NFT - Will it improve fan engagement?

Remember back in the 80’s and 90’s you could collect football cards of your favourite team and players either in Serie A or the World Cup. You came home, grabbed your collection booklet, ripped the package open, and hoped to find a special card inside. You may sometimes put players in the booklet, but most of the time you just put the cards in your giant pile of cards to trade with your classmates. Those were the days.

These days, you are able to buy and sell digital fan cards called NFT. What is NFT you ask? It’s short for Non-Fungible Tokens. Meaning, NFTs allow ownership and use rights to be demonstrated for any piece of digital content by assigning the content a specific, nonduplicable identifier that is recorded on a distributed database, or blockchain, typically Flow or Ethereum. Ownership of an NFT may include ownership of the underlying digital asset, though most sports NFTs sold to date have no ownership or use rights in the underlying media. Each NFT includes a smart contract whose terms are applicable indefinitely and that executes immediately and irrevocably with each trade

Each NFT is unique in the same way that each limited run of a physical print is individually numbered, yet otherwise identical. In this way, NFTs bring predefined scarcity to digital content. They’re the digital equivalent of printed sports trading cards—which were selling for up to millions of dollars each in 2021 and which have long been a major revenue source for teams and leagues, especially in the US market. NFTs effectively address the same needs as cards, but swap still images with digital stills or video, cardboard with pixels, binders with digital displays (mostly smartphones), collectors’ fairs with online trading platforms, and third-party authentication agencies with blockchain.

Enhancing fan experiences

In 2022, the most common and lucrative application of NFTs in the sports industry will likely be the sale of limited-edition video clips of sporting moments or player cards. The value of each NFT will depend on the prominence of the athlete, the significance of the event, any additional content included within the NFT, and demand. An NFT limited to a single edition of a major event—say, a winning goal, home run, or dunk by a legendary star, bundled with a commentary by that star—could be sold at auction, while the same video but with no additional content and 20,000 available copies would be sold and traded via an online marketplace. This is analogous to some aspects of the art world, in which variants of the same work of art, but with differing numbers of certified copies, have different values.

NFTs are also an opportunity to enhance relationships with fans. Rights holders should consider how best they could apply NFTs to enhance the fan experience by enabling them to acquire and display NFTs of their team, as well as to contribute to decisions such as player of the month (in Japan), or even which songs are played during game intervals (in Italy). In some cases, NFTs can also be used within fantasy sports league applications, with each NFT representing a player who could be part of a team entered into season-long competitions.

Deloitte Global predicts that NFTs for sports media will generate more than US$2 billion in transactions in 2022, about double the figure for 2021. By the end of 2022, we expect that 4–5 million sports fans globally will have purchased or been gifted an NFT sports collectible. Interest in sports NFTs is likely to be spurred by activity in the wider NFT market, including that for digital art, the top five most valuable sales of which had generated over US$100 million by August 2021.

This is a recap of an article from Deloitte: From trading cards to digital video: Sport NFTs kick sports memorabilia into the digital age.

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