By: Lars Rensing, CEO of enterprise blockchain solutions provider Protokol
In the past, esports was thought of as an underground hobby, but the astronomical growth of the industry has completely changed this. Today, 496 million people around the globe regularly watch esports in both an online and in-person fashion. This figure has been rapidly growing over the past decade but this growth brings with it several challenges with one commonality: the fans. Teams struggle to maintain relationships with their digital native followers which in turn affects levels of engagement. This, coupled with trepidation from sponsors – who may not have advertised in this industry before and have a limited knowledge of how to utilize learnings from fan data, — leaves this rapidly growing industry facing some growing issues.
On the face of it, this industry is thriving with mass global adoption, major tournaments that sell-out, and immersive viewing experiences. But fragmented systems, inefficient processes and out-of-date fan management systems leave organisations in the dark about the behaviours of their fans and what they need to be providing in order to reward fan loyalty. In the changing world of esports, teams that refuse to adapt face losing a significant proportion of their following. In the face of the Covid-19 pandemic many teams saw an influx of fans but, will they be able to sustain this new viewership, and will they capitalise on new markets going forwards?
Esports teams are looking to innovate and effectively engage with their fans in order to bring in much needed capital to grow their brands and bridge the gap between supporters and sponsors to better understand fan engagement. Blockchain can provide this solution.
Focusing on the fans
Esports teams have large social followings and big viewership figures but they lack an understanding of how these followers engage with the team’s brand. By utilising blockchain as the underlying foundation of a fan engagement platform, teams can create an ecosystem that places the fans at the centre of their business, making it easier to both gain and interpret accurate, real-time fan data which will enable teams to engage viewers past the point of onlooker and to the point of fandom.
A well-established way of engaging fans is through fan loyalty programmes allowing ‘points’ to be accumulated and spent on merchandise, tickets, collectibles, or in-game rewards. This inclusion fosters a sense of community and enhances sponsorship exposure. However, there are some issues with existing loyalty platforms which are expensive to establish and often suffer from slow onboarding. Not only this, but there is little transparency for fans when it comes to earning or redeeming rewards, and they often rely on costly middlemen. Fans may not even own the points they earn. With blockchain, loyalty platforms are less expensive to create, and offer more for less. Without middlemen involved, these platforms are cheaper for both fans and teams alike. Blockchain is also innately transparent; all parties can have access to the information stored securely on the blockchain, meaning that fans have a clear overview of transactions when earning or cashing in points. Making these platforms more transparent for fans encourages even greater loyalty, in turn benefitting the teams.
Working with sponsors
Blockchain’s transparency also allows for a seamless transfer of data from fans to sponsors. Sponsors can access verified metrics on fan behaviour from blockchain-based loyalty platforms, which creates a more profitable business model from which to work from, subsequently strengthening their relationship with the team.. The risk of inaccurate or tampered data is also mitigated as blockchain technology relies on decentralisation and cryptographic encryption. As there is no central network, data is incredibly secure and protected from bad actors.
A new source of revenue
Teams can go one step further and integrate a blockchain-based fan token into the ecosystem. These digital tokens can act as a team’s own currency and could be spent in-game, on merchandise, or as gifts to other fans. What’s more, these tokens are bought for regular currencies like dollars or euros unlocking a profitable revenue stream for teams. Fan tokens are securely underpinned by blockchain technology and provide both sponsors and business partners valuable insight in a seamlessly secure fashion, as blockchain’s transparency and security means that partners can access accurate data on how fans are using tokens, allowing for a better understanding of fan behaviour.
From a fan perspective, tokens offer an exclusive window into their favourite team. For instance, teams can allow fans to purchase or earn fan tokens to then use to buy discounted merchandise or exclusive collectibles. Holding fan tokens can even give fans the benefit to make decisions through mobile voting. For example, having a certain number of fan tokens could give fans the ability to vote on a new logo or kit for the team, or even on the line-up of the team, letting them feel involved in the team, and therefore increasing fan loyalty.
Blockchain-based digital collectibles (NFTs), have been a popular subject in the sports & esports industries recently. NFTs can be created by teams to offer fans exclusive digital collectibles for purchase, opening up a profitable new revenue stream for teams. Through blockchain’s secure ledger, unique digital collectibles can be created, traded in a peer-to-peer ecosystem, and crucially can’t be replicated, forged or destroyed like physical collectibles can. Ownership and rarity is provable via a transparent digital ledger. This is something the esports community has been calling for for many years to make the trading of collectibles easier and more secure for fans, and can now be realised through blockchain technology.
Following the pandemic, many industries are facing new challenges trying to adjust to a more online world. However, the esports industry is well placed to adapt, given its digital-native fans who already engage with more online content than any other generation. Teams must be innovative to keep fans at the centre of their business models. Blockchain technology can help teams to do this, by allowing for the creation of transparent and efficient loyalty platforms and offering fan tokens and collectibles to engage supporters. Those teams that take advantage of these innovations will be best placed to ride the trajectory that the esports industry is taking, while opening up new revenue streams, taking on larger sponsors, and ultimately having an engaged fanbase.