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Los Angeles Lakers legend Earvin “Magic” Johnson has just bought two new sports franchises—in the metaverse.
Johnson is investing in Beverly Hills-based SimWin Sports, a digital sports league where virtual teams and athletes backed by non-fungible tokens (NFTs) compete in simulated games. In addition to taking an ownership stake in the startup, Johnson has acquired a yet-to-be named basketball team and football franchise called the Los Angeles Magic. Financial terms of the deal were not disclosed.
Founded in 2019, SimWin Sports is among a crop of startups merging fantasy sports with blockchain technology. The league’s NFT teams are owned by well-known athletes and celebrities, from Hall of Fame NFL wide receiver Jerry Rice to former Backstreet Boys singer Nick Carter. SimWin fans, meanwhile, can buy, sell and trade NFTs representing fictional players who can be drafted by the league’s team owners. Those NFT holders can potentially earn money, too, when team owners like Johnson pay their players salaries and performance bonuses.
“This multibillion-dollar business is about to take off and the SimWin model is an excellent way for sports fans to get involved in this groundbreaking opportunity,” Johnson, who will also serve as an advisor to SimWin, said in a statement.
SimWin’s virtual sports contests are largely games of chance. Team owners can pre-set their game strategies and rosters, while player NFT holders may “train” their players to improve their attributes—but player performance itself is simulated through what SimWin calls an “innovative AI performance model.” The digital athletes, in turn, develop over the course of their careers and can go through hot and cold streaks, much like real athletes.
“From a fantasy perspective, for all those people who wanted to own a team—whoever wanted to be a player, manager or player agent—they'll have an opportunity to do that,” Andre Johnson, SimWin’s executive vice president of business development, told dot.LA. (Andre Johnson, a former gaming executive at Sherman Oaks-based Mythical Games and L.A.-based Virtual Reality Company, is Magic Johnson’s son).
The company has sold “dozens” of teams so far, including some for a seven-figure price, Andre Johnson said, while NFTs for players are expected to run between $300 to $600 for fans to purchase. SimWin also plans to generate revenue through merchandise and TV distribution deals, and aims to integrate sports betting through licensing deals with third-party sportsbooks, he added.
The 22-person startup expects to launch its first virtual football season by late summer or early fall, according to Andre Johnson. SimWin has raised $13.25 million in funding to date, according to PitchBook Data, from investors including 1UP Ventures, Animoca Brands, Infinity Ventures Crypto, Bron Studios, Kingsway Capital and YOLO Investment. The firm’s CEO is David Ortiz, a former senior producer on EA Sports’ popular Madden football video game franchise who’s also worked at the gaming studios of Sony and Microsoft.
Other companies are attempting NFT-based sports leagues of their own, including Hermosa Beach-based Fan Controlled Football, which lets crypto owners call the plays in real-life games. Andre Johnson called sports the “biggest form of entertainment,” but noted that most American pro sports leagues only run for a few months each year. SimWin—which says it will run games 24 hours a day, every day—is betting that die-hard fans will engage all year long with its more than 5,000 contests annually.
“We want everything that you would see from a traditional sports franchise,” Andre Johnson said. “All the ways you can generate money, all the things you can do, we're just doing it from a digital perspective.”
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Sports media startup Wave Sports and Entertainment (WSE) has laid off 56 people—roughly one-third of its staff—as worsening economic conditions continue to hit tech startups.
The Santa Monica-based company began laying off workers last week, the company confirmed to dot.LA. A WSE spokesperson said the “restructuring” will allow the firm to focus on “core areas of expertise” like storytelling and league partnerships, with most of the eliminated roles coming from “supporting functions.” The layoffs, first reported by Insider, leave the company with 110 employees.
“As the industry begins to face economic headwinds, this restructuring will also allow WSE to maintain its strong balance sheet position, continue aggressively investing in key growth areas and manage from a position of strength,” the spokesperson said in a statement.
The startup is only several months removed from announcing a $27 million Series B funding round in February, which attracted investors like private equity firm TZP Group and venture capital firm Crossbeam Venture Partners. Star athletes have also been drawn to WSE’s platform; Milwaukee Bucks superstar Giannis Antetokounmpo joined the company’s Series B round as a “strategic partner,” while other athlete-investors include Cleveland Browns quarterback Baker Mayfield and former Duke University basketball star Jay Williams.
