Lloyd Danzig: Four steps to overcome before sports betting reaches the masses in the metaverse

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Sports fans will close their eyes and focus their thoughts as a brain-machine interface projects a photorealistic virtual reality directly into their neurons, producing a robust, high-fidelity experience that is indistinguishable from real life.

With just the use of their minds, users will navigate through the most magnificent sports hospitality space imaginable. Wagers will be placed at a virtual sportsbook that sources liquidity from a decentralised automated market maker. Avatar-based social interactions will occur while each user retains full customisation capabilities to have any combination of games projected up on the big screen.

Certain areas with special features will be available only to owners of specific NFTs. Users will be able to transport directly to any seat at any stadium to watch the game they’ve wagered on. They will be able to pause the game, rewind, replay in slow motion, or watch from a different angle, all without interrupting the experience of other fans.

However, the market is still several large steps away from providing an experience like this at scale. Although several of the largest gaming companies have been exploring virtual reality casinos and metaverse sportsbooks, these conversations are exceedingly preliminary and experimental in their current phase.

Right now, operators like DraftKings and Fanatics are more focused on becoming the one-stop shop for all of a sports fan’s digital needs, while, similarly, other operators are positioning themselves as the home for all of an online real-money gamer’s activities.

Achieving this type of market position requires a combination of access to technology, licences and customers. Such positioning is highly coveted because users that enjoy one form of “competitive entertainment” are disproportionately likely to enjoy others, given the psychographic and behavioural similarities between the experiences.

Gamers and sports fans tend to be customers who love trying experimental and innovative ways to exhibit their brand affinities. As such, this audience is especially ripe for early adoption of cutting-edge metaverse experiences.

Even though a fully immersive, synchronous metaverse is not feasible currently, the smartest and most forward looking brands know they need to start researching and developing next-gen technology today so that they are properly positioned to deploy it at scale tomorrow. They have also taken notice of the tectonic shift in individuals’ focus away from their physical lives to their digital identities, particularly among younger audiences.

And so, as companies look to get ahead of long-run innovation curves, there are several important technological and behavioural developments that will need to take place for the mass market sports betting experience to more closely resemble the world of Ready Player One:

Step one: Hardware needs to become less bulky, less expensive, less complicated and less intrusive. Current solutions, such as VR goggles, haptic body suits, and 360-degree treadmills are far too costly, take up too much space and are difficult to set up and use. Ideally, brain-machine interfaces or smart contact lenses will solve these problems. It may also be helpful to leverage augmented- and extended-reality technology as an experiential bridge. Alternatively, and in the shorter term, UX innovations may produce desktop- or mobile-based metaverse interactions rich enough to obviate the need for a fully immersive video device.

Step two: Avatar-based VR experiences need to become less lossy. If communication is the process of sending thoughts from one brain to another, lossiness is the property by which some portion of the original thought fails to reach the other brain. Most people can relate to the experience of having a rich inner-monologue and comprehension of a subject that then seems to dissipate or grow incoherent when an attempt to verbalise or write down those thoughts is made.

It is not yet the case that it is easier to communicate ideas and emotions in VR than in physical reality. However, technological innovations have often proven successful in decreasing lossiness. For example, text messaging was originally reliant on “abc” typing, which required each button on the phone to be pressed the number of times corresponding to the desired character’s position on the keypad. Then, a new protocol called “T9 Word” was invented that immediately enabled people to communicate far more information with the same number of keystrokes. Subsequently, Blackberry came out with a handheld mobile device containing a full QWERTY keyboard which further improved a user’s ability to convey thoughts and emotions.

Similar innovation will occur in relation to the metaverse so that existing devices can carry a higher percentage of the intended message without requiring additional effort on behalf of the user.

Step three: Sportsbooks need to achieve a greater level of vertical integration and control over their tech stacks in order to integrate existing functionality seamlessly with metaverse experiences. Operators today are frequently hamstrung by technical debt and the incompatibility of legacy platforms. Maximising the profitability of a digitally shared space or virtual world will likely require optimising for interoperability.

Some companies will leverage platforms that bridge digital and physical environments to provide a more accessible onramp to fully virtual experiences. In addition, operators will benefit from forging partnerships with major software and hardware players in the space in order to carve out access to the most popular metaverse platforms and VR environments.

Step four: Either the mass market needs to become comfortable converting between fiat and crypto or the UX has to evolve to make that unnecessary. It may ultimately not be the case that the metaverse is blockchain-implemented, although the current consensus points to tokenisation playing a critical role in the user experience.

Currently, engaging with cryptocurrencies, buying NFTs and trading digital collectibles requires technical knowledge and skills that are beyond the grasp of the average user. In addition, platforms generally need to provide a path of least resistance to a particular experience in order to foster mass market adoption. If NFTs and fungible crypto tokens are fundamental to the metaverse, blockchain-powered user flows that don’t appear to be blockchain-powered will play a critical role in adoption.

In conclusion, the metaverse in its purest, ideal form is several years from coming to fruition. However, companies seeking to succeed in monetising the future of digital shared spaces in any form need to start laying the organisational and operational groundwork today.

Lloyd Danzig is the founder and managing partner of Sharp Alpha Advisors, a venture capital firm specialising in sports betting and online gaming.

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