The explosion of the digital collectible space, especially tied to Non-Fungible Tokens (NFTs), has been nothing short of remarkable over the past few months.
In a business where there is a rush to the new idea…see esports, gaming, sports gambling, CBD, health and wellness, sports SPAC’s, streaming, cause marketing and social responsibility in the last year alone…the expansion of what was wayyy back in 2018 a quaint industry, collectables, is now top of mind as new revenue streams and global consumer interest keeps being fueled by a digital economy, some of which is tied to the growing phenomenon of the blockchain.
To be clear, the tangible collectable market is also on a renaissance that doesn’t seem to be subsiding either. From sneakers and ticket stubs to signed items and large estate sales, the unique, the abstract, and the buzzworthy are driving big dollars and lots of attention.
“Our Topps 2020 collection, where we brought in street artists to reimagine classic baseball cards was a big wake-up call for where we were going,” explains Jeff Heckman, Global Director, New Business Ventures, at Topps, one key company that is riding the renaissance wave of classic cards, digital offerings and new collections (as well as now getting involved in the NFT space this week with their partner, MLB). “We keep seeing the global marketplace expand, and the interest in both rare and reimagined cards and memorabilia as collectable art keeps rising. It’s really exciting and engaging to be involved on so many levels as a brand and as content creators.”
The NFT business really took off barely six months ago with the NBA’s partnership with Dapper Labs to launch NBA Top Shot, and the launch of digital art tied to action on the court. That has spawned a whole wave of individuals (see today’s launch of the Manning brothers’ cause based Manning Legacy Collection, Tom Brady‘s Autograph or boxing’s Tyson Fury Gypsy King) launching their own platforms to try and get in on the global frenzy.
In the rapidly evolving NFT space, Peyton and @EliManning are now the first retired players to launch their own digital artwork. The Manning Legacy Collection will go live on MakersPlace on 4/16, with a portion of the proceeds benefiting @TackleKidsCancr & @PeytonChildrens.
— Adam Schefter (@AdamSchefter) April 7, 2021
That frenzy has also included other disruptive companies. Take a look at digital horse racing, or Triller Fight Club’s recent launch of not just an NFT from YouTube star-turned-boxer Jake Paul’s knockout of former NBA star Nate Robinson, but of a futures market as well.
That’s right, now someone can buy both that moment and a moment that has yet to happen—the result of this weekend’s fight between Paul and Ben Askren, if there is a KO—for the cool price of $10 million.
Is the digital art collectable space in sports a fad? A trend? A case of the have’s and the have not’s?
Too soon to really see where it will shake out and be bubble or revenue stream. But we also wanted to look at how the NFT market could appeal to brands as a value-add or even a new line of revenue? For example, could you package and promote digital art as content to a core audience and get an ROI?
“I think the packaging of content so that appeals to a mass audience in a format that is not intrusive, or damages the value of a collectable is possible, but is always evolving,” said Chris Lencheski, a Columbia University professor and CEO of Winning Streak Sports, the leading producer and distributor of fan commemorative banners and another company that has seen interest really rise in the past year in the collectable space. “The goal is to be inclusive if I’m a brand, and not overt and intrusive, and that’s the challenge.
If (or as) NFTs continue to grow in value and resonate with an audience that is more and more digital savvy, what would brand engagement look like?
“What we are looking for is that idea that bridges the intersection of art, culture and sport for our clients, and puts the athlete in the middle of the conversation (or token),” said Matt Shulman. VP, Platform Sales & Client Services, A1 Partners, whose clients include both the NBPA and the NBRPA, which represents NBA and WNBA retired players. “For us, it’s a bit like Art Basel in Miami Beach meets the NBA Finals. Only this festival is happening 24/7 globally, payments are not made in cash and we can link the crypto world with the real world for a brand partner. That’s what makes it so important to find the right brand partner and the right brand concept.”
Who would be right for that type of concept to engage?
CPGs seem to be a good fit as they pivot to more value add to cut through the clutter. One that has stood out is Taco Bell‘s “taco art” NFT, with a cause attached and a $500 Taco Bell Gift Card going to the winner.
You can see brands that are elevating their cause marketing using NFTs as a way to pull in ancillary attention, consumer interest and buzz while handling a critical element of philanthropy to their work.
A great deal of the future success of NFT engagement will revolve around two key areas:
Each NFT must continue to be limited to small quantities, maintaining its exclusivity. Limited availability of course drives up value.
Perhaps most importantly, however, is who owns—and therefore and can sell—the actual IP?
As the digital collectable market tied to blockchain continues to grow, exclusivity can be maintained.
However, the seller has to own the content and be able to repackage it. Like streaming rights, digital collectables is a new territory. Going forward, how will a college athlete like Suggs’ and his impending Name Image Likeness (NIL) rights factor in?
“I don’t think this will be for everyone, and just put into any deal, at least not for the short term,” Shulman added. “Do I think there is appeal for large retail, innovative CPG brands and ones that are trying to find a better way to reach a younger audience who is locked into the process? Sure, it comes up in most discussions we have now. It’s a question of value, cost and effectiveness of engagement.”
There have been many “collectable” elements that were part of promotions past that fizzled after market saturation. Beanie Babies, POGs and Tamagotchis all had their moments in the value-add cycle on the promotional side.
Whether the digital collectible world can work for the long term is to be seen.
There is continued and growing concern over potential damage NFTs could do to the environment because of the way they are created. The inefficiency of the Ethereum blockchain, for one, is not a good thing in an eco-friendly world.
But most importantly, how can these become valued partner, or even a new and much needed revenue stream is worth watching—and even collecting—the data and information we have in this evolving world of partnerships.