WSE produces sports video content that it publishes on social media platforms such as Snap, TikTok and Facebook, reaching more than 115 million followers globally, according to the company. Its brands—which include BUCKETS, FTBL, and HAYMAKERS—offer sports highlights, commentary and athlete profiles, among other digital content.
The company is far from the only tech firm—from giants Netflix and Snap to startups like Albert—that has slashed staff or slowed hiring in recent months amid increasingly precarious economic conditions. Privately-backed companies have cited a pullback in venture funding behind their need to cut costs, with private investors now also feeling the pain of a stock market that officially fell into bear market territory on Monday.
These SoCal Startups Are Getting Ahead of the Game Via Comcast’s Sports Tech Accelerator
A few years ago, language translation startup LetzChat learned that there was a big need for its services in the sports world.
It can take hours, if not days, for a human to translate a given contest’s closed captioned subtitles, depending on the language—and by that point, most fans no longer care about the game in question. But LetzChat’s technology translates subtitles within minutes after the final whistle, co-founder and CEO Jordan Orlick told dot.LA. In 2020, the company inked a deal with the NFL to translate on-demand videos for America’s most popular sports league.
Now, the Westlake Village-based firm is working with some of the biggest names in sports broadcasting, from NBC Sports and the Golf Channel to WWE. Those pilot agreements are the result of LetzChat’s participation in Comcast and NBCUniversal’s SportsTech Accelerator program, which just recently wrapped up. The 12-week program in Atlanta connected 10 startups—including four from Southern California—with executives at the media giant and its sports partners, who mentored those companies’ founders.
Besides LetzChat, the other local participants were Newport Beach’s Ice Cream Social, a platform that helps companies turn customers into brand advocates; Los Angeles-based Movrs, which uses AI to generate biometric data without wearable sensors; and San Diego’s Meetlete, which enables video chats between fans and their favorite athletes.
For these startups, the benefits of the SportsTech Accelerator appear obvious: Founders get one-on-one time with leaders at the likes of NASCAR, the PGA Tour and U.K.-based Sky Sports, who help them flesh out their business ideas and scale their operations if they secure deals with the big brands. But the accelerator also offers Comcast and its partners an early lens into the next generation of innovations in sports tech; the cable giant and Boomtown, a Colorado company that designs and operates accelerator programs, split $50,000 investments into each startup in the program.
“Our connection to sports runs really deep,” Jenna Kurath, Comcast’s vice president of startup partnerships told dot.LA. “It just made a lot of sense for us to be on the forefront of working with startups to bring new fan experiences.”
LetzChat, for example, could help the media conglomerate across many parts of its enterprise. The Comcast-owned Golf Channel, for instance, sits on a “treasure trove” of historical footage that could reach a broader audience if translated to multiple languages, Kurath said. Sky, the European pay-TV provider, could cut costs by using LetzChat’s language dubbing services, as well.
Comcast has also pushed LetzChat to work on applying its technology to local TV and regional sports content, much of which ends up on digital platforms these days. There is currently no regulatory requirement to include closed captioning for such content, Kurath said, but that could change in the future.
“If we can challenge LetzChat to see if that same technology could be used [for regional content], then we can get ahead of what will probably be a mandatory requirement coming up soon,” she said.
Founded in 2010, LetzChat only recently became a rising player in sports. In addition to video subtitles, the 10-person company quickly translates online chats and businesses’ websites into a customer’s language. Its clients include fast food restaurants and auto dealership software companies, according to Orlick.
But sports is now a huge pillar for the business. The startup plans to translate its first live game for the NFL this year and has secured at least 11 deals—mostly pilot agreements—with the Comcast accelerator’s partners. One of them is with WWE; the pro wrestling promotion is interested in LetzChat’s recent forays into deepfake technology, which could make it look like its wrestlers are speaking different languages with their own voices, Orlick said.
“All of these companies in the sports world are the top-of-the-top,” he said. “We don't have the level of access to these partners without the [SportsTech Accelerator] program.”
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