The importance of status in Web 3

Hi everyone,

Welcome to Issue #5 of Sports 3.0

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A $50bn + Web 3 opportunity

This issue is the last part in a series covering use cases of NFTs in sports.

Over the past two weeks we explored Collectibles and Utility based NFT's, but today we will be focusing on all things Virtual Identity - which could be big business.

For those that are new, here is a handy little image documenting some of the core opportunities I see when it comes to NFTs and Sports.

Virtual Identity as a use case for Sports NFTs

What do I mean by Virtual Identity NFTs?

You could also describe these as NFTs as ones where a primary use is to signal status and identity around someones online brand.

Identity is already consciously and unconsciously inbuilt into our everyday lives, but NFT technology mean digital asset ownership is enabled to be a critical part of the online experience for the future too.

Don't underestimate the importance of identity in a virtual world.

Some considerations and watch outs on Virtual Identity based NFTs 👇

• Humans are tribal, and visual cues can help you find your tribe

• These NFTs will be an important visual trigger as an identifier of the online community and tribe you associate with

• This area is probably one of the hardest for people to get their head around when it comes to NFTs

• "Why would I pay for something which doesn't have any purpose" // "It's nothing like owning items in real life" are some common sceptic views

• The intangibility of digital assets is something people struggle to get their hear around, but the psychological principles of brand and identity do not change going from offline to online.

• The importance of Virtual Identity is already well established of course in gaming through skins and outfits for in game characters,

• For example, the Fortnite skin collaboration with NFL earned in excess of $50 million dollars equating to 3.3 million branded NFL team skins being sold.

Let's take a brief look at each Virtual Identity NFT type:

PFP's (aka Profile Pictures)/Avatars:

Perhaps one of the biggest bug bears of NFT skeptics over the past 18 months has been the headlines surrounding celebrities buying simple jpegs for exorbitant amounts of money which then flood Twitter via appearing as owners profile pictures.

Even just two years ago, it would seem highly unusual for anyone to pay for an image to use as their Instagram and Twitter profile picture.

Yet here we are in 2022, and Neymar recently paid $289k for a Bored Ape, which now sits as his profile picture across socials.

And he's not alone.

Eminem, Snoop Dogg, Justin Bieber, Steph Curry, Chainsmokers, Mark Cuban, Alexis Ohanian, Logan Paul, etc as well as countless non celebrities have all opened their digital wallets to buy NFTs which then sit as profile pictures.

But why?

It's not because he has been paid by Yuga Labs, owners of Bored Ape Yacht Club, to do so, it's because he places a value on what this means identity wise.

Flipping your profile picture to an owned Bored Ape signals early adoption. It signals being part of a community who see the future differently. It signals you understand a shift in culture.

And of course NFT use cases can be multiple. As per Bored Ape, you get the avatar kudos, but also get 'membership' to the Bored Ape community.

But don't try and just replicate Bored Ape Yacht Club.

Any avatar project focused needs to have its own take on meaning and identity amongst the target community - otherwise it has no value.

Of course 99% of NFT avatar projects in the last 18 months won't stand the test of time. Most won't be anyway near as desirable as Bored Ape Yacht Club. Some have just been pure scams.

This is and will continue to be a hard area to crack. It is a big commitment for someone to change one of the most visible touch points on social platforms and is clearly prime real estate.

Your profile picture is the primary gateway to online self expression.

But in the sports industry, we can speak to communities who identify through tribes, passion and fandom, and I think opportunities will still exist to help create meaning via online PFPs and avatars.

For example, Nike owned RTFKT launched their Clone X avatar collection. In the future could this be a way for Nike athletes to be identified in online environments?

LFC Heroes Club has probably been the most high profile project from a sports team to tap into this space.

🚨 Top Tip: A watch out. Of course many athletes and celebrities have and will be approached to chance their online avatars in exchange for cash (I'm looking at you John Terry 😑) but this does not make the collection a desirable avatar based on status.

