NFT Master 001: NFTs in Consumer Consciousness

My aim for NFT Master is for it to be a series to help inform about NFTs and give an overview of many things in the market but also be a normal voice in an area that can be very off-putting with jargon to newcomers. This will be an occasional series written in a less formal way than my professional output, but one that I hope will be of interest.

If you work in the media biz, you won’t have escaped the last 12 months without hearing about NFTs. This is for good reason. Monthly spend on NFTs massively ramped up in the middle of 2021, hitting a high of $4.5 billion in August, with the industry worth $18 billion for all of 2021.

For comparison, WWE’s revenues hit north of $1 billion for the first time in 2021, with NFT total revenue eclipsing other big entertainment brands like Fox, Lionsgate, and AMC Networks.?

This heady feat was achieved despite the majority of Americans still not familiar with what an NFT is. A study that I designed with GetWizer found in January that 50% of US consumers aged 15+ were hadn’t heard of NFTs, down from 63% in the research wave conducted in July 2021. Another study, conducted by Hub Entertainment Research, found in January that 44% of Americans 13+ were unaware of the phenomenon.

Familiarity is also not strong overall, but gains the younger one gets. GetWizer found that one in four people in the US knew how to buy an NFT, a strong proxy for familiarity. Hub found a very similar proportion (27%) were confident that they could explain what an NFT is.

This suggests opportunity and is why every media and entertainment company, from Disney to the NFL, have created NFT positions within their organizations.

I’m not here today to explain the technical details about what an NFT is in minute detail. Every title under the sun published a “What are NFTs” piece in 2021 explaining the technology.?

What’s important to understand is that NFTs are digital but have the same licensed rights as any physical equivalent. If you were to buy a pack of Pokemon cards, it would be illegal for you to scan the image of a card in your pack and sell merchandise based on it.

The same principal applies for NFTs only they exist in the digital realm. Once you figure that out, the world of NFTs becomes a lot clearer.

Which is good because the technology can be applied to almost anything. This makes understanding the concept difficult because we are conditioned to think of things along product lines: trading cards, books, video games, sneakers etc. Yet NFT is a term used to describe a digital item that can exist as an image or a video, an avatar or a sound, a video game item or a pass enabling exclusive access to events, which adds to the confusion.

Much of the popular attention paid to NFTs has so far been focused on their collectible functions. Unique one-of-one images command a high premium (the jury is out on whether this is boosted by money laundering from organized crime, drug cartels and other ne’er-do-wells given crypto’s current unregulated status), which command a high media attention, but this isn’t what will push NFTs to mass consumer status.

What will is a combination of sating consumer desire for collectibles in a more sustainable way (within the next year or so most platforms won’t be massive energy consumers but all consider how digital ownership will remove so much waste in terms of packaging and shipment) but also adapting the technology to other formats like a move back to content ownership from the current model of digital rights licensing.

To achieve this, entrants to the NFT market must follow the lead of the likes of products such as NBA Top Shot and Panini and eschew cryptocurriencies as a payment system. Crypto adds a layer of complexity that forms a considerable barrier to entry for many, and that barrier isn’t shifting even as NFT awareness grows. Making your product available for purchase with both a credit or debit card and crypto is the way to go to reach mass adoption.

2022 is going to be the year when brands jump into NFTs. Consumer awareness and knowledge is going to grow, and adoption will boom as it goes mainstream (aided by climate change fears which I believe are going to seriously ramp up given the crazy weather patterns we are seeing and the UN’s next report).?

NFTs offer a new revenue frontier for all brands and they’re going to embrace it; talk about the format isn’t going to die down. Consumer education will grow as will the sanitization of the market. Revenues will reach new heights in 2022 and coming years as awareness and familiarity grow and new products are released - this is only the tip of the NFT iceberg.