NFT creators are looking to appeal to a wider audience and increase revenue through the sale of retail products and by deepening the commercial relationship with the entertainment industry.
The Financial Times has reported that the change in strategy comes amid lost earnings caused by the overall drop in the crypto market and the cost of living crisis. The NFT sector is striving to increase revenue through the sale of real-world products, such as soft toys representing the Pudgy Penguins brand.
According to Drew Austin, cofounder of the Web3 technology company Knights of Degen, the unpredictable nature of sales and inconsistent returns mean that NFT creators must look at solutions to “diversify your revenue streams and expand.” The company in question has diversified through investments in the sport and entertainment sectors.
Increasing appeal through the entertainment industry
NFTs have been synonymous with the entertainment sector for some time. But the move to vary revenue streams to expand the appeal of NFTs to a wider audience has led to NFT creators more eagerly embracing celebrity endorsements. For example, Doodles NFT has appointed the music producer and recording artist Pharrell Williams as its Chief Brand Officer. The company is using William’s music to create videos and an album.
This follows the release of the Eminem & Snoop Dogg song entitled “From The D 2 The LBC.” The music video for which features the transformation of the rappers into animated Bored Ape NFTs.
The move to diversify reflects a direction in the wider entertainment industry to broaden the appeal of online products and services. This is exemplified by the boom in the popularity of online games which has led to the formation of Esports leagues featuring games such as Call of Duty.
Just as online games reflect a shift in consumer behavior, the decision to take online bingo live to the homes of players now replicates the experience of playing the popular game in a traditional bingo hall. Through live presenters, players can even chat with the larger-than-life bingo moderators, turning the online version of bingo into an immersive experience. This demonstrates how the entertainment sector is able to react quickly to changing behavior and preferences of its customers.
Diversification is the key to growth
Economic diversification has long been recognized as an avenue for growth by moving into a wider range of sectors and markets. This can be seen in the diversification of Big Tech companies into new areas, such as Meta embracing the Metaverse and the decision of Alphabet Inc. to move into other markets, beyond Google search and YouTube. The latter has looked to diversify by investing in the Google Cloud in an attempt to generate new income streams, though the company’s cloud business is experiencing big losses at this moment in time.
The NFT industry could also examine how Apple Inc. has successfully moved into new sectors through its development of Apple+ and Apple Arcade, alongside its popular Apple Music streaming service.
The growth opportunity of expanding revenue options has also led to Netflix moving into the gaming sector with its roster of online video games and the acquisition of games studios such as Spry Fox, the indie developer behind popular games including Realm of the Mad God, Bushido Bear, and Alphabear.
NFT creators will be hoping that the move to diversify will have a similar effect with real-world retail products and deeper celebrity endorsements increasing the popularity of NFTs amongst a wider audience.