Companies including Disney, Robinhood Markets and Electronic Arts 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, licensing and merchandise related revenues,” Citi analyst Thomas Singlehurst wrote in a report entitled “Disruptive Innovations.” “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 highlights video games and music as industries that are most likely to see positive changes from the influx of NFTs, 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 positively impacted by NFTs include FormulaOne Group, Discovery Inc., ViacomCBS, World Wrestling Entertainment and Activision.
- Companies in Europe expected to benefit from NFTs include Ubisoft, Embracer Group, Team17 Group, Frontier Developments, Believe, WPP and Publicis.
- Citi highlighted that these 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 ecosystem.
- Areas and companies that are likely to be negatively impacted by NFTs include digital storefronts in video games, traditional record labels and music publishers, traditional SVOD and music streaming platforms and “walled garden” online ecosystems. All these are intermediaries who 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 game yet, competitor Fox Entertainment announced in June it was putting $100 million behind Its NFT-driven blockchain experiment.