Why Brazil’s Top Esports Team Loud Sees 'Massive Opportunity' in Web3

The most-tweeted-about esports and gaming team so far this year isn’t a Western giant like FaZe Clan or G2 Esports—it’s Loud, a buzzy Brazilian upstart that is finding fresh ways to harness its hyper-engaged audience. And those ways increasingly revolve around Web3 technology and how it can better connect the team with fans.

Loud, described by publication Dexerto in 2021 as the “biggest esports org you’ve never heard of,” has quickly grown from a regional player into a global presence in the video game world. Now the team has launched a new parent company, Spacecaps, with divisions focused on Solana-powered NFTs, crypto-fueled games, and tokenized incentives for fans.

As Decrypt recently explored, esports teams are making a significant push into the crypto space via brand partnerships, NFT drops, fan tokens, and metaverse experiences. But many of the best-known esports teams are still losing money today, and are heavily reliant on sponsorships to keep them afloat as the industry gradually gains mainstream traction.

Web3 offers potential ways to build more mutually beneficial relationships with fans and overhaul the esports team model, Loud co-founder Matthew Ho told Decrypt.

“We started identifying ways in which we can go direct to consumer, and create experiences that would directly add value to our audience,” said Ho, “and in doing so, allow us to find a more sustainable way towards monetization and solving this massive issue that you have within the realm of esports organizations’ business models.”

Latin American esports fans are known for being passionate and highly engaged with their favorite teams and players, thus catapulting Brazil’s regional squads into the global conversation. But Ho said that they’re also more open to crypto and NFTs than many Western gamers, which have pushed back against blockchain-based games and NFTs.

He pointed to the heavily unbanked audience in Brazil, and unstable local currencies more broadly across Latin America. To many gamers in the region, Ho suggested, cryptocurrency is a “much more valid space for their holdings” than traditional currency and banking, and that the “much more positive” sentiment has extended to NFTs and crypto gaming as well.

“We've been able to find all of the signals to keep pursuing and chasing [down] this rabbit hole,” said Ho.

Making noise in Web3

Spacecaps expands beyond Loud’s focus on competitive gaming and streaming content with six additional, complementary businesses. There’s Sundae, for example, a creative and production agency that has worked with brands like Amazon, Samsung, and Netflix. Outplay is a studio that creates interactive content for proto-metaverse games like Fortnite and Roblox.

But other Spacecaps companies have a clear Web3 focus. Snackclub—which itself raised $9 million in May—is a decentralized autonomous organization (or DAO) focused on Web3 gaming. Members can earn token rewards via play-and-earn (or play-to-earn) games, as well as vote on investments in gaming projects.

Dropull, meanwhile, is a team developing a gaming-centric NFT marketplace, wallet, and other tools for creators, while mobile game studio Monomyto has developed a play-to-earn game called Gunstars—similar to Supercell's Brawl Stars—that supports Solana NFTs. And Druid is a creative marketing firm that works both with big brands like Google, but also Web3 companies like fan token platform Socios.

That’s a lot of moving pieces, but it’s easy to see how they can collaborate on initiatives like esports team NFTs, play-to-earn games, token rewards, and sponsored interactive content for metaverse game worlds. And instead of one big company trying to do a lot of different things, Spacecaps’ approach lets each team specialize under a shared umbrella.

There are a couple of particularly compelling Web3 products in the mix. One is a token-powered fan engagement platform for Loud that will reward enthusiastic followers for their contributions.

Ho said that the platform will identify the largest backers in Loud’s community and provide incentives for them to create content and spread the word. Spacecaps will work with brand partners to provide redeemable rewards that could range from free food to a car, Ho suggested, offering tangible, crypto-fueled benefits in addition to status within the free fan community. And users won’t have to be crypto-savvy to use it.

“They continue engaging with our content as they normally do, but in doing so, they're leveling up and getting rewarded for it,” said Ho. “Fans are now incentivized to collect these Loud and team-based NFTs, which actually accelerates their progression and opens them up to more rewards.”

Another initiative is a custom multiplayer role-playing (RP) server for the PC version of Grand Theft Auto V called Cidade Alta. It’s been modified to feature Solana-based NFT versions of exclusive cars and weapons that players can use and trade, enabled by Dropull’s Web3 tools.

A Grand Theft Auto (GTA) RP server lets users jump into a shared online world and control a customizable background character (typically a non-playable character, or NPC). It’s a unique twist on the typically violent and chaotic GTA experience, plus it’s been a huge draw for streamers on Twitch, sometimes netting hundreds of thousands of total viewers at a time.

Spacecaps’ rendition adds an NFT twist in the form of permanent item ownership. Ho said that Cidade Alta has been a valuable “proof of concept” for Spacecaps’ NFT growing ambitions, and that its limited-run NFT drops have each sold out in less than a minute each time.

Beyond LatAm

Spacecaps is on the verge of rolling out its Web3 products to a broader audience. Ho said that the Loud membership and engagement platform will launch around the middle of this month, Dropull’s NFT minting tools will debut around the same time, and the beta version of play-to-earn game Gunstars is also nearing release.

Brazil’s engaged and crypto-friendlier audience has arguably accelerated Spacecaps’ Web3 plans, but could this kind of model work for gaming and esports organizations elsewhere? Jason Yeh, co-founder and general partner of early-stage Web3 venture firm Patron—which led Spacecaps’ seed round—believes so.

“They’ve presented it in a way where it actually adds value directly to how fans are engaging. I don't think that's necessarily specific to Brazil or Latin America,” Yeh told Decrypt. “If you can actually demonstrate real value to your users and give them a good experience, then there shouldn't be this dislike for something just because of the technology it's using.”

Esports teams have thus far had mixed success in launching NFTs, in part because of dislike and distrust from gamers. G2 Esports’ rollout of a Solana-based membership club earlier this year caught flak from some fans, and the NFT avatars—which also serve as an access pass to G2’s Web3 community—now sell for a fraction of the original mint cost in SOL.

Ho said that G2’s mistake may have been focusing on exclusivity for a small group. By implying that only people who spend money on NFTs belong in a special club, the initiative potentially excluded a large chunk of G2’s sizable, international fanbase.

Loud’s approach with Spacecaps is to make it easy for fans to participate—and try to reach millions of users in the process, but without rushing into anything, said Ho.

“There’s a massive opportunity here," he said. "It’s ‘let’s do this right,’ versus ‘let’s do this now.’”