Non-Fungible Tokens (NFTs) have made their grand entrance onto the world stage. The battle is no longer for awareness of the medium — instead, it’s for acceptance of the fact that NFTs are good for a lot more than showing off digital art. Fortunately, NFT innovators aren’t just waiting for the mainstream to catch up with what they’re capable of. Instead, they’re defining the next generation of NFTs with a unique combination of practical utility that’s already making them an indispensable part of Web3 (the next iteration of the web being ushered in, which leverages blockchain technology, open-source applications, and the decentralization of data and information) — and a compelling path forward for entertainment brands.
What Is the Next Generation of NFTs?
Given their explosive growth, it’s easy to see finding success in the field of NFTs as a moving target, especially for brands that are currently on the outside looking in. Should you make a curated set of unique avatars? A token that ties in with a piece of real-life merch? Or maybe even an AI NFT that unlocks access to a unique, generative piece of software? Thankfully, there’s no need to guess.
We run our own blockchain-based collectibles marketplace, and we asked our active user base where they’d like to see NFTs head next. Over half of the respondents said they want to see more utility from NFT programs. When we ran the survey, a quarter of NFT sales volume in the preceding 30 days was for NFTs with both physical and digital utility, a marked uptick over the 14% of total sales volume that type of NFT has represented historically.
In short: people want NFTs that do more and they’re putting their money where their mouths are.
Utility NFTs Are Already on the Rise
Let’s back up for a second: What do we mean when we talk about utility NFTs? The term refers to blockchain tokens that have substantial use beyond conferring ownership of a digital asset, (putting them in relief against some of the best-known NFT lines such as CryptoPunks). In the case of our own collectibles marketplace, our utility NFTs represent ownership of real-life goods — if you own the token, you can redeem it to take possession of the physical thing from our vault.
Other common applications for utility NFTs include giving owners access to exclusive communities or events; for instance, Fox’s new Krapopolis show from Rick and Morty co-creator Dan Harmon lets fans purchase a Krap Chicken Fan Pass to participate in the show’s creative process — including a token-gated viewing room that gives holders early access to animatics and other insider previews of what’s coming to the TV network later this year.
Utility NFTs can also grant access to real-life opportunities. This is exemplified by the Paris Saint-Germain Fan Token, which allows holders to vote on choices that impact the team, including the design of its new stadium roof ridge, and also provides access to holder-exclusive events. This clever combination of a very useful NFT with one of the most beloved brands in sports combined to make it the top fan token in June 2022 with a sales volume surpassing $15 billion.
NFTs Are the Future of Fandom
Adding more layers of utility to NFTs will make them an even more powerful complement to fan culture. On top of the well-established desire to amass and trade collectibles of the brands people love, we’ve already seen that NFT owners are eager to do more. This could take many shapes, some of which are already clear and others that are only now coming into focus.
As shown by Krapopolis and Paris Saint-Germain, tokens are a great way to give fans a new way to engage with your brand while simultaneously opening up a new revenue stream. But the possibilities go even further still. Imagine a token that lets fans own an exclusive way to interact with their favorite character via voice-synthesized chat. Or a token that lets fans generate art trained on stills, concepts, and other images from your brand. Perhaps they sound far-fetched — but AI NFTs have already made these ideas into realities.
How potential forms of regulation will impact the growth of NFTs, of course, remains an open question. However, current trends in tech legislation are tending toward protecting creators. Like any new and emerging medium, it’s worth approaching NFTs with caution. There will almost certainly be some bumps along the way, but the growing popularity and uses of NFTs even in these early days prove there’s no going back.
The only missing element is your brand.