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Esport’s popularity has peaked, with an estimated 29.6 million monthly esports viewers in 2022, an increase of 11.5% from 2021. And with a fan base made up mainly of young people who are technically savvy individuals, the industry is uniquely positioned to exploit the potential of the budding metaverse. and non-fungible token (NFT) vertical markets to drive a more sustainable revenue model.
The use of NFTs and virtual spaces can provide tangible rewards for fans and create a market for virtual assets to create new sustainable opportunities for athletes and e-sports franchises to align the success of their businesses with the joy of e-sports fans.
Esports is ready for NFTs
Revenue-wise, the e-sports market has grown significantly in recent years, and estimates suggest it could be close to $ 3 billion by 2025 or more. Double the size of 2021. Traditionally, e-sports athletes have had to rely on a combination of sponsorships and prize money to generate revenue and fund their careers. However, NFTs can be the perfect way for these competitors to bring in new revenue streams while providing something of value to their fans.
NFTs are blockchain-based digital assets that contain unique cryptographically encoded and verifiable data. This makes each one completely separate and non-replaceable (or non-fungible). Despite some loud setbacks, NFTs have seen impressive growth over the past year, earning over $ 40 billion in valuation in 2021 alone.
Built with long-term value at heart and marketed properly, these assets can appeal to both esports fans and NFT collectors, bringing even more new users into the fold.
NFTs can bring in recurring revenue in several ways
Recurring revenue is the holy grail of esports teams: it allows team leaders to more confidently build their teams and business models for the future. Being able to offer long-term player contracts means that teams can gradually build and succeed over time, instead of losing top talent in bidding war when short contracts expire.
In addition to recurring revenue, NFTs can generate revenue for players and esports leagues in several ways. First, these assets can act as an extension of physical collectibles. Items such as trading cards, 3D models, music videos and more can be released digitally and traded by fans. Entire marketplaces can be built around collectibles that offer everything from perks in virtual worlds, such as specific skins or accessories, to physical access to unique events or merchandise. The many different characteristics can create complex motivations for followers to possess them.
Due to their unique digital nature, NFTs can be programmed with special features, including how their secondary sales work. For example, embedded royalties mean that every time an officially licensed esports NFT is resold in any market, a fixed percentage of all revenue can go directly to the original issuer. For example, an NFT video may be designed to send a small donation to a predetermined wallet each time the recordings are played. The same logic can be applied to other forms of media, meaning teams can make money simply by having engaging content that fans can consume.
Therein lies the true promise of NFTs for e-sports. Any individual or team can release a range of exclusive content in the form of collectible digital assets and can then see the potential for recurring revenue as these NFTs are repeatedly traded between followers who want to access the usefulness of NFTs . Of course, the market can get crowded with sloppy products if these devices do not make meaningful collectibles for fans.
Utility is the key to unlocking long-term fan engagement and loyalty
When done right, help NFTs can generate long-term commitment. When done poorly, these promotional releases consist of low-stakes payouts. In this case, consumers quickly get tired and sources of income can dry out. That is why it is important to bring unique benefit and ongoing commitment to these campaigns and their assets. It can also be done in different ways to build fan loyalty and promote greater fan engagement.
There must be clear and direct benefits that users can see by owning these NFTs. For example, NFTs can be used to offer VIP access to physical or online events, provide discounts on event tickets or merchandise, and even unlock exclusive content from the issuing team. The possibilities are many, and ultimately the implementation depends on the imagination of artists and esports promoters. But as long as these offers convey meaningful experiences to fans, it is likely that NFTs will see continued engagement and exchange for some time to come.
There are many ways for industry leaders to work with NFTs in their models. From the ability to monetize every moment of the biggest and most prestigious matches, to the unique ways in which leagues can engage with their fans to build loyalty and encourage further support, can be backed by a solid NFT strategy. Entire content centers can be developed to manage campaigns and collections, giving users a single entry point and giving franchisees a clear path to leverage increased revenue and advertising potential.
Using NFTs as a new source of revenue and e-sports is an ideal situation. The industry is already digitally driven and has a generally forward-thinking fan base. If athletes and leagues can take advantage of the opportunities of decentralized technology and publish compelling content, then there will be a real chance for brand new influxes of funds to help grow brands and expand their influence. In addition, early adopters who take the leap are the first to see the most benefits, and those who catch up will look like imitators, not innovators.
Sebastian Quinn is the CEO of Yesportsco-owner of Talon Esports and a veteran of blockchain development and new technology companies.
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