After the hype, NFTs find their purpose: revolutionising digital asset management
Justin Wenczka is the CRO at esports and video entertainment platform Verasity.
As with many new technologies, NFTs have been through an initial hype phase, with notable tweets, digital artworks and popular viral images sold by their creators for staggeringly huge sums.
Many onlookers were justifiably skeptical, and the puzzling name was only one part of the problem.
Obviously, the argument will continue to rage over whether the certified ownership of a significant tweet or a famous digital image is a worthwhile investment.
The baseball cards of the future
These days, the kind of devoted collecting impulse that once made baseball and football cards a phenomenon has largely shifted into virtual gaming assets – think of Fortnite skins and battle passes as the most obvious example.
In-game purchases accounted for 74% of game publishers’ global revenues of $159 billion in 2020, according to Newzoo. That’s $118 billion, and that’s a big deal.
Cosmetics – as gear, weapons, outfits and similar gaming-related purchases are known – are the lynchpin of a vast in-game economy, but outside the walled gardens of those games, their legitimate value is dubious and complicated.
Whereas pre-digital collectibles spawned their own secondary trading market, the trading of digital assets and accounts mostly takes place on the black market and is not generally supported by developers, who have their own in-game revenues to protect.
The picture is a messy one: huge revenues on the one hand, but on the other, a limited user experience, no transferable value and a magnet for fraudsters.
But imagine if esports or major variety games had their own NFT marketplaces, where digital merchandise could safely be sold and resold – like an iTunes for gaming merchandise and content.
Without even touching the in-game market, game publishers and esports promoters can open the door on a whole secondary world of branded out-of-game products, from limited edition collectibles to digital cards of your favourite characters or gamers.
What about the publishers?
To-date, major games publishers have held off on allowing their creative to be minted as NFTs, essentially for these reasons their in-game cosmetics are often the product of exclusive third-party deals; and NFTs can be easy prey for fraudsters.
These are valid objections, but technology now stands at a point where we have the answer to each of them. An accredited marketplace built on blockchain offers perpetual licensing for the creator. Proof-of-view technology verifies the authenticity of the NFT across its lifespan. This can generate long-tail revenues for publishers and engagement and collectability for fans, while cleaning up and consolidating the market for all.
But that’s the bigger picture. In the meantime, NFTs are coming to enhance the variety of gaming and esports experience, and $118 billion says fans are going to be very interested.
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