Virtual Stadia real estate:

Would you ever buy space in a virtual stadium?

It may not be as mad a question as it sounds.

In the same way in which owning a season ticket in the real world not only gives you access to all games, but an intangible and unmeasurable aspect is a representative of your commitment to the team.

Season Ticket holders of teams will often be quick to tell you "Yeah I've got a season ticket" if you ask them whether they go to games. This is unconscious signalling and identity of their fandom.

Virtual stadia real estate can offer the same opportunities for fans online, such as owning a specific NFT seat within an online SoFi Stadium or Old Trafford?

Owning this seat in that virtual stadium could give you access to watch exclusive in-stadium events and appearances from sports stars, à la the hugely successful Fortnite gigs.

This actually provides new opportunities for sports where fans typically don't have home stadiums week in week out, for example cycling and F1.

Manchester City and Sony are some of the first movers working on virtual real estate.

🚨 Top Tip: If you are exploring virtual arena options and experience, ensure to look at ways the experience can be different from just virtual watch-alongs. This will be critical to fans hyping up their experience within their community.

Digital fashion/wearables:

This battleground is going to be huge.

Morgan Stanley predict the Metaverse fashion industry could be worth $50bn by 2030 🤯.

"Where influence (and money) leads, fashion will follow" - Vogue Business

Let's be clear, the concept of intangible wearables isn't new. In gaming of course it has become a key revenue driver, but we are starting to see the battleground emerge around the future of virtual worlds and the metaverse.

You know NFT wearables is big business when one of the biggest brands in sports dives straight in, with Nike acquiring RTFKT in December last year, adding the NFT Streetwear company to their brand portfolio alongside Jordan brand and Converse.

And it makes sense.

Why shouldn't virtual fashion be treated with the same cultural importance.

RTFKT have been establishing themselves as the leading virtual streetwear company for years and have collaborated with well known NFT creators as well as global artists such as Takashi Murakami.

This culminated with the launch of the RTFKT Nike Dunk Genesis earlier this year, the first iteration of Nikes Crypto Kicks line, which allows the owner of the sneaker to equip NFT based skins vials to change its looks

The sneaker above sold for 45 eth, otherwise known as $130,000 💸.

"But why would I buy sneakers that I can't even wear".

Let's be clear. The person who bought these physical Nike x Louis Vuitton sneakers for $352k is going to lock them up in a vault and never wear them either.

This is all around brand and identity.

Estimates are that 15% of our wardrobes could be digital in the future.

And of course not all digital fashion items will be sold for eye-watering sums. As per the real world, there will be price points to cater for all needs.

A few other players looking at this:

Exclusible - Creating virtual luxury wearables, fashion and real estate

Fan curve - Fusing digital fashion with sports teams

NFAST - Creating Hypercars for the Metaverse

Gucci - They have been part of many collavorations with other NFT projects over the past few months

🚨 Top Tip: This area is primed for sports brands and right-holders. My advice for exploring early touch points would be via collaborations.

🚀 Level Up

Hungry for more? Here are a few further things I've hand curated this week that I think you may be interested in:

📖 Read... A must read! Take a look at the latest Digital Native newsletter from Rex Woodbury, covering how media influences culture. Very relevant for Sports 3.0 thinking!

👨‍💻 Listen...One of my favourite podcasts is 'Infinite Loops'. Jim O'Shaughnessy, is a brilliant host, and each episode leads me down a different rabbit hole of interest. This episode is called 'Preserving the Physical Metaverse' and has some wonderful discussion points around the stories, psychology and also the metaverse.

That's all for this week!

If you enjoyed this insight please feel free to share with like minded friends and colleagues.

Thanks & see you next week,

Richard Johnson

P.S Every week I read all feedback I receive, and it massively helps make Sports 3.0 as useful as possible for subscribers. Vote on your thoughts from todays issue below. 👇