business

Should brands use NFTs? Market trends from an industry perspective

Have you used NFTs? In the past two years, NFTs have spread like wildfire. Last year, digital artist Beeple’s “Everydays: “The First 5000 Days” was sold for US$70 million (approximately NT$1.9 billion), a record high in the NFT art market. Since then, there have been frequent stories of major brands, artists, and artists releasing NFTs. Nowadays, almost anything you want can be converted into NFTs through digitalization. Recently, the Japanese communication software LINE also announced the launch of their LINE NFT platform “Global NFT Market—DOSI.” Thus, it will be more convenient for ordinary users to obtain NFTs and for LINE users to trade them in the future. This can also connect the community more closely and create a unique NFT ecosystem.

NFT is derived from blockchain technology and is the abbreviation for Non-Fungible Token. It is a token issued by the Ethereum ERC721 standard. It is characteristically inseparable, irreplaceable, and unique. Before learning about a "non-fungible token,” let’s talk about the concept of a “fungible token”! Modern currency is called a “fungible token.” It is assumed that each NT$1,000 bill is valued equally and can be cut (divided into ten NT$100 bills). However, if there is a celebrity signature on the 1000NTD, then it takes on the characteristic of a unique “non-fungible token.”

The NFT craze started at the end of 2017 from the online game CryptoKittie. Each cat in the game was unique and could not be copied or destroyed. Within a week of its launch, it resulted in more than US$1.9 million worth of Ether trade. We see that NFTs are also an important step in asset virtualization. Through blockchain technology, ownership can be verified and authenticity can be distinguished.

As a brand owner, are you also on the fence about entering the market? Before making a decision, this article will provide guidance in the world of NFTs and explore brand potential in the future NFT market through case introductions and market trends.

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Case Study 01

Luxury fashion cross-border games and restaurants launch NFTs

Renowned French luxury brand Louis Vuitton collaborated with well-known digital artist Beeple for the mobile game “LOUIS: THE GAME” to celebrate the 200th anniversary of the brand’s founder. It also launched 30 Louis 200 NFTs.The game’s mascot Vivienne provides players with various color options for her appearance. Furthermore, during the game players can buy different clothing for the mascot in the virtual store and also have the opportunity to obtain limited edition LV x Beeple NFT digital creations designed by Beeple. By gamifying NFTs and lowering the barriers of entry, consumers could gain understanding of the brand in a more interesting way.

The food industry has also caught on to the business opportunities of fashion cross-border NFTs. For example, the pizza chain brand Papa John’s collaborated with Cheddar to launch a fashion boutique-style pizza tote NFT. The design was by Spanish designer Tom Hoff and London Central Saint Martin’s artist Ash Sketch. A continuation of last year’s Papa John’s X Cheddar joint campaign, nine pizza totes inspired by the street style of delivery driver uniforms and delivery bags were designed.

The number of NFTs expected to be issued is based on the year Papa John’s was founded, 1984. As a result, 19,840 NFTs will be released to customers for free, and one consumer will be selected to get a limited package of physical NFTs.

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Case Study 02

A car NFT that combines technology and art collecting

Lamborghini Auto, a well-known car brand, has launched the first space-themed NFT “Space Key,” with a global limited edition of 5 pieces. As a leading company in carbon fiber composite materials, Lamborghini sent five samples of advanced carbon fiber composite materials to the International Space Station (ISS) in 2019. After completing all relevant tests in space and returning to the earth, the composite became part of the “Space Key.” The project “Space Time Memory” is a collaboration with artist Fabien Oefner. Each key has a QR code on it and is linked to a NFT component. The NFTs are a series of five separate images of a Lamborghini Ultimae that depict individual moments as the car rises above the earth. Its parts, the engine, the transmission, the suspension and hundreds of nuts and bolts are shooting away from the chassis like the exhaust flame of a rocket. This project has undoubtedly become new evidence of brands exploring the metaverse and setting new boundaries.

Nissan, a well-known car manufacturer, has also kept up with the art collection NFT craze and commissioned a design by Canadian artist Alex McLeod. In addition to a one-of-a-kind NFT creation, the winning bidder also received a physical 2021 Nissan GT-R NISMO Special Edition car. The starting price was $280,000 CAD (about US$220,000) and was sold on the auction platform RUBIX.

Case Study 03

An edible NFT? A food NFT combined with performance art

In the past two years, there have been more and more cases of well-known large-scale food brands selling NFTs, such as the popular fast food leader McDonald’s. Last year, it launched free NFTs at the 40th anniversary of the McRib. McDonald’s officials said: “As long as you have a McRib NFT, you will never have to say goodbye to your favorite sandwich/burger.” Anyone who shared event posts could participate in the sweepstakes. The number of participants exceeded 100,000. Finally, 10