Blockchain ticketing experiments show value of digital, but simpler solutions may be available

  • Open golf championship looks to follow Uefa in trialling blockchain ticketing
  • Experiments are adding weight to the case for more digital ticketing
  • But simpler solutions look a more accessible option for most rights-holders

Blockchain advocates have claimed the technology can solve some of the global problems of our time; for its detractors, it is the most over-hyped technology in human history.

The sports industry will soon begin to make up its own mind as blockchain platforms position themselves as offering new operational models for everything from player transfers and concession payments to fan engagement and ticketing.

In the last of those fields at least, blockchain cannot be dismissed as offering a solution to a problem that does not exist – the issues of security, distribution and reselling it aims to address are concerns for venues and spectators alike, and why the likes of European football’s governing body Uefa and golf’s R&A are interested in exploring its potential.

Their final conclusions are yet to be drawn, but two things seem clear: firstly, blockchain’s rocketing profile is creating a halo effect around digital ticketing in general; and, secondly, the technology’s biggest challenge may well be differentiating itself from less-starry alternatives that can deliver similar solutions in a simpler fashion.

Paul Williamson, ticketing director of the London 2012 Olympics and now managing director of the Sports Ink consultancy, believes that the more venues and rights-holders that begin to move beyond traditional systems, the wider will be the variety of solutions likely to emerge. “I think blockchain is an interesting development,” he says, “but let’s keep it in context because a lot of the benefits of blockchain are benefits of digital ticketing.

“As we are more digital generally and more things are delivered to devices rather than as paper tickets, many of the benefits can be delivered without the blockchain, frankly, just by things being sent to the end user and then being validated as they enter the stadium. I think we will see more digitisation of ticket access and some of that will be blockchain.”

Uefa has shown an appetite for exploring blockchain’s potential

What is a blockchain?

A blockchain is a database that stores a growing list of records in a series of ‘blocks’, each containing transactional information and a timestamp, and each of which is securely linked to the previous one using cryptography. It is also a type of decentralised distributed ledger, which means each block added to the database is validated and recorded across multiple computers – potentially up to thousands worldwide. The number of copies against which each new transaction must match prevents the blockchain being amended retrospectively.

Blockchains can also be configured to require each transaction to comply with a digital ‘smart contract’, which sets out the conditions that must be met for a new block to be validated and added to the chain. This is particularly relevant to sports venues and rights-holders as it enables them to control what happens to a ticket after its initial sale. They can specify a maximum resale price or prohibit its transfer completely. Buyers in the secondary market can be confident they are purchasing a valid ticket. A smart contract could also require the identification of all secondary purchasers or recipients of a ticket, enabling venues to know who its owner is at any given time.

Digital ticketing takes back control

The key ticketing issue facing rights-holders, venues and fans is one of ownership – being able to determine and restrict the identity of the person in possession of a ticket at any point in its life cycle from initial sale through to its ultimate validation at the gate. Life-cycle ownership control enables the regulation of the secondary market (in terms of who can buy or sell, and at what prices), and generates more real-time data about the ultimate users of tickets as well as their original buyers.

Regaining this control is the main driver of the R&A’s exploration of digital ticketing in general and blockchain in particular, after being introduced to the technology by its ticketing partner SecuTix, which it shares with Uefa. Kevin Bain, head of data and digital infrastructure at the R&A, tells SportBusiness: “Our interest has come from being aware of the number of tickets that are on the secondary market, and that is impacting our fan experience. If there is a ticket available on general sale for £80 and it is going for £400 on the secondary market, that is not a story we want to be told about the Open. We want people to be able to get there for a fair price.”

And he says of blockchain specifically: “We have nothing concrete planned but SecuTix have talked us through the technology and approach Uefa took and we could potentially do a trial for 2019 with a small group of users and assess it.

“The Uefa model shows it affords them flexibility and a higher level of control over their tickets. It allows the end user to forward a ticket to a friend and it cuts down on a lot of pain points. If you have got someone who buys four tickets for them and their mates, it’s a really good way of forwarding them on securely. You take your mobile everywhere with you, but I’m sure I am not the only person who has nearly forgotten to take their tickets with them.”

The Uefa test

Uefa’s was the first major rights-holder to trial blockchain ticketing on any significant scale, in the distribution of all 10,000 general admission tickets for its August 2018 Super Cup match and a smaller number at the Europa League final the previous May.

