Esports arena: Why NFTs are a perfect fit for esports

Both the NFT market and esports market have been skyrocketing in the past few years. In 2022, NFT sales have already surpassed a massive $42bn, according to Chainanalysis data. In the same year, the global esports industry was valued at over $1bn and around 290 million people are forecast to be viewers of esports by 2024. It is becoming increasingly clear that these two rapidly-growing arenas are an obvious pairing, with an expanding group of esports organisations dropping NFTs. But as with every launch of a new product, there’s a right way to do business and please your fans and a wrong way to do it, too.

What is an NFT?

NFTs (non-fungible tokens), put simply, are digital assets. NFTs enable organisations and players to incentivise fan engagement and loyalty with rewards like behind-the-scenes access and the chance to trade memorabilia.

Digital assets are becoming more and more popular in esports, for example in 2021 two of the largest organisations in esports, BOOM and Fact Revolution, partnered with trading platform Yieldly, offering NFTs to fans on the blockchain Algorand.

Education

Clearly the potential for NFTs in esports is finally being recognised, but organisations need to ensure the priority is on education and their fans, not jump on the bandwagon to make some quick cash as we have seen with some failed drops across a range of industries.

One of the most crucial steps towards a successful drop is placing a huge emphasis on helping fans understand the product. While esports teams have made big media announcements, one of the missing pieces is often the lack of education of their fans. If the fans don’t understand what the organisation or players are trying to offer, and how it benefits them, they will not engage. Equally it’s important to create actual use-cases and explain their benefits, otherwise fans may feel players are being disingenuous and capitalising on a hype train.

At the outset, esports teams ought to focus on communicating their plans to fans, providing resources and explainers on how fans will be able to connect to their favourite players and tournaments on a level not seen before.

NFTs can be used to unlock access to VIP spaces, clubs and channels hosted by esports teams. This enables fans to get closer to their chosen teams and purchase memorabilia and sports kits. It can be a digital tool for ongoing fandom, rewards and access.

NFTs and esports go hand in hand

One of the best things about this pairing is that esports players are a young demographic, they are already familiar with tech and more likely to purchase crypto. For example, the average age of most esports players currently stands at around 25, with some teenagers having won huge championship titles. Young digitally centric audiences have grown up playing Fortnite, where players can buy skins that change their characters’ appearance, so having a digital currency is already second nature to them.

This is an audience that is just coming through to being the big purchasers. It’s about nurturing an audience that’s about to get bigger and bigger. To do that, education and communication is key.

The esports industry is already five steps ahead in terms of fan engagement, compared to most other sports and industries, but to ensure that players and organisations build on this momentum and establish long-term revenue streams, esports teams and organisations must focus on education and their fans above all.

Tim Mangnall is CEO and founder of Capital Block, Europe’s leading web3 consultancy dedicated to sports and entertainment. Capital Block is an evolution of Capital Sports Media, which owns and manages sports inventory and general media activity across football clubs in Europe, Middle East, North Africa and Turkey.

Mangnall began personally investing in cryptocurrency around seven years ago and has successfully built Capital Block over the past two years into the most trusted consultancy in Europe for sports teams looking to enter the web3 space. Capital Block represents Mangnall’s two major passions: sports and cryptocurrency.