Sorare, the symbol of an entire sector

Sorare undoubtedly stands out as the most widely recognised "crypto" start-up among the general public. This blockchain-based fantasy games platform primarily offers a collection of digital football cards, evoking the concept of Panini cards, while also offering a strategic game based on the actual performances of football players.

The year 2021 was marked by an impressive fundraising of €640 million, taking its valuation to €4.1 billion.

This colossal sum places immense responsibility on the shoulders of CEO Nicolas Julia and his 160 employees, elevating them to the status of symbols of the digital assets sector, particularly in the eyes of the authorities. Sorare has gained such prominence that the law supposedly creating a framework for Web3 games (the Jonum law) has been renamed by some as the "Sorare law".

Sorare's concept is simple: using blockchain technology, the company guarantees the uniqueness, traceability and authenticity of each card, thus giving collections a tangible value and guaranteeing players exclusive ownership of their items. What's more, these cards can sometimes be resold at a premium.

Sportsmen's image rights paid for at a premium

From an economic point of view, Sorare has adopted a two-pronged strategy: to profit from the initial sale of the cards and to receive a 5% commission on resales. By initially focusing on football, a sport with a worldwide following, Sorare was able to attract a diverse audience, ranging from football fans to crypto investors. The start-up then expanded its offering to include baseball and basketball (NBA) to conquer the US market.

However, exploiting sports image rights comes at a considerable cost, as evidenced by the deal signed with the English Premier League in 2022, valued at €35 million per season, according to Sky News. A financial abyss, even if many contracts are being renegotiated since the slowdown in the NFTs market.

"Sorare made the choice to tackle very popular sports, particularly in the United States, which is very expensive when you want to conquer new markets," points out Julien Bouteloup, who owns many Sorare cards via BlackPool, a fund specialising in NFTs.

Despite the fact that Sorare claims more than three million registered users, its active base is smaller. Around 72,000 unique users played with paid cards in September 2023, according to Sorare Data. 172,000 played at least once in a free competition.

Financially, Sorare generated €4.9 million in September 2023 from the sale of cards on the primary market, in addition to commissions levied on sales of €10.8 million on the secondary market.

"Sorare generates more or less the same as when it started, but the size of the teams has increased tenfold and acquisition costs have soared, so inevitably business is much harder to sustain," points out Julien Bouteloup.

Limiting exposure to crypto cycles

While the price of cards sometimes reached several hundred thousand euros during the NFTs boom between 2020 and 2022, this trend has now contracted considerably. The start-up must now adapt to a more reasonable market and continue to expand its user base. Except that Sorare remains closely tied to cryptocurrencies...

The company is actively working to distance itself from them and has worked hard to simplify access to its game. Since August 2023, for example, it has been possible to buy Sorare cards with a simple bank card, instead of cryptocurrencies, removing barriers in the user experience. "This is probably the way forward to expand its audience," says Nicolas Pouard, director of Ubisoft's innovation lab.

It has become clear that Sorare, having enjoyed initial success, now needs to evolve to future-proof its business model. While blockchain technology played a crucial role in its initial appeal, the company must now broaden its horizons beyond this niche to consolidate its position in the sports and games industry.

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Activity in September 2023 (source Podium/Sorare Data):

• Active players: 72.000
• 550,881 cards exchanged
• 44,122 separate card buyers
• 4.9 million euros worth of cards sold on the primary market
• 10.8 million euros worth of cards sold on the secondary market