WILMETTE, Ill. — The digital theme continues in motorsports, centering around the fan experience and increasing engagement.
This month, we will explore the growth of non-fungible tokens (aka NFTs) and their use in the sports industry.
As another new class of digital asset, NFTs are taking the sports world by storm. The increased visibility and popularity have led to a better understanding and acceptance of the digital marketplace.
Paying for digital-only content may feel unfamiliar. A decade ago, this behavior was niche. But the evolution of spending within video games points to a burgeoning, now mainstream acceptance of the concept.Â
Gamers spend billions on virtual currencies that they then use to purchase game-related artifacts and capabilities that only exist virtually.
The sports marketplace for NFTs is rapidly growing. Analysts predict there will be more than $2 billion in transactions this year — twice the previous year. There have been approximately 4 million sports fans globally who will have purchased or been gifted an NFT sports collectible.
When it comes to racing nothing beats the enthusiasm of its fans. They go to extreme lengths to support their favorite driver, team or sponsor. They spend big money on travel to races, tickets and merchandise.
Fans are crazy about owning racing collectibles, from die-cast cars to signed driver cards, T-shirts, hats and anything and everything to do with motorsports.
Collecting and trading racing memorabilia has long been a popular way for fans to express their passion for the sport with physical products, whether it be through assembling a collection of die-cast cars or filling up a garage with race-worn tires and banged-up fenders. Â
NFTs will initially represent various items of the motorsports collectible landscape. This may include tickets, programs, driver cards, helmets, video clips and other pieces.
NFTs now offer a new digitized way of collecting sports memorabilia.
One may ask — physical or digital?Â
Old physical trading cards have been sold for millions. This is the result of a limited run of a print is individually numbered, yet otherwise identical.
NFTs are the digital equivalent of printed sports trading cards and they present the ability to swap still images with digital stills or video.
Value in each case is a function of demand and scarcity
They also present a great money-making opportunity for the racing industry. Teams, drivers, sanctioning bodies and tracks will be able to sell limited-edition video clips of moments (taking the checkered flags, crashes, etc.).
The value of each NFT will depend on the prominence of the driver, the significance of the event, victory, crash or other key moment that is included within the NFT when coupled with the demand for that content.
An NFT limited to a single edition of a major event — a win or crash bundled with a commentary by that driver star — could be sold at auction, while the same video but with no additional content could be sold or traded via an online marketplace.
Many motorsports entities are exploring the NFT space.Â
Formula 1 and its teams are dropping digital recreations of race cars. This reflects the technology and engineering nature of the sport.
Speedway Motorsports created RaceDay NFT — a digital collection marketplace for its racing venues. The goal was to drive excitement toward the tracks and events. Featured digital objects included tickets, coins and die-cast cars. Fans were able to buy, sell, trade or hold motorsports-themed NFTs.
Recently formed MotorDAO plans to offer motorsports fans and online communities the chance to participate via NFT based memberships. The decentralized and autonomous organization will allow its supporters to determine which teams and drivers receive financial backing.
Membership provides access to the perks of team ownership, including a racing-helmet-themed NFT.
Motorsports is about leading the race and staying ahead of the pack. By embracing the use of NFTs, the business will deepen engagement with the next generation of fans via the digital marketplace.