NFTs A fad or new beginning in digital commerce & engagement?

NFTs. One of the fastest growing areas in sports & entertainment that you cannot have missed over the last year. According to DappRadar, a platform which tracks cross-platform sales, trading volumes in the first half of 2021 were c$2.5 billion. NFTs are gaining traction.

For sports rights owners especially, having an NFT strategy has become essential and was probably not even on the to-do list 12 months ago, before Dapper Labs and NBA Top Shot exploded in the USA – and many more that have followed.

However, you may well have heard about them but what are they and what are some of the key things to think about for sports rights owners?

What are they?

In summary NFTs are "one-of-a-kind" assets in the digital world that can be bought and sold like any other piece of property, but which have no tangible form of their own. The digital tokens can be thought of as certificates of ownership for virtual or physical assets. Examples of collectibles that can tokenised include trading cards, sports kits, video clips and memorabilia Source: https://www.bbc.co.uk/news/technology-56371912

Things to think about

The premise of having another way of monetising assets digitally is certainly a welcome new revenue stream. However, it is crucial to have an understanding and plan across the assets and rights you control (versus any existing broadcast, digital and licensing agreements). And simultaneously thinking about what is right and will be appealing to your fan-base.

It is important to consider the ways your NFTs will be sold – via a private marketplace hosted on your site, or being one of many on a public marketplace – and the respective pros and cons of these two approaches.

With the main advantage of the private marketplace is the ability to have ownership & control of the site, plus crucially, first party fan data – the holy grail if you are able to move people from your broadcast and social channels and develop a deeper, more meaningful relationship with them which is mutually beneficial.

There are then differing ways of engaging fans, be it challenges and gamification within collectible and trading card style solutions (e.g., NuArca & Rugby League World Cup), through to fantasy-based providers (e.g., Sorare).

Again, depending on the size of the rights owner, fanbase and content they have available, a multi-pronged and non-exclusive approach may fit, in order to cater for different products and not put all your eggs in one basket – see La Liga’s recent deals with Dapper Labs and Sorare.

Timing. To do things right, it will take some time to define objectives, build a marketing and content plan, develop the content (depending on the model with the provider), negotiate and contract, test and learn and then go live and watch the money roll in!

Credibility

Lastly, the credibility and security of the NFT provider is key – as many rights owners are rightly considering what is the right approach for the medium to long-term, rather than taking a fast buck.

The relationship the rights owners have with fans is a precious one and it’s vital the fans are not exploited for short term financial game but have a clear NFT strategy that rewards their loyalty and gives them content they value. In our view it’s also important to have a NFT provider who gives their fans the choice of payment  for their transactions in FIAT currency (i.e. USD, GBP, EUR etc) rather than requiring them to buy unregulated currencies like crypto.

Wrap up

No prizes for saying that NFTs are a fascinating and fast-moving area – with many ways to structure rights and agreements. We believe the applications for the use of NFTs for rights owners are endless from digital content/archive, digitising historical and collectible merchandise, through to ticketing solutions and on to ways to provide additional engagement and activation opportunities to sponsors.

It is a sector we are excited to be working in as we believe the opportunity for fans and rights owners is enormous.