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Karate Combat’s token giveaway could become the ultimate sports fan engagement tactic

The rapidly growing combat sports league reveals the thinking behind its recently announced DAO ownership initiative which it hopes will become one of global sport’s most innovative projects

Jonathan Anastas (Karate Combat)

Karate Combat, the world’s premier striking league, is set to deliver a massive blow to sport’s established order after announcing plans to become the first league to transition its governance to its fans and athletes by becoming a Decentralised Autonomous Organisation (DAO).

The British Virgin Islands-headquartered combat sports organisation, which has become one of the world’s fastest growing combat sports franchises since being founded in 2018, will launch its $KARATE token in December 2022.

At that point Karate Combat, which has pioneered new production standards by fusing live martial arts action with innovative video game-style graphics created using the Epic Games Unreal Engine, will begin giving away tokens to fans and fighters for free.

Token holders become a stakeholder in the DAO, which gives them a voice in determining matters such as resource allocation, event locations, fighter matchmaking (subject to the relevant rules) and more. The goal eventually is to have 50 per cent of company ownership distributed to fans in this way.

Additionally, starting post-launch, token holders can use the new “Up Only Gaming” app to make fight predictions and be rewarded with more tokens for being successful, without losing tokens for incorrect picks.

Pioneering move

It is a pioneering move that has raised some eyebrows across the sports world. While other leagues have tested the waters with fan tokens – for example by offering enhanced membership schemes and NFTs – none have expanded tokens into a DAO ownership model. Instead, the focus has been on integrating betting partnerships such as DraftKings into events to increase engagement and participation.

For Jonathan Anastas, Karate Combat’s Chief Business Officer, the launch is a natural progression as the sporting world evolves to increase engagement with a new generation of fans who expect to be active participants in the action, having grown-up with videogames and esports – as well as going to festivals such as Coachella – versus old-school “lean-back” TV-centric sports viewing like Sunday Night Football.

“The success Socios has seen with fan tokens across European football, the NFL, NBA and UFC has proven the demand for deeper, tech-enabled fan engagement using new web3 tools,” said Anastas. “It was a matter of time before a league or team went all the way and utilised these new tools to the fullest to give real control to the fans and athletes. We’re thrilled to be the first mover to do so, but we’d be shocked if we were the last.”

“Traditional organisational structures in sports concentrate power in the hands of a CEO, a board of directors and some senior leaders like coaches,” continued Anastas. “This puts key decision-making outside of the average fan’s reach. In a DAO, power and ownership are distributed more broadly, giving considerable voice, and voting power to any fans who hold the necessary digital tokens. These fans will have a real voice in decisions which influence the direction of the league – I can’t think of a better engagement tool for any sports fan.”

The giveaway will begin in early December with an initial airdrop and the launch of an iOS mobile app that allows fans to claim their tokens and participate in the league’s ‘Up Only Gaming’ functions. The league’s app will allow token holders to nominate their favourite fighters to boost their fight purses and $KARATE token holders will be rewarded for their knowledge of the sport by earning additional tokens for successfully predicting Karate Combat bout winners. Unlike sports gambling, where a stake is required and may be lost, token holders simply make their choices and are rewarded with extra $KARATE tokens and voting power for successful predictions.

Livestream record

The DAO launch comes at a time when interest in Karate Combat is at an all-time high after a spike in global awareness, perhaps indicating a rise to become “the next generation’s UFC”.

In August, it was announced that a combined livestream audience of nearly 6.6 million viewers watched Karate Combat 35, breaking the previous record – set just two months previously – by 8.5%, according to the industry-standard Live+3 Day metric.

With Karate Combat’s audience roughly 85% male and highly skewed towards Gen Y and Gen Z born between 1982 and 2010, it’s little surprise that viewers are accessing content via both livestreams and video-on-demand across Facebook, Instagram, YouTube, TikTok, Snapchat and Karate.com as well as through major sports broadcasters in over 100 countries.

Anastas believes the viewership growth in 2022 can be attributed in part to a changing broadcast landscape that switched, post-COVID, towards streaming. Unlike other combat sports leagues who but the undercard on social and hold the best content behind pay and membership walls, Karate Combat believes in an open-source-like digitally driven “democratised” distribution where the full event cards are free on all the top global platforms.

However, Anastas says there are also specific reasons why Karate Combat has been particularly successful, including changes to production and a focus on TikTok.

“In addition to the changes in consumption, Karate Combat’s unique blend of live action combat sports mixed with video-game-styled CGI (using the Unreal Engine) struck a chord with Gen Y and Z men, who grew up on, and play, games,” he said. “For example, the company has invested deeply in TikTok, who, if they survive US regulatory scrutiny, may be the most important new platform for sports media brands.”

Valuable audience

Karate Combat falls under the Mixed Martial Arts (MMA) umbrella, a sector which has over 600 million fans globally, and is regularly counted as among the world’s fastest-growing sports.

Karate Combat’s popularity among those Gen X and Y men under 40 years old makes it an attractive prospect.

Anastas said: “This is the most valuable sports audience and brands have a hard time reaching these guys. Traditional sports have been losing them, for example – even the UFC’s linear ESPN+ audience is over 40. So, to be able to offer such a desired demo at scale is a big lever for Karate Combat.”

Highly monetised

“While we see viewership that is truly global, one of our 2022 goals has been an increased focus on highly monetised and high value marketplaces for sports media rights and sponsorship revenue,” Anastas said. “This has actually meant a greater focus on North America, the UK and the EU as well as Mexico and Brazil. We also entered China for the first time with a Douyin partnership.”

While handing away half the business to fans and athletes through the DAO might be considered a revolutionary act, Anastas said that Karate Combat won’t be pulling its punches any time soon.

He added: “To be honest, we’re planning some of the craziest sh*t anyone’s ever seen in combat sports. The whole sector needs to catch up very, very fast with the access and interactivity demanded by younger fans. Stay tuned!”

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