Today’s guest columnist is Santiago Jaramillo, chief product officer at GameOn Entertainment Technologies.
At times over the past six months, it’s felt like people have been asking the same question about NFTs: Are they here to stay?
While some recent offerings may have tried to capitalize on the trend as a cash grab, and much of what is being sold today will lose value or even become “digital trash,” non-fungible tokens (NFTs) are not a fad. The intersection of the properties of blockchain technology and the products and experiences unique to the digital world will unlock new possibilities across a variety of industries and entertainment vectors. Of course, people will still roll their eyes at the thousands and even millions of dollars spent on digital collectibles, but they did that with trading cards and other tangible collectibles that still sell for millions today. Is there any difference between paying $5.2 million for a highly sought-after piece of cardboard and a digital highlight in high demand?
One of the most powerful features of NFTs is that they allow everyone participating in an experience to capture the value of the economy they themselves are creating. Sports fans don’t want to simply be passive viewers—they wager on their favorite sports, argue amongst each other about on-field tactics and performance, control their favorite players in video games like FIFA and Madden, and flaunt their apparel and memorabilia.
Similarly, the community behind NBA Top Shot, for example, doesn’t want to be seen as “consumers” or “buyers.” Such fans want to be part of the story—it’s how eight collectors received a once-in-a-lifetime experience at Game 5 of the NBA Finals, and how owning $BAR Fan Tokens give FC Barcelona fans access to unique real-life experiences like sharing tapas with players. This new relationship to digital content will shift the current paradigm of closed economies and one-way transactions between a consumer and a publisher. People will see digital goods in a different light, and they will expect the agency they have over digital content to be something more akin to their control over the physical goods they own.
Not all NFTs will be created equal. The products trying to profit off the technology without giving it much thought will fail to create a sustainable business model. For me, two of the most important elements for a winning NFT product in these early days are 1) the existing culture around the NFT’s domain and 2) the experience.
The existing culture is what allows for a shared understanding of value and connoisseurship of what makes a great play, a memorable match and a meaningful record. These common bonds are a necessary precondition for a winning NFT product based around collectibles (which is by far the most common use case of NFTs so far).
We also can’t underestimate the power of the experience being built around an NFT, particularly the meta. People like me know this from the gaming world; I spent 10 years at Electronic Arts developing EA’s FIFA franchise into what it is today. Some gamers like discovery and some like competition, but two big motivating factors in gaming relevant to NFTs are what is called a completionist motivation and the achievement of status. Wanting to “catch ’em all” is a real driving factor for action. Completing an NFT challenge of finding the right collectibles and combining them the right way is a form of gameplay. It’s the same reason people are breeding and racing digital horses via Zed Run. For brands and companies, figuring out the nexus of experiences that capture the desire to play with the content is a huge untapped opportunity.
It’s already evident in sports. The natural gravity that pulls fans into more than just watching is a big reason the team at Dapper Labs and I saw such potential for blockchain technology and NFTs.
NBA Top Shot offers traditional collectors something new to seek, sell and trade, and a way for brands, leagues and players to have greater involvement without going through a third-party publisher or company.
The NBA is this amazing highlight-producing machine. Sports fans love bragging about “I was there when…” because it offers status in a community with a shared passion. Creating highlights with the blockchain technology of authenticity, verifiable scarcity and true ownership was a big part of why highlights as collectibles made so much sense. We also made sure to package these highlights in a way that evoked the same feelings of pride and ownership as an autographed Peyton Manning football in a display case.
Thanks to social media, NFTs can in an instant unlock a community of like-minded individuals, whether they’re fans of the same team or player, avid collectors looking to boost their status and reputation, or the guy looking to turn a profit. If I unpack a rare LeBron James highlight from Top Shot, I can post about it on social media and tag @KingJames himself, who may share it with his 49.9 million followers. I am now “the guy with the rare LeBron James highlight” and will have plenty of suitors to purchase it from me—to either be that guy themselves or to turn it into a profit. You can’t get that scale from a basement full of game-worn jerseys, nicked baseballs and autographed headshots.
With today’s technology, fans who want to be part of the story are looking for a more intimate connection to players, teams and leagues. You don’t need NFTs to do that, but they’re one innovative way of doing so.
Before joining GameOn, Jaramillo worked as head of sports at Dapper Labs and was creative director for the FIFA franchise at Electronic Arts (EA).