As we approach the end of 2023, there is a noticeable resurgence of interest in NFTs. Notably, NFT brands are expanding their reach by selling products in both physical retail stores and online marketplaces. This trend is accompanied by the launch of major blockchain-based games and the entry of established companies into the NFT space. Consequently, NFT-based brand building is set to play a pivotal role in driving the adoption of Web3 in 2024.
The upcoming wave of successful NFT products is expected to differ significantly from previous offerings. Rather than focusing on a limited number of high-value assets, these products will be produced in larger quantities and made available at more affordable price points, with the aim of reaching a wider consumer base. The emphasis will shift towards direct value creation rather than speculative trading. Furthermore, many customers will acquire and utilize these digital assets without even realizing that they are built on blockchain technology.
This shift in the NFT landscape marks an exciting and transformative phase in the evolution of digital collectibles and their integration into mainstream culture.
We have witnessed various experiments involving mass-market NFTs as digital collectibles, with notable brands such as Nike, Reddit, Starbucks, and even former U.S. President Donald Trump exploring this space. Similarly, NFT-native brands like Pudgy Penguins, Cool Cats, and Kitaro Studios have introduced “phygital” activations. In these cases, a physical product is accompanied by an associated NFT, either directly linked to the product or accessible through a claim code provided at the point of sale. Concurrently, established players like Ticketmaster and newcomers like tokenproof and YellowHeart have been testing the use of NFTs for event tickets, memberships, and fan engagement initiatives.
These products offer an opportunity for consumers who may not be familiar with NFTs to experience digital ownership through this innovative technology. They are typically priced at what can be considered “normal” consumer product rates, with event tickets priced similarly to traditional tickets and phygital prices generally aligning with those of the physical objects alone.
Early involvement in NFTs often required users to navigate complex self-custodial wallets, but these NFTs are typically presented within a platform design that simplifies the underlying blockchain technology, using partially or fully custodial wallet systems. However, this approach does not prevent consumers from deriving utility from the tokens and incorporating 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 many cases, they can even transfer their branded NFTs to self-custody if they wish.
This strategy allows for a smoother introduction of NFTs to a wider audience, making digital ownership more accessible and less intimidating for newcomers.
Facilitating accessibility to digital assets, both in terms of technology and pricing, has the potential to significantly expand the market and lay the groundwork for brands to thrive.
As outlined in our upcoming book, “The Everything Token” (available for preorder), NFTs offer companies and creators a means to harness the power of decentralized value creation by transforming their customers into a community. The NFT itself forms a network that connects holders to the brand and to each other. Ownership of these assets also motivates consumers to actively promote the brand and contribute to its growth.
For instance, Starbucks Odyssey members have gone to great lengths to create third-party websites dedicated to the program, organize unofficial meetups, and host events independently of Starbucks’ direct involvement. This sense of community has extended into the digital realm, where members have established their own group chats with friends from the public Starbucks server. As a result, individuals who wouldn’t have known each other without these NFTs now stay connected on a daily basis in both the digital and physical worlds.
This approach is equally effective for small businesses and individual creators as it is for major corporations. However, it works best when the community is inclusive and continues to grow.
For brands like Starbucks or Nike to maximize the potential of their NFT products, they must ensure accessibility to their global customer base. Similarly, when customers aspire to be part of a brand’s digital ecosystem, they should have the means to do so. This holds particularly true for businesses with a strong local following.
This indicates that the trend of smaller, more widely available NFT products is not just an experimental phase; it represents the future. The success of “open edition” creator NFTs in early 2023 demonstrated the effectiveness of this approach for creators. Throughout the year, it became evident that businesses were also embracing this strategy.
Therefore, it is anticipated that in 2024, brands will embrace “small” NFTs on a larger scale. In doing so, they are likely to draw a more significant number of consumers into the NFT space.
Disclosure: Both Kaczynski and Kominers own digital assets, including fungible and non-fungible tokens related to some of the mentioned companies. They also provide advice to companies and serve as experts in areas such as marketplace and incentive design, Web3 strategy, NFT brand development, and more. Additionally, Kaczynski is the Community Lead for Starbucks Odyssey, and Kominers is a Research Partner at a16z crypto, which invests in cryptocurrency projects, including NFT initiatives and platforms (for general a16z disclosures, refer to [link]).