Esports arena: Don’t underestimate the reputational risk of NFTs

It’s been almost impossible to ignore the huge splash that NFTs have been making over the last year. A number of sports and esports teams have been enjoying the success of non-fungible tokens (NFTs), from the NBA to WePlay esports. It’s no wonder that so many teams have been turning to these NFTs; after the uncertainty of the pandemic when revenue from live events was no longer a firm source of income, NFTs allow teams to unlock new revenue streams and engage new and existing fans.

However, these collectibles aren’t without their downsides, and there’s an unforeseen reputational risk surrounding NFTs that has been largely unaddressed. At the moment, NFTs are being bought largely by crypto enthusiasts looking for an investment or a quick resale, as opposed to genuine fans. This can lead to disappointment and anger from fans. This is something we saw with the backlash to 100 Thieves’ NFTs – rather than being bought by fans of the team, these NFTs were snatched up by crypto collectors, with little thought for the fans by the company. This led to disapproval from fans, who accused 100 Thieves of caring more about revenue than their fans, and of having poor motives when creating NFTs.

If teams appear to be creating NFTs simply to make a quick buck rather than wanting to give back to fans – even when this isn’t the case – teams could face heavy criticism from their supporters. Thankfully, esports businesses and teams can optimise their NFT strategy to ensure they are taking a fan-centric approach, while also using NFTs to full potential.

Esports and sports teams can transform their NFTs from simple collectibles by attaching exclusive interactions and rewards to them. This adds more value to the NFTs for fans, rather than the only value being the prospect of increased resale prices. For instance, teams could offer NFTs of their players’ jerseys to sell to fans, but could transform them by including an exclusive interaction with the associated player upon purchase. NFTs could even be personalised for fans, with additional rewards and personalisation on purchase. This could include personalised video messages from players that fans were buying the NFTs of, or adding fans’ own names to NFTs of team jerseys. Making NFTs into these types of rewards means that teams can ensure their NFTs are not disingenuous. This also means that teams can focus on appealing to fans, rather than speaking to crypto collectors buying NFTs. More personalised additions to NFTs protect teams’ reputations, and let them establish better relationships with followers, fans and customers, while also maintaining the new revenue stream from digital collectibles.

NFTs will be key to the future of esports and sports teams when it comes to building fan engagement and setting up for success in the long-term. But teams have to ensure that they are putting the fans first. Attaching rewards and exclusive experiences to NFTs means that they can reach their full potential by engaging fans, in turn increasing fan loyalty. Establishing a passionate fan base for years to come is essential for a team’s long-term success, and NFTs are a key way that teams can lay those foundations.

Lars Rensing is CEO and co-founder of enterprise blockchain services provider Protokol. He has more than four years’ experience in the blockchain industry, helping to lead and co-found Ark; the open-source blockchain platform which underpins Protokol’s blockchain services. He is passionate about helping everyone from start-ups to enterprises unlock the opportunities of blockchain technology for their business, and as a result currently also serves as an adviser for a number of start-ups leveraging blockchain technology. He leads the overall strategy and direction for Protokol, which is helping businesses across the world solve real challenges though custom blockchain solutions.