Karate Combat: The New Face of Ownership & Engagement in Pro Sports
Karate Combat: The New Face of Ownership & Engagement in Pro Sports
This week we discuss Karate Combat, which is pioneering an evolution in pro sports ownership and engagement models, having launched the world’s first pro sports league structured as a decentralized autonomous organization (DAO), governed and gamified by a token.
Combat Sports are in Need of an Upgrade
Combat sports have been a mainstay of culture and media since the dawn of civilization. Fighting was the centerpiece of the first radio broadcast in 1921, the first pay TV channel in 1973 (HBO) and the first major YouTube Pay Per View event in 2018 (Logan Paul vs KSI). Today, combat sports represent a multi-billion dollar global industry, with leagues such as the UFC (worth >$10bn) and WWE (worth >$5bn) generating in excess of $1bn in revenue annually from over 600m global mixed martial arts fans.
However, despite their success, traditional combat leagues face a few key challenges. Ownership is typically highly centralized, resulting in limited revenue sharing with fighters and few opportunities for fans to participate. Fighters and fans are, more or less, completely dependent on a handful of owners to drive the fate of the league. And the prohibitive cost of watching leagues like the UFC (up to $1,000+ annually) impedes their ability to engage younger, digital-native audiences.
Missing the Mark with Digital Natives
Traditional combat leagues’ fan bases are also aging (for the UFC, Pro Wrestling,and Boxing, the median age is ~49-54) and they’ve had limited success in meeting the demands of younger audiences who expect a different level of access, participation and interactivity (including gamification, betting, short-form content, and participation in decision making).
To get a better sense of the growing digital native audience: Nearly 48% of NFL fans aged 18-43 prefer highlights to full games (vs. only 11% of fans over 50), marking a departure from traditional formats and program length (Maru Group, 2021). According to Forrester, less than 50% of adults under 32 will even pay for a traditional cable subscription by 2025 (Forrester, 2015). Already in the US today, less than 50% of households subscribe to paid TV, projected to dip to 35% by 2027 (InsiderIntelligence, 2023). And 46% of fans under 35 prefer to watch sports on their phone, preferring streaming to cable and shorter to longer-form content (Nielsen, La Liga Tech, 2022).
Data from Newzoo (2023) also suggests gaming is Gen Z’s top leisure activity, noting that they spend 3x more time per week gaming than baby boomers. Similarly, 28% of Americans 21-24 bet on sports at least once a month and roughly 83% of Gen Z say sports betting makes them more likely fans, regardless of the sport (YPulse, 2021). And, maybe more glaringly, 39% of males aged 20-38 say sports are only interesting when betting is involved, suggesting engagement is crucial to capturing younger audiences (Whistle Wise, 2021).
Which is why we were so excited to invest in Karate Combat’s April 2023 financing round led by BITKRAFT Ventures, alongside Delphi Digital and Hashkey, as well as angel investors including Bart Stephens from Blockchain Capital and others.
Karate Combat: The World’s Premier (Fan-Governed!) Full Contact Striking League
Karate Combat (“KC” or “the League”) is a vertically integrated, live combat sports league featuring high-intensity, full-force karate tournaments with a ruleset designed to create a more entertaining and engaging multimedia experience. Over 100 exclusive, world-class fighters (incl. Olympic medalists and national champions) compete for championship belts across 8 distinct weight classes, set in enchanting 3D VFX CGI-based arenas rendered in Epic Games’ Unreal Engine (like the arena above, set in Okinawa at sunset!).
But, even more excitingly, with the launch of the Sensei Foundation and the $KARATE token (now up to $500m+ FDV), Karate Combat is the first pro sports league in the world to be structured as a decentralized autonomous organization (DAO), governed and gamified by a token. This pioneering approach allows token holders to participate in shaping the league’s future direction and creates the backbone for their proprietary, token-based ‘Up-Only’ gaming platform and engagement model.
Geared toward Entertainment & Built for Engagement
The actual fighting is geared towards entertainment, with scoring heavily favoring aggression and action. The format is similar to UFC, but with shorter rounds, less downtime and no wrestling. And in addition to governing the league and providing access to exclusive events and content, the $KARATE token supports Karate’s unique ‘Up-Only’ gaming platform which allows users to pick fighters and bet on fights.
Token holders who pick winning fighters earn additional tokens from modest, perpetual token issuance. However, unlike sports gambling, token holders who pick losing fighters suffer no penalty but rather face dilution from new token issuance to winning fighters and players, who thereby increase their voting power in the DAO. As such, governance power and league ownership flows over time to the most active, informed fans and best fighters, avoiding churn and rewarding participation and engagement in a new, dynamic approach to sports ownership.
Resulting in a Better Sports Experience All Around
For viewers, Karate Combat creates the more entertaining sports-media experience that digital natives are demanding, grounded in market trends toward shorter-form, higher engagement content and ownership. For fighters, KC creates a more direct relationship with fans, transparent earnings and a voice in league decisions. This approach creates a completely novel way for both fans and athletes to support and influence the sport’s growth directly.
And, unlike traditional combat sports leagues, which derive revenue primarily from PPV and TV rights, Karate Combat drives revenue through top-tier event sponsorships and is able to leverage and license its IP across multiple platforms and media formats, driving creator and third party revenues through smart contracts & NFTs. The added layers of 3D VFX in KC’s arenas also offer a differentiated, dynamic advertising proposition for brands and sponsors, in-game and in-arena, that other leagues can’t match.
And it’s Already Proving to be Successful
With impressive viewership and steady traction out of the gates since 2018, Karate Combat is poised to take professional sports by storm. KC already streams free through sports TV distributors in over 100 countries and total views across all platforms grew from roughly 700K in 2018 to more than 8.5m viewers across TV and digital in 2022.
Today, Karate Combat gets upwards of 10m views per event and sees more than 200m digital views per month, across platforms. Since Blockchain Coinvestors attended KC 39 in Miami last May for the launch of the company’s ‘Up-Only’ betting platform, total unique players have grown from 1,527 to nearly 40,000 during KC 44 last month (a 25x increase in <12 months).
With Marquee Events in Partnership with Web3’s Leading Properties
Last week, the company announced they will partner with crypto’s longest-running conference to put on KC 47 at Consensus 2024 in May, in Austin, Texas. The event will also feature the second installment of its new Influencer Fight Club (IFC) format, which sees popular influencers face off against each other in the pits; a format popularized by Youtubers like Logan Paul and KSI, that is now increasingly popular among digital natives. (Imagine your favorite internet pundits and talking heads having to put their fists where their mouths are, on live stream!).
In another groundbreaking update last week, KC announced it has partnered with Dubai’s Department of Economy and Tourism (DET) and the Dubai Sports Council (DSC) to bring KC 46 to the emirate this spring as a headline event for Token2049 in Dubai. In the weeks leading up to the conference, the league plans to hold special events at the city’s most iconic landmarks, including a press conference at the popular Museum of the Future and face-offs in front of the renowned Dubai Frame. KC’s signature 3D VFX arenas will also feature epic scenes of Dubai’s skyline, with a futuristic twist.
With regards to the event, Asim Zaidi, President of Karate Combat, said: “It’s very much our goal to shock the combat sports world with every single event we do. And I have to say our event in Dubai will absolutely break the internet! Nobody entertains like we do, and with DET and DSC’s support, we’re about to shake up the world of combat sports. Stay tuned!”
And all of this following their first Kickback style event in January, hosted by renowned global artist Rick Ross, at a stunning mansion in Miami.
Keeping in mind that the UFC, WWE and similar combat sports properties have made little-to-no changes to their static, large-arena event formats in years.
Setting a New Standard for Pro Sports Worldwide
Having already more than 10x’d it’s viewership in just a handful of years and drawing on a long history of Karate lore (Cobra Kai, Dragon Ball Z, Street Fighter, Mortal Kombat...), KC is rapidly gaining popularity worldwide as it proves out a completely new model for ownership and fan and athlete participation in professional sports.
Built for engagement and high-octane action, KC epitomizes a broader paradigm shift in professional sports towards more engaging formats and is already winning out with younger audiences, with 75%+ of their viewers falling in the coveted 18-34 digital native age bracket.
And as Karate Combat continues to grow, capitalizing on underserved digital native audiences, pressure mounts on other professional sports leagues to explore decentralized ownership models, transparent decision making structures and increased fan engagement possibilities that are sorely lacking today. At Blockchain Coinvestors, we anticipate it won’t be long before we start to see traditional sports leagues follow suit.
Author
Christopher Nelson
Head of Digital Asset Research