Companies including Disney, video game publisher Electronic Arts and Robinhood Markets are expected to benefit from non-fungible tokens (NFTs), according to a new report from Citi.
- “The advent of NFTs promises significant disruption to any/all sectors with exposure to IP (intellectual property), licensing and merchandise related revenues,” Citi analyst Thomas Singlehurst wrote in a report entitled “Disruptive Innovations,” noting that “the key point is that its decentralized and democratized model allows content owners to disintermediate traditional gatekeepers both in terms of distribution and monetization.”
- Citi said that video games and music as industries that are most likely to see positive changes from the influx of NFTs, which are blockchain-based tokens that prove ownership of a piece of digital content. Trading in NFTs climbed to $10.7 billion in the third quarter, an increase of more than 700% from the previous quarter, according to a report by blockchain analytics firm DappRadar.
- Other U.S. companies expected to be helped by NFTs include video game publisher Activision, FormulaOne Group, Discovery Inc., ViacomCBS and World Wrestling Entertainment.
- Companies in Europe expected to benefit from NFTs include such entities as video game publishers Embracer Group, Frontier Developments, Team17 Group and Ubisoft and ad agencies Publicis Groupe and WPP.
- Citi said that those companies either focus on selling content or branded goods, are involved in the creation or trading of NFTs or are service companies that help content creators navigate the NFT market.
- Areas and companies that are likely to be hurt by NFTs include video game retailers with physical stores, traditional record labels and music publishers, traditional video and music streaming platforms and “walled garden” online ecosystems. All of those are intermediaries that could be bypassed if content creators had a more direct relationship with their customers, according to the report.
- “To be clear, in each case the rise of NFTs is unlikely to be terminal for any of these players, but to the extent that there is pressure on take rates as content ecosystems become more decentralized/democratized, it potentially heralds (relative) pressure on revenues and returns,” Singlehurst wrote.
- While Disney doesn’t appear to have entered the NFT market yet, competitor Fox Entertainment announced in June it was putting $100 million behind its NFT-driven blockchain experiment.
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