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Racing is one of the most popular sports globally – and one of the most capital-intensive. Formula 1, the most renowned racing brand globally, and different teams have pursued different partnerships in the crypto sector to raise money.
While many of these partnerships have been successful, one notable brand recently shut down following a license renewal dispute.
Revving Up One Last Time
Last month, F1 Delta Time, one of the oldest and most popular racing-based blockchain games, announced that it had shut down and ceased operations entirely. The shocking announcement proclaimed that the F1 Delta Time game could not renew its operating license, and its developers had no choice but to terminate its operations.
Launched in 2019, F1 Delta Time was an Ethereum-based game that allowed players to enjoy virtual racing and get rewarded for it. The game was founded by Animoca Brands, a gaming software developer and venture capitalist company based in Hong Kong. Animoca had gotten a license with Formula 1 to develop games for the brand with the hopes of helping the racing behemoth grow its brand value and global presence.
As an Ethereum-based game, F1 Delta Time worked with ETH tokens – which, when converted to the game’s REVV tokens, could be used to purchase non-fungible tokens (NFTs) representing drivers, cards, and special equipment.
The game primarily consisted of these NFT collectibles, although there were also different race modes like “Grand Prix Mode” and “Time Trials” – modelled after real-life races – that allowed players to put their collectibles to the test.
Initial Success, But Subsequent Sputtering
F1 Delta Time was quite successful when it first launched. The agreement with Animoca Brands put Formula 1 among the first global sports leagues to enter the blockchain space, and the very first Formula 1 NFT (called 1-1-1) sold in May 2019 for 415.9 wETH (worth about $113,000 at the time).
That NFT, which featured the first digital car for Delta Time, attracted the highest sum for a branded game NFT that year.
In March 2021, Animoca sold a 70th Anniversary Edition car NFT for REVV tokens worth about $265,000. Around the same time, the publisher sold almost $2 million worth of in-game track segments in Delta Time. That same month, another Delta Time NFT car sold for $288,000 in REVV tokens on the secondary market.
Sadly, even the NFT fever that gripped the world in 2021 didn’t do much to help Delta Time. The game itself didn’t make so much money in the secondary market, with NFT Stats showing that it had attracted less than $15,000 in sales over the last seven days. Compare that to platforms like The Sandbox – also owned and developed by Animoca – which has millions in sales volumes.
Total secondary market transactions for F1 Delta Time’s NFTs topped out at less than $7 million. These numbers were just too low for a game aiming for global appeal.
An Ambiguous Licensing Issue
Despite the paltry sales numbers, the primary reason for Delta Time’s shutdown is Animoca’s inability to renew its license with Formula 1.
The company failed to mention what went wrong with the license renewal, although it appears not to be a case of anti-crypto bias from Formula 1. The sports league has been open to bringing crypto brands as its constituent teams constantly need new sponsors.
Red Bull Racing, the current Formula 1 World Champions, has a three-year, $150 million sponsorship deal with Singapore-based crypto trading platform ByBit.
Crypto exchange FTX also has a long-term deal with the Mercedes AMG Petronas team.
So, if Animoca Brands could not renew its license, the fault might have been with the company, not Formula 1.
Animoca’s Compensation Plans
Now that Delta Time is closing its doors, Animoca Brands has claimed that the plan is to compensate the platform’s users and token holders. The Delta Time NFTs are now essentially worthless, and holders have been clamouring for some compensation since the game shut down.
As Animoca said in its announcement, there are different compensation avenues. The company could offer Replacement Cars, race passes, or other proxy assets from Revv Racing – another NFT-based game owned by the software developer. In other words, you get a token for a token.
The problem with this is that players would be sceptical about anything related to Animoca. If the company failed to get a license renewal for Delta Time, what is the assurance that its other racing-based games won’t suffer the same fate?
Games shut their doors all the time. The only difference here is that Delta Time and its assets were essentially pitched to players as investments. Now that the game is shutting down, most players would like to get their money back. So far, the compensations offered by Animoca Brands seem like cold comfort at best.