Consumer perceptions around NFTs
By Maru Entertainment & Technology | September 6, 2022
The Web3 innovation of NFTs (Non-fungible tokens) is not going anywhere. With an increasing number of entertainment companies either announcing plans to or already entering the NFT market, the technology can be expected to adapt and become more consumer-facing in the next few years.
It will take time for NFTs to move to be consumer-friendly because of what has preceded them. The crypto boom of 2021, while now fading, fueled lavish overspending on digital art NFTs, which painted the popular opinion that NFTs were either wastes of money or scams.
Maru’s Entertainment and Technology team has fielded the first wave in its quarterly assessment of NFT perceptions. The aims are to see if NFT ownership is growing, as well as to understand the sentiments around the technology.
It’s important to remember that NFTs are technology and can essentially be anything – a record, a ticket stub, a membership to a community, a collectible—and are not limited by the collections which appeared during the first era of NFTs (2014-2021).
The majority of U.S. adults are aware of NFTs, with just over a third saying they hadn’t heard of them. Younger Americans are the most likely to be aware, with this falling to half of those 55 or older. Considering that digital products will be aimed at digital natives, this shouldn’t come as a big surprise – there will be some adopters among older generations, but NFTs will primarily be a young person’s game.
Over one in five Americans aged 18-34 reported owning an NFT, double that of 35-54s, who are at the one in ten mark. Only one in one hundred older consumers owns one, reaffirming where the target market for entertainment-based NFTs should be. For media companies, this also suggests that careful choice needs to be made regarding which IP is used to create NFT lines, as older-skewing properties may likely fall flat in interest.
Perhaps the most interesting finding from asking those aware of NFTs a list of attributes that may or may not describe the technology was how uniform the belief across age groups is that NFTs are expensive digital images, with over 80% agreeing, regardless of age. This points to a need for education for companies entering the NFT space, both concerning price (price points cannot be seen as expensive) and product (more than digital images).
Another need for consumer education stems from the mass perception that NFTs are confusing. This could take several directions: it may be easier to label products as something other than NFTs (for example, “digital collectibles”), but this also speaks to the wider confusion around a product formerly associated solely with cryptocurrency. Any consumer NFT release must be available to purchase with fiat money (i.e., USD) to lower barriers to entry.
In terms of the long-term future of NFTs, it is interesting to note that a majority of 18-34s aware of NFTs think that NFTs are the future of collecting. Considering that ownership of NFTs among 18-34s aware of the tech is at 29%, this shows strong positivity among the age group, which should be considered the prime target market for any NFT releases.
This is furthered when assessing interest levels in a future NFT purchase. One in five 18-34s aware of NFTs says they will definitely purchase an NFT in the next month, which is 3.7x the rate of 35-54s. Translating this into the total population equates to around 17% of all 18-34s with the highest NFT purchase level and strong market size.
Younger consumers are also the least likely to have their perception of NFTs altered by the recent press coverage around the decline in the value of cryptocurrencies and NFTs pegged to these coins. In fact, 18-34s are the only age group to see more say that their thoughts around NFTs had grown more positive than negative in the wake of stories in the media.
One likely common avenue for entertainment companies launching NFT lines will be utilizing their intellectual property to create digital products for fans to collect. One in five 18-34s have a definite interest in purchasing a digital collectible, with a further 15% expressing probable interest, making over a third with a positive interest in such products.
Obviously, this interest level is broad, with interest in specific lines much lower, but it is a good starting point for a relatively new industry. With around one in five 35-54s also interested in digital collectibles, this represents a valuable new revenue stream.
NFTs are not just digital collectibles or artwork. There is a growing trend for NFTs that offer utility, whether that’s an entrance to an event, membership of a community, a share of the profits for a song or movie, or perks at a live event, which may, in the long-term help change how NFTs are seen by the public.
One in four U.S. adults said they were aware that some NFTs could provide real-world benefits, with this strongest among 18-34s, who saw almost half saying that they knew some NFTs offer utility.
This is an aspect that companies entering the NFT space should focus on as it resulted in a net positive impact on NFT perceptions. Anything that can be done to remind consumers that not all NFTs are expensive images will be helpful for the technology to reach the widest possible base. There is a good-sized potential market for NFTs, as evidenced in our research, but the key will be overcoming negative perceptions and figuring out what products and intellectual property is the best fit for the likely buyer.