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Esports popularity has peaked with an estimated 29.6 million monthly esports viewers in 2022, an 11.5% increase from 2021. And with a fan base made up largely of young, tech-savvy individuals, the industry is perfectly poised to leverage the potential of the booming Metaverse and Nonfungible Token (NFT) industries to drive a more sustainable revenue model.
Leveraging NFTs and virtual rooms can provide tangible rewards for fans and create a market for virtual assets to create new and sustainable opportunities for esports athletes and franchises to balance the success of their business with fans’ enjoyment of esports .
Esports is prepared for NFTs
In terms of revenue, the esports market has grown significantly in recent years and estimates suggest it could be a nearly $3 billion market by 2025, which is more than double the size of 2021. Traditionally had to Esports athletes rely on a combination of sponsorships and prize money to generate revenue and fund their careers. However, NFTs can act as the perfect medium for these competitors to generate new revenue streams while still offering something of value to their fans.
NFTs are blockchain-based digital assets that contain cryptographically encoded, provably unique data. This makes each one completely different and not interchangeable (or irreplaceable). Despite some vocal resistance, NFTs have seen impressive growth over the last year, raking in a valuation of over $40 billion in 2021 alone.
When built with long-term value at their core and properly marketed, these assets can appeal to both esports fans and NFT collectors, which can bring even more new users to the group.
NFTs can bring recurring revenue in a variety of ways
Recurring revenue is the holy grail for esports teams, allowing team managers to be more confident in building their teams and business models for the future. The ability to offer long-term player contracts means teams can gradually build and thrive over time, rather than losing top talent in bidding wars when short contracts expire.
Aside from recurring revenue, there are many ways NFTs can generate revenue for esports players and leagues. First, these assets can serve as an extension of physical collectibles. Things like trading cards, 3D models, video clips and more can be published in a digital format and transmitted back and forth by fans. Entire markets can be built around collectibles, offering everything from perks in virtual worlds, like specific skins or accessories, to physical access to unique events or merchandise. The variety of traits can create complex motivations for backers to own them.
Because of their unique digital nature, NFTs can be programmed with specific properties, including how their secondary sales work. For example, baked-in royalties mean that whenever an officially licensed esports NFT is resold in any market, a fixed percentage of all proceeds can go directly to the original issuer. For example, an NFT video could be designed so that a small donation is sent to a predetermined wallet each time the footage is played. The same logic could be applied to other forms of media, meaning teams can generate revenue simply by having compelling content for supporters to consume.
Herein lies the true promise of NFTs for sport. Any individual or team can release a series of exclusive content in the form of collectible digital assets and can then realize the recurring revenue potential as these NFTs are repeatedly traded between backers who desire access to the benefits of the NFTs. Of course, if these companies don’t take care to create meaningful collectible items for fans, the market could become overcrowded with inferior goods.
Utility is the key to unlocking long-term retention and loyalty from fans
When done well, utility NFTs can encourage long-term engagement. When done poorly, these promotional releases consist of low-effort deposits. When this happens, consumers tire quickly and revenue streams may dry up. That’s why it’s important to give these campaigns and their assets a unique value and ongoing engagement. This can also be done in a variety of ways to keep fans coming back and encourage greater fan engagement.
There must be clear and direct benefits that users can see in holding these NFTs. For example, NFTs could be used to provide VIP access to physical or online events, discounts on event or merchandise tickets, and even unlock exclusive content from the exhibiting team. The possibilities are many and the implementation ultimately depends on the imagination of the eSports performers and organizers. But as long as these offerings provide meaningful experiences for fans, it’s likely that NFTs will continue to be engaged and traded for some time to come.
Industry leaders have many opportunities to work with NFTs in their models. From the ability to monetize every moment of the biggest and most prestigious games, to the unique ways leagues can engage with their fans to build loyalty and encourage further support, a solid NFT strategy can be supported. Entire content hubs can be developed that manage promotions and collections, providing users with a single point of entry and providing franchises with a clear path to unlock increased revenue and advertising potential.
Using NFTs as a new source of income and sports is an ideal situation. The industry is already digitally oriented and has a generally forward-thinking fanbase. When athletes and leagues alike can harness the power of decentralized technology and publish compelling content, there is a real opportunity for entirely new cash flows to empower brands and expand impact. Additionally, the early movers who take that leap first will see the most benefit, and those who are catching up will look like imitators, not innovators.
Sebastian Quinn is the CEO of jasportsPartner at Talon Esports and a veteran in developing blockchain and emerging technology companies.
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https://venturebeat.com/2022/04/26/how-the-metaverse-could-unlock-sustainable-revenue-models-for-esports/ How the Metaverse could unlock sustainable revenue models for esports