Non-fungible tokens (NFTs) have been in the news a lot lately, with everyone from Hollywood celebrities to sports stars getting in on the action.
NFTs are unique and can’t be replaced, which makes them ideal for digital collectibles. Because they’re stored on a blockchain, NFTs can also be used to represent ownership of digital assets like art, music, sports highlights and many more. This has led to a surge in NFT popularity, as more and more people look for ways to invest in digital assets. So far the NFT market has been driven by early adopters and crypto enthusiasts, but it’s started to gain mainstream attention as well.
The world of sports is not lagging behind. NFTs are increasingly being used in the sports industry to establish new forms of rights ownership and trading. These tokens allow individuals and organisations to securely own and transfer unique digital assets such as tickets, gameday experiences and merchandise.
In addition, NFTs can be used to monetise fan communities by giving them the ability to create their own games using these digital assets. For example, a sports team might release a line of NFT stickers that allow fans to fully customise their fantasy teams or create more immersive gaming experiences. With its many advantages over traditional forms of ownership, it is no surprise that the use of NFTs in the sports industry is on the rise. But there are still quite a few challenges that need to be resolved.
While NFTs look like a very promising technology, it is still a difficult platform to monetise. NFTs currently lack the kind of high-profile content that typically attracts sponsors and advertisers. Sports broadcasting rights are notoriously expensive, and without those rights this vertical struggles to draw in much revenue from advertisers.
Furthermore, because NFTs are primarily used by amateur athletes and small organisations, there are often conflicts over who has the right to claim ownership of the footage or photos captured during matches or games. This can create major headaches for anyone trying to monetise their content using NFTs, making it a challenge for even the most experienced media companies.
Sports fans have always been passionate about their teams and players, but the rise of NFTs has taken this fandom to a whole new level. Fans can now buy and sell digital assets related to their favourite teams and players, including game tickets, highlights, and even player jerseys. While this new level of engagement is exciting for many fans, it is also rife with speculation and potential for fraud.
While a lot of the NFTs in the sports market are collectibles, some are already offering more value to their owners, like voting rights and other perks. This is something that must become a standard, because in order for NFTs to be successful, they must have a utility. That is, they must offer some practical benefits that users find valuable. Fortunately, there are a number of ways in which NFTs can be useful. One example where NFTs can provide utility value is by unlocking exclusive content and experiences in video games and sports apps.
At Videoflow we are exploring a way to allow sports groups to deploy their professional video content as NFTs that allow their owners access to view the content but not explicitly own it, since it is not hosted on the blockchain. The concept of the high-end NFT video was created to encourage sports franchises and all content owners to take advantage of NFTs and Web3 without sacrificing quality and without risking loss of ownership of their content. After all, if something is deployed purely on the blockchain, it is public and open to everyone. It is inevitable that someone will wish to take advantage of that public and open nature of content on the blockchain, sidestepping ownership to watch a piece of content for free.
This is when the utility of the NFT to access, but not host content, becomes vital. It is no longer about speculation and hope for the value to go up. It is a true utility that provides value in other forms and not only in increasing the token’s price.
While NFTs have a clear benefit and Web3 has a lot of great potential utility, it does not mean Web 2.0 is obsolete. In order for this ecosystem to work and thrive we will have to find creative ways to get the best of both worlds – leveraging Web3 and Web 2.0 to provide a scalable and secure environment for sport franchises and their fans.