Chris Byrne, president of Byrne Communications, explores NFTs to see which companies are jumping on the bandwagon, and whether these digital collectibles will be a lasting trend.
Non-fungible tokens (NFTs) are unique pieces of virtual content—like artwork or music—with ownership details stored on a digital ledger (blockchain). The market value of NFTs tripled to US$250 million last year, and IP owners in the kids space are taking notice. In July, ahead of the premiere of Space Jam: A New Legacy, Warner Bros. bowed a limited collection of Space Jam NFTs.
So are NFTs a collectible craze with long-term legs like Pokémon cards, or will they fizzle like Beanie Babies? “It will be fascinating to see how they’re treated and how they’ll be displayed,” says Byrne. “There will be people who are smitten with the concept—collectors who will purchase NFTs as investments, buying them today and holding them for 10 to 15 years like you would a stock. And there will be a whole ancillary industry around how you display these things.”
While big names have already jumped on the bandwagon, the trend’s collectible status will depend on how it’s handled by toycos, says Byrne. Mattel, for one, launched three exclusive Hot Wheels NFTs in June. The digital vehicles (the Twin Mill, Deora II and Bone Shaker) were offered up at auction on the Mattel Creations e-commerce platform, with one fetching the equivalent of US$14,000. It was a success, and the toyco announced its intention to turn other brands into NFTs later this year.
“The staying power depends largely not on the NFT itself, but on the property. NFTs are here now, and they’re probably here to stay, but the question is how many will be generated? Is every Hot Wheels car going to have an NFT?” After all, he explains, Mattel has created more than 25,000 unique die-cast Hot Wheels models over the years. “If so, what’s the value of that? But, if they’re limited edition or something that’s really rare, it’s possible to create value in the long term.”
WildBrain, for its part, sold a one-of-a-kind Teletubbies-themed coin as an NFT in an effort to raise money for Kids Help Phone. And while the kidco isn’t investing in the digital trend long term, many others are keen on NFTs because they’re so easily produced. “It’s not like you have to build molds, and you’re not dealing with shipping. You can create a unique digital file, and I’m sure the smart people at these major toymakers have found a way to mass-produce those as well,” says Byrne.
And even though consumers can’t hold these collectibles in their hands, Byrne notes that they understand NFTs are “a one-of-a-kind thing they own, and they get the emotional benefit of that collectible moment.”
Ultimately, each toyco and IP owner will have to determine if the relative low cost of production is worth the risk of investing in what could be the next flash-in-the-pan collectible craze.