Leveraging the $18 billion opportunity – the next point of strength in the NFT space

Written by Teng Yan Delphi, Source: Twitter 0xPrismatic; Compiled: Pine Snow, Golden Finance

Entertainment is the next megatrend that will rely heavily on NFTs. In Asia alone, this is an opportunity worth $18 billion.

K-POP is a typical example. K-POP is Korea’s number one cultural export. South Korean boy band BTS earns $5 billion a year, accounting for 0.3% of South Korea’s GDP.

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Asian fans are enthusiastic. They are willing (financially) to support their favorite stars and support them on their way to success.

The core of the fandom is the purchase of a large number of physical albums and merchandise.

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The top 5 K-POP groups alone have sold more than $1.5 billion in albums.

Fans buy photo albums for photo cards, posters, and other souvenirs. Some have a gacha-like mechanism. Ownership can help fans bond more closely with their favorite stars.

Fan culture is reflected in business metrics:

HYBE (BTS brokerage) had a total revenue of $673 million in 2020, of which $276 million came from albums (41%) and $219 million from merchandise (32%)

Universal Music Group’s total revenue in 2020 was $8.9 billion. However, only $217 million came from commodities (2%).

Digital collectible NFTs will enable the next generation of FANDOM:

• Exclusive token-gated experiences such as concert ticket pre-sales, private fan channels, and opportunities to meet celebrities.
• Dynamic media can change and evolve depending on the actions taken.

Fan-collected NFTs can also:

• A transparent and unchangeable record as a “fandom”. Everyone can see who the top fans are.
• Has a scarcity attribute (unlike most commodities today).
• Easy trading in the secondary market.

I’ve seen NFT startups approach K-POP in several ways:

1. Partner with top K-POP agencies. This makes sense, as there is a large fan base that has matured and can be leveraged.

2. Focus on second-tier artists and IP.

Many talented entertainers fail to make their mark on the K-POP stage due to competition, but they still have a sizeable fan base.

Agencies are more open to new ideas and collaborations here, rather than riskier top-tier intellectual property.

3. Build a new entertainment agency from scratch and develop your own content IP.

Leverage NFTs for community co-ownership, nurture fan ambassadors, and deliver novel experiences.

The road is difficult, but the opportunities for disruption are enormous.

For example: Modhaus is a community-driven agency of a 24-member KPOP group where fans can make key decisions.

Fans can vote on which member will belong to which squad and which song will be the title track of their debut album.

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In South Korea, you can purchase a random physical TripleS card pack ($0.40) and then scan the QR code to link the card to the Cosmo app.

Each physical card is also an NFT with different rarities and voting rights. They are transferable.

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Selling digital fan collectibles to generate revenue is a business model.

Another business model is to give away NFTs for free… Yes, for free.

It works as follows:

Free NFTs can serve as marketing and customer acquisition tools.

They can indirectly increase revenue by introducing users to traditional revenue streams in the entertainment industry:

• Concert ticket sales;
• Music albums;
• Merchandise sales, etc.

For example: Gemie is an entertainment-focused metaverse platform that supports virtual concerts.

The next generation of avid fans will begin to emerge when they find the right product and are ready for consumer adoption.

It’s not prime time yet, but we’re getting closer.

Cultural tipping points will occur when:

• Early adopters showcase their favorite digital collectibles in their fan base;
• Celebrities actively discuss their NFTs on social media.

I predict that this wave will start in Asia and then spread to the West.

It may take 9 - 18 months, but it happens.

Once the focus on fan-collectible NFTs starts to increase, it explodes quickly. Remember the 2021 NBA Top Shot (Sports)?