Seats for both events were sold through the organisation’s usual lottery system but the standard distribution of printed tickets was replaced by a blockchain model the organisation wanted to explore, as a means of gaining control over ticket transfer and eliminating forgery.

Fans purchasing tickets received a link via SMS that enabled them to download a Uefa smartphone app on which they could register to unlock access to their ticketing wallet, and then transfer seats to family and friends as necessary. The transfer process forwarded a similar link, again requiring registration to access the wallet and with the details of the transfer and the identity of each ticket holder recorded in the blockchain. On the day of the game, fans’ devices were authenticated via Bluetooth connection with a series of beacons sited around the stadium and the actual mobile match ticket unlocked. They could then scan the mobile ticket at the turnstiles to gain entry to the stands.

Uefa tells SportBusiness that the process ran sufficiently smoothly for it to want to continue with further testing. A spokesman explains: “We took a lot of positives from the trials: flexibility, cost reduction through the fact that we do not have to ship tickets via courier service any more, and also to witness the openness of fans towards new technologies and processes was a very positive observation. The most interesting element was clearly the controlled transfer of the tickets to the ticket-holders, combined with the added security that replication is prevented.”

Blockchain v digital: The similarities

Uefa’s experiments can be seen as a trial of digital ticketing that happened to use blockchain as its delivery system, rather than as a trial of blockchain alone: the organisation says it has not identified a cost advantage of using blockchain over any other digital solution and is not wedded to the technology in the long term. The spokesman adds: “Blockchain itself is only one element of the solution. Our aim is to be able to move to a mobile ticket distribution that provides more security than just storing tickets on a wallet application. The key is the combination of blockchain with other operational processes.”

The fact that blockchain is just one option for the R&A too underlines the extent to which none of the digital functionalities that can strengthen rights-holders’ control of their ticketing ecosystem are blockchain-exclusive. Jeffrey M Kreuser, president and ticketing consultant at American software developer Softjourn, whose clients include LiveNation and eTix, observes: “Blockchain forces digital ticketing, but there is nothing stopping the use of conventional technologies to accomplish many of the same things. One of the items mentioned for blockchain is data integrity, trust, and smart contracts. But a conventional ticketing provider can provide all the same things without blockchain – all we need to do is trust the provider the same with the digital asset as we trust them now when using a paper ticket.”

Trust is at its weakest in the secondary market, but suppliers are already taking steps to improve accountability here by setting up ‘ethical’ resale platforms such as Twickets, Ticketek Marketplace and See Tickets’ Fan2Fan service, which restrict prices to face value and mark-ups of 10 per cent and five per cent respectively. The outcomes are the same as those achievable through blockchain alternatives, says See Tickets’ chief executive Rob Wilmshurst, who argues: “In a classic blockchain use case, no one party can control the transaction and data without the consensus of all participants of a transaction. Fan2Fan is a closed, end-to-end system where, er… no one party can control the data without the consensus – willing seller, willing buyer via some transactional mechanism – of all participants. Spot the difference.”

Blockchain v digital: The differences

The difference for blockchain advocates is not that currently available digital ticketing systems are incapable of providing any level of control and assurance, but rather that the new technology can offer with greater detail and at lower cost.

Warwick University economics professor Michael Waterson, the author of the UK government’s 2016 review of the secondary ticketing market and an advisory board member at blockchain ticketing developer Aventus, says: “There is no need to use an expensive secondary website, as some clubs do, to authorise ticket transfers. In total, charges on the main secondary sites are of the order of 25-30% of the selling value, so this strikes me as something a blockchain solution can easily keep below. But, of course, it depends on how much of a discount the clubs receive.”

Blockchain ticketing can be used to prevent re-selling altogether but, again, many venues are already prohibiting this via comparatively low-tech methods. How successfully they are doing so may be open to question, but Williamson cites tennis’ Wimbledon Championships as one property happy to discourage the practice in this way. “They do checks on people, they have a legal process against resale, they police and manage it very effectively and they spell out the policy very clearly in their terms and conditions. They do that with paper tickets. They could switch to blockchain but would it bring untold benefits to them? No, because the business model is working already.”

Consequently, Williamson sees blockchain as a more elegant solution rather than a revolutionary one, but he also argues that most venues and rights-holders are far more preoccupied by another ticketing issue altogether – they need to get their tickets into the hands of more people, not just those of the right people.

“I think [blockchain] gives tighter control, better audit and better connection with the ultimate user [than other digital systems],” he says, “but there aren’t many clients for whom those are the top priorities. Seventy five per cent of venues are desperate to sell more tickets and blockchain is not a marketing solution: it doesn’t help you sell more tickets against unattractive opposition on a Tuesday night.”

What happens next?

Factors ranging from consumers’ growing familiarity with mobile payments to governments’ increasing willingness to tackle the excesses of secondary ticketing markets are creating the conditions for a widespread shift from paper or card-based systems to new models of digital delivery.

For example, the NFL has introduced mobile-only ticketing for the 2018 season, a move that Softjourn project manager and ticketing technology specialist Lyubomyr Nykyforuk says “is not an easy decision as it requires an access control upgrade and customers to rely on their phones rather than something they’ve been using for decades”.

Taking a further step towards blockchain-based systems is arguably an even bigger decision, given their greater complexity and unfamiliarity. Kreuser says of the barriers: “Other than for cryptocurrency, the use of blockchain is still very early and immature. Speed and scalability are an issue, permissional – or private – blockchains are still a young technology and the use of a public blockchain can be slow and expensive.”

Wilmshurst echoes that opinion, adding: “It’s too slow for high-frequency ticketing, it’s expensive to deploy and not widely understood. It’s probably a great idea if you are a CTO looking for ‘budget’ from an unwitting CEO I guess [but] I haven’t seen an example use case that could not be tackled with traditional database technologies and rule sets.”

The technical barriers Wilmshurst highlights are: the cost of adapting stadium entry systems (which require an additional point of verification to unlock the mobile ticket from the spectator’s blockchain-enabled digital wallet); the development of the blockchain ledger itself; and the speed at which the system is able to process ticket sales.

Uefa and the R&A say adding beacons or geofencing to a venue perimeter is relatively inexpensive, but the three and a half hours it took Dutch supplier GUTS Tickets to sell 50,000 concert seats via blockchain in September 2018 – believed to be the largest such sale to date – is significantly longer than major sports venues’ current systems would take to process the same inventory, due to the additional requirement of creating and verifying a new block in each ticket’s chain.

As a result, Nykyforuk says the best place to start any blockchain adoption would be “with the small segment of fans that are open to innovations”, an approach that is likely to apply just as much to rights-holders.

Williamson, who is currently working with the hosts of this year’s World Cups in rugby union, cricket and netball, believes the specific circumstances of the likes of Uefa make exploration of blockchain’s potential a logical step for the governing body to take, but that most other rights-holders will be far more circumspect.

He explains: “Uefa own the ticketing for all their events and have the strategic strength to take their solutions anywhere across Europe. Trialling a blockchain solution makes absolute sense for them moving forward, where they are staging their tournaments or finals in different territories but want the same service levels and delivery each time. It’s more secure, joined-up and long-term [than other digital alternatives].”

But he also believes Uefa and the R&A are in a minority of top-tier rights-holders able to make the business case for experimentation. Major international tournaments are restricted in their ability to innovate by the capabilities of the venues they use, he says, while the giants of the world’s biggest sports leagues are more naturally inclined to wait for new technologies to mature before getting on board.

“It’s quite difficult for a one-off project to be leading-edge in terms of technology,” he says. “You certainly don’t want to trial anything new because you don’t have a second chance to get it right, and you often don’t have the opportunity to trial anything new anyway because you have to tie in with existing systems and controls. I work in major events, where we are using multiple venues on a turnkey basis, which mean the lowest common denominator of ticketing solution generally has to apply.”

And he adds: “There will be blockchain solutions at some major operators – Uefa being one of them – and probably at lower-end venues or clubs where change is easier, but the biggest players tend to be risk-averse, and for good reason.

“If you already have a pretty complicated but very well-oiled system, say for example the FA or any big football club, you are not going to throw the baby out with the bathwater. Rather you will get there incrementally through digitisation and enhancements. If you run a big business, sometimes it is better to be incremental rather than revolutionary. That is why we won’t see many big sports venues jumping straight in.”

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