. The level of competition has become so high where the slight little mistake can make all the difference in a game. This is where technology could give those teams that one little competitive advantage that could help those teams have their best player(s) back on the field faster or help those teams not losing their best players for the next game due to major injuries. The point here is that technologies can sometimes make a key difference. Teams and coaches know it which is why they are looking for those cutting edge emerging technologies that could make a big impact.
10. AMS, GPS, HR monitoring systems remain the most common types of sports performance technologies used by pro teams. But there is a growing appetite for new technologies like sleep tech, hydration/electrolyte assessment tools, EMG sensors for injury prevention purposes.
Generally speaking based on the conversations that we had last week we got a general sense that GPS systems, HR monitors and AMS (Athlete Management systems) remain the most common types of sports performance technologies used by pro teams today. Now there are still some pro teams who do not use HR monitors or AMS systems but most teams seem to be on part in this area. In addition it was also clear that there is a growing appetite from teams for emerging technologies like smart sleeping masks, hydration/electrolyte assessment tools, or EMG sensors for injury prevention purposes, just to name a few. For example we work with companies like Sana which built a smart sleeping mask that helps athletes sleep in 15 minutes using pulses of lights and sounds. Teams can use this type of mask to help kill pain experienced by players. It can also be used to fight jet lag issues or improve players’ sleep.
Hydration/electrolyte assessment was also top of mind based on our conversation with teams. Why? Because dehydration can have a negative impact on a player’s performance during practices or games especially when players play during games in hot conditions or they loss a high amount of fluid. We work with a startup called Flowbio which built a smart patch that can measure in real time the players’ hydration and electrolyte level. The Flowbio app understands the baseline of each player and can tell a player how much fluid he/she needs to take in order to get rehydrated. EMG sensors for injury prevention purposes is another hot area and has gained great adoption lately. Why? Because teams are looking for any ways to better assess the risk of injuries in order to prevent major injuries. A company like Neurocess has built EMG sensors that is being used by major pro teams and help them prevent injuries. The EMG sensors can be applied directly on the players’ skin and it can track 10 parameters in real time. The bottom line is that the amount of pressure on players and coaches has become so high with sometimes games played every 3 days so there is a higher risk of injuries for players. And it is understandable to see those teams looking for emerging technologies to try to offset potential injuries, reduce the stress of players, or improve their sleep or the rehab process.
11. Injury risk assessment tools are top of mind among pro teams. Some teams have a better handle on assessing and preventing injuries than others.
As we noted earlier, teams are looking for any ways to help them prevent injuries which could cost them the victory for the next game. Now based on our various meetings last week it is also quite clear that for some teams injury prevention has become a real “secret sauce” meaning that the athletic training staff has put processes, technologies in place in order to better assess the risk of injuries of its players. Now as we noted before we know some teams that told us that they have managed to reduce injuries by as much as 35-40% over the past 5 years which is quite remarkable given the higher intensity and frequency of the games these days. In our view it comes down to (1) the quality of the athletics training staff and (2) the quality of the sports performance technologies that the teams use. At the end of the day some teams have a better handle on injury prevention than others but that’s also what makes some of the best teams in the world best at what they do on and off the field.
12. European clubs are primarily interested in research back sports performance products.
Lastly because we deal weekly with major pro teams in both North America and Europe, last week’s meetings in Europe was another reminder that most European teams are very much more research driven. What we mean by that is that unlike most of the North American teams, European teams are always asking if the technologies that we present to them are backed by real studies or research. Why? Because (1) many of these teams collaborate with top European researchers and universities (2) these European teams want to see if these technologies are validated by solid research and studies. In our view this is actually a good thing and it helps better vet those vendors and technologies. But this is a slightly different approach compared to teams in North America, which are not always asking if any given technologies are backed by real studies. This is just a different mindset.
Bottom line: The world of elite sports is back in full swing. Although we are still in the middle of the pandemic we had a clear sense that there is a real optimism among top European pro teams. This is a very different situation from 2 years ago in 2020 where most clubs were trying to figure out how to handle COVID-19, and where clubs were losing money due to ticket losses and other factors. Fans are back in stadiums and most of the stadiums we saw were packed. On the digital side of things, there is a huge amount of interest towards the NFT/Metaverse space but most teams are still in the early phase of their reflection when it comes to their metaverse strategy. Lastly, all the teams we talked to are looking for unique sports performance technologies that can give them a competitive advantage in order to outsmart the competition.
PS: If you are a sports tech startup and need help accelerate your business, connect with pro teams (NBA, MLS, NFL, Premier League…), put together a VC deck and raise money please contact us at julien@sportscouncilsv.com and check out our site www.upsideglobal.co
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