Bitcoin’s ten-year birthday has come and gone, and the crypto industry is now more than just a new and exciting movement at the fringes of the tech space. The term “blockchain” still has techs-appeal, but at this point people want to hear about more than just potential. They want to see tangible results, and that requires adoption.
Crypto darlings like Ethereum, Cardano, Zcash, and EOS are finding it difficult to gain meaningful traction despite what the screaming headlines might suggest. After all, going from 100 to 200 participants shows 100% growth, but doesn’t mean much in absolute terms.
At the same time there are a whole host of traditional companies that have outdated business models, but massive user bases. These incumbents often struggle with understanding changing customer profiles or are hamstrung by operational limitations, and while their bases appear strong, they could be in danger of losing market share and/or going instinct.
Before 2018 scared everyone off the ICO, the concept of the reverse ICO was gaining steam. Companies with an existing user base and steady revenue streams were beginning to consider implementing blockchain and related concepts in order to revitalize their businesses.
While the process might be in need of some rebranding, the fundamental concept is solid. Here are some traditional players that could/should benefit from a blockchain play.
Spotify went public with a direct listing on April 3, 2018. This was an unorthodox approach and made Wall Street take notice. Still, over the past six moths Spotify has been on a steady downward path.
Spotify’s issues have been well documented. Due to very unfriendly deals with major record labels it has had a tough time becoming profitable. Already, we are seeing Spotify trying to diversify in order to escape the punishing royalties split. Still, when you look at its Asian market counterpart (Tencent Music) Spotify is way behind in terms of establishing an ecosystem. It is the social component that has been giving Tencent a major revenue boost.
It is not easy to establish a profitable ecosystem and it will not be easy for Spotify to compete with Tencent if and when they come head to head, but blockchain can give Spotify an edge.
For Spotify, this would be a way to catalyze its indie artists efforts, as well as, create a platform for dApps unlike any other. They could incorporate features of BAT, Steem and the like, all with an existing customer base. Its large userbase would enable to generate network effects that rival that of the Apple ecosystem and shift the landscape of the music industry.
Nintendo is one of the titans of the video game industry: but over the last year, and specifically since the Fall, it has been suffering from a steady price decline.
Nintendo’s death certificate has been signed and proved wrong so many times, that Keanu Reeves’ character should wear a shirt with their logo in the latest John Wick movie. Every time PlayStation or Xbox, or any other game-industry player raises the bar, Nintendo adds an entirely new dimension to industry.
This was an incredible feat for several reasons: it rejuvenated a classic brand; it successfully implemented AR technology; and it helped Nintendo branch out into mobile. At one point the buzz around the game increased Nintendo’s capitalization by nearly $17 billion. Still, one of the biggest knocks against the game was its lack of p2p interaction.
Now imagine if Nintendo put PokemonGo on the blockchain and there was a marketplace where users could buy and sell unique in-game items. While projects like DMarket and CryptoKitties are trying to either trade some other publishers’ items or create a brand out of thin air, Nintendo could have both without much effort.
With 4,000 patents for mobile gaming and legendary gaming brands, Nintendo could create a gaming ecosystem like no other.
Some of the other console developers and game publishers are wary of cannibalizing their revenue stream, but Nintendo is forced to innovate because they are under a constant threat of being pushed out.
If Nintendo moves to a more in-game economy business model it would have an early mover advantage and be able to fully capitalize on its brand recognition and technology. Blockchain would enable it to create a marketplace that is fundamentally different from what its competitors are offering, increasing user engagement, and successfully monetizing it.
Simon Property Group
Simon Property Group is one of the biggest mall operators in the US. However, with brick-and-mortar business being forced to move online or file for bankruptcy the company has had a rocky time.
While real estate has gotten a lot of attention in the blockchain space, it has mostly been from a tokenization angle. With the STO concept becoming more popular, tokenization efforts have been gaining steam. But for a $63+ billion public behemoth, raising capital is probably not the most pressing issue.
With foot traffic dying off and customers window shopping before buying on Amazon, mall operators are finding it more difficult to fill the floors and maintain margins. Some have already started to diversify.
For example, Simon Property Group could implement something similar to a Basic Attention Model, but in this case, reward time spent on location.
With IoT technology advancing, incentive models could range from paying for receiving promotions to proof-of-location mining.
While this is all hypothetical given the steep downward trajectory of mall traffic, operators may be forced to adopt some novel approach to gain an edge. In the end, this will not stop the ultimate decline of malls, but it could slow the rate of decay and also ease the transition to more diversified real estate use that is already underway.
Collectors Universe is one of the biggest players in the collectibles grading and authentication market. Yet, it has been experiencing a drop off over the last year and has been up and down over the last six months.
While the sports collectibles industry has already started experimenting with blockchain, and it is natural to expect this segment to grow and expand, the grading and authentication segment has been lagging behind. Sure, there have been some projects, looking to solve issues in the space, but overall it has been relatively quiet.
However, if you consider how active blockchain has been implemented for similar purposes in the art industry, you will see the potential. Platforms such as Artory and Portion have been used with highly publicized success for provenance and auction services. This is only the beginning.
In the world of collectibles, the price differential based on a grade is very significant. For example, consider the price differences for PSA (part of Collectors Universe) graded cards from a 1951 Bowman set.
If, for some of the above companies implementing blockchain technology is about taking advantage of new market opportunities, for Collectors Universe, blockchain is a vital defensive play.
There was a time – not so long ago – when Microsoft was being written off, as a company that was not able to change with the times. However, since Satya Nadella took charge, Microsoft has made a mighty comeback, even though its stock price has not fared well of late.
Microsoft is no stranger to the blockchain space. It has launched its Blockchain Workbench and has been working on connecting its other products while earning high marks in the Blockchain-as-a-Service space.
Still, this is more of a B2B endeavor and some would argue not exactly what blockchain was meant to be used for.
However, Microsoft has a juicy B2C play waiting for the company to capitalize on it. It lies in its search engine and browse products. According to Net Marketshare, Google dominates the search engine market with Bing coming in as a distant third at 4.54%.
Google had $78 billion in revenue in 2017 from the search business, while Microsoft brought in $1.8 billion in revenue for the same year. Clearly for Google search ads are a core business, while for Microsoft it is just a cherry on top. So, while Google will do anything to protect its revenue stream, Microsoft can potentially sacrifice for a bigger share of the market and new business opportunities. This is where blockchain comes in.
There are already projects like BAT that offer a business model that rewards users for watching ads. However, despite BAT featuring its own browser its current market reach is rather small. Now, Microsoft’s browser (Internet Explorer or Edge) may have less than 11% market share, but think of all the computers that have the browser pre-installed, even if it is not used.
This strategy would be very similar in its strategic importance to Google’s Android play. It made the operating system open source, sacrificed revenue in the short term, but was able to capture a vast chunk of the market.
At the end this was about getting its products (as opposed to Apple’s) in the hands of people. A little bit of immediate revenue sacrifice for a long-term play.
Microsoft would potentially be able to do the same.
Furthermore, given that TRON plans to integrate its BTT token into the µTorrent Windows client to take advantage of the user base, Microsoft should be able to integrate blockchain into one of its oldest products. The revenue at stake and the potential rewards, should make this well worth it.
Mainstream Blockchain Integration Should Be A No-Brainer
Blockchain has definite business potential across several industries. On top of that it has a certain appeal that is able to create buzz and revitalize interest in a brand.
So, while the majority of the market’s attention has been on promising startup projects, the incumbents deserve no less, if not more attention. Dominant market leaders, like Spotify and Microsoft have the user bases to maximize the impact of DLT technology. While upstarts are working to grow an ecosystem, these giants already have theirs and just need to implement new innovations to capitalize on them in a new way.
The ones that do will secure a promising future for themselves, and the ones that don’t will risk getting left behind.
The author is not currently invested in digital assets.