NFTs in Sports and Entertainment

Two industries that have been lead by users and early adopters of NFTs are sports and entertainment.

The sports and entertainment industries are large and growing global markets that are heavy users of digital technology. They also have large, enthusiastic and intensely loyal groups of customers, more commonly known as fans. Sports franchises and record labels, for example, are seeing huge opportunities to directly engage with their customers and to offer new products and experiences through the new digital asset platform of NFTs.

The use cases of NFTs cover a wide range of applications from collectibles to fan experience, including virtual participation and ticketing and access. There are also opportunities for reinventing financing and sponsorship by using NFTs to create property rights and track identity, activities, and other specific information that relates to the artistic product or event.

While many new technology companies and startups are developing these innovative products and services (such as Anamoca Brands, Dapper Labs, and Opensea, to name a few), the lead users of NFTs have been the global sports and entertainment franchises. This is largely because these franchises, which are often billion dollar plus businesses, already have large established consumer (fan) bases and are engaged in an intensely competitive industry. New digital technology platforms, which is what NFTs represent, are a clear frontier for competition by building a new platform for digital engagement and service delivery.

Sports

On the sports side, the early adopters in this space have been some of the world’s major big name sports clubs, such as the leading football franchises and sports leagues in the US. In Australia, almost all major sports codes have already launched, or are planning to soon launch, NFT-based products and media strategies.

Entertainment

The entertainment industry, and particularly the music industry, has been an extremely early adopter of blockchain technology. In many instances blockchain technology has been used as a way to solve problems associated with the costs of complex administration, such as metadata adding and updating, royalties, and licencing. These capabilities occur on top of the more obvious advantages of digital platform infrastructure, such as the content delivery of music files.

NFTs enable a more distributed and decentralised platform for content production that offers powerful and direct (i.e. disintermediated) ways for artists to produce works that have a richer and more immediate engagement with users through various digital affordances.

Many of these experiments are occurring now, and encompass new types of reuse and access permissioning via NFTs, new fan communities (with NFTs being used as ‘social tokens’ for membership into an exclusive fan club), and integration with immersive digital experiences (augmented reality at live in person concerts, or in the metaverse).

Direct engagement with fans

In sports and entertainment industries, NFTs are facilitating more direct engagement between artists and fans or between sports teams or even individual athletes and fans, with the NFT intermediating that relationship and providing a platform for verifiably proving fandom, and verifiably tracking both sides of the relationship.

These relationships have always existed, but they have often been costly to establish and verify, intermediated by managers and other administrative functionaries, and so have made intense fandom difficult to scale. NFTs enable low-cost digital verification of fan commitment and experiences, and can automate some of these functions. This is good for artists, athletes and other producers as well as fans.

By using NFTs as a new class of digital assets, which are in effect platforms for building new products, these large sports and entertainment businesses can grow revenue and increase customer engagement by providing digital versions of current products, such as collectibles and merchandise, and ticketing. This can then enable new digital affordances and expanded product lines to be bundled within these digital offerings, such as embedding videos of key moments in a match as limited editions. These are just some of the capabilities for market development that NFTs bring.