As we approach the end of 2023, there is a renewed interest in NFTs. NFT brands are now selling their products in both physical stores and online retailers. Additionally, major blockchain-based games are being launched, and established companies are entering the NFT market. As a result, the use of NFT-based brand building will play a significant role in driving the adoption of Web3 in 2024.
The next wave of successful NFT products is expected to differ from what we have seen before. Rather than being focused on a small number of high-value assets, these products will be produced in larger quantities and sold at more affordable prices, targeting a broader consumer market. They will prioritize direct value creation rather than speculative investment. What’s interesting is that many consumers will acquire and utilize these digital assets without realizing they are built on cryptocurrency technology.
We have already witnessed experiments with mass-market NFTs as digital collectibles from brands such as Nike, Reddit, Starbucks, and even former U.S. President Donald Trump. Similarly, NFT-native brands like Pudgy Penguins, Cool Cats, and Kitaro Studios have introduced “phygital” activations, where a physical product is accompanied by an associated NFT, either linked directly to the product or through a claim code given at the point of purchase. In addition, major players like Ticketmaster and newcomers like tokenproof and YellowHeart have been testing the use of NFTs for event tickets, memberships, and other forms of fan engagement.
These types of products provide an opportunity for consumers who are not familiar with NFTs to experience the concept of digital ownership that comes with this innovative technology. They are typically sold at prices similar to traditional consumer products. For example, tickets cost what one would expect to pay, and phygital activations are generally priced similarly to just the physical product.
While early NFT adoption required users to navigate complicated self-custodial wallets, many of these NFTs now come with a platform design that simplifies the underlying blockchain technology through partially or fully custodial wallet systems. This, however, does not prevent consumers from deriving utility from the tokens and integrating them into their digital identity on social media and other platforms. It also does not hinder their ability to participate in the broader NFT ecosystem if they choose to do so (in fact, they can even transfer their branded NFTs to self-custody if desired).
Furthermore, making digital assets more accessible in terms of both technology and pricing expands the potential market significantly and provides a solid foundation for brands to build upon.
As we discuss in our upcoming book, “The Everything Token,” NFTs offer companies and creators a way to leverage decentralized value creation by transforming their customers into a community. The asset itself establishes a network that connects holders to the brand and to each other. Simultaneously, ownership incentivizes consumers to share the brand with others and contribute to its growth.
For instance, Starbucks Odyssey members have created independent websites devoted to the program and organized unofficial gatherings and events without direct involvement from Starbucks. This sense of community extends into the digital realm as well, with members forming group chats with friends from the public Starbucks server. As a result, community members who wouldn’t have known each other without these NFTs now stay connected daily in both the digital and physical worlds.
This model can be as effective for small businesses and individual creators as it is for major companies. However, it works best when the community is broad and continuously expanding.
For larger brands like Starbucks or Nike to fully benefit from their NFT products, they must eventually make these products accessible to their global customer base. Conversely, whenever a customer wants to join the brand’s digital ecosystem, they should be able to do so. This is especially relevant for businesses with a more localized following.
This implies that the smaller, more widely available NFT products we have been observing are not just experiments; they represent the future. The success of “open edition” creator NFTs earlier in 2023 clearly demonstrated the effectiveness of this strategy for creators. Throughout the year, it has become evident that businesses are also realizing its potential.
Therefore, in 2024, we anticipate brands embracing the use of “small” NFTs on a larger scale. This approach is likely to attract many more consumers to the NFT space.