Written by Lars Rensing, CEO of enterprise blockchain solutions provider Protokol
In just ten years, the esports industry has transformed from a largely underground pastime into a billion-dollar industry. One of the key drivers has been its ability to attract huge viewing numbers. Over 496 million people watch esports, both online and in person, across the globe. However, this enormous growth has come with several challenges, which teams are being forced to adapt to at lightning pace. From difficulties engaging and forging relationships with an increasingly growing fan base, to limitations with fan traceability, and issues with generating actionable data for sponsors – the esports industry is facing some tough challenges.
Many of the key challenges esports organisations are facing boil down to one common theme: the fans. While the industry as a whole thrives, fragmented systems, disjointed processes and out-of-date fan management systems mean that teams are struggling to get a clear picture of how their fans are behaving, what their needs are and how best to reward them for engagement. In a fast-growing industry, teams who can’t achieve this kind of insight and adapt to changing fan demands risk leaving a significant portion of their fan base behind. And with Covid-19 driving a sharp growth in viewers and engagement with esports online, as well as attracting a mainstream audience due to traditional sports matches being cancelled, they also risk not capitalising on a new generation of esports fans.
As a result, esports teams are looking for innovative ways to effectively engage and monetise fans in order to bring teams, supporters and sponsors closer together, and better understand what keeps fans engaged. This is where blockchain comes in.
Building a fan-centric ecosystem
One of the main problems at the moment is visibility. Esports teams have a huge social following and constantly growing viewing numbers, but they don’t have a fool-proof way of understanding how these followers are engaging with their teams. By using blockchain, teams can create a fan-centric ecosystem which puts the needs of fans at the centre of their business and makes it easier to collect, interpret and convert data insights to drive fan relationships and loyalty.
On these platforms, fans can be rewarded for certain things, such as creating and sharing content, or through loyalty programmes that allow them to accumulate points or rewards to spend on merchandise, tickets, and digital collectibles. These platforms not only help to foster a sense of community for fans but can also enhance a team’s relationship with sponsors.
Blockchain technology is transparent in nature, as everyone on the blockchain can be allowed to have access to the information stored in it. This means that teams can share fan interaction data seamlessly with sponsors, giving them verified and immutable engagement metrics, leading to a better ROI and createing stronger more profitable business relationships for the teams.. For fans, it means visibility over the transactions when it comes to being awarded or spending loyalty points. What’s more, because this information is decentralized (i.e. stored on a secure blockchain network, rather than one centralized server), there is also no single point of failure, making the data incredibly secure and almost impossible to corrupt. Blockchain, then, can provide reassurance of the validity of the metrics and insights gathered from fan interactions, helping sponsors generate a better ROI.
Creating fan tokens
Teams can go one step further by incorporating blockchain-based fan tokens into their fan ecosystems. These digital tokens act as a team’s own virtual currency, which fans can purchase for fiat currencies, like dollars, euros and pounds, making them a viable revenue stream for teams. Fans exchange the fan tokens for merchandise, collectables, in-game assets or exclusive experiences. Fan tokens are a finite, digital asset backed by secure blockchain technology. Data related to ownership and transactions of fan tokens is automatically stored on a secure, decentralised digital ledger, allowing teams to access in-depth fan interaction data that can seamlessly and securely be shared across the ecosystem, giving valuable insight to both sponsors to business partners.
For fans, ownership of fan tokens offers them the ability to use their tokens to unlock discounts on merchandise, access unique experiences, or participate in fan-led decisions through a mobile voting platform; as well as serving as a ticket into a secure, exclusive inner circle of fans with shared passions and beliefs.
Digital asset and collectibles
In-game purchases made to buy special objects like guns or swords are generally one-time, non-transferable investments. This has been a bugbear for fans for years, who have been calling for more easily transferable assets. With blockchain, this no longer needs to be the case. The technology can be used to give players full ownership of these items, allowing them to take the items out of their original games, sell them on for profit, or even use them in other games.
Blockchain can also allow teams to create either unique or limited-edition collectibles which fans which purchase and which can’t be can’t be destroyed, replicated or forged. This has already proved highly profitable for digitally native fans, as we saw with the wild popularity of the CryptoKitties game in 2017. Esports teams can take advantage of this by creating collectibles like digital trading cards of their players for their fans to collect, opening up a completely new revenue stream.
Particularly during the pandemic, the esports industry is in a unique position to appeal to an enormous network of global fans. In order to capitalise on this growth, teams need to explore innovative new ways to ensure fan experience stays at the centre of everything they do. Teams that do this will be well placed to continue the astronomic growth of the industry, while keeping fans engaged, sponsors happy, and opening up new revenue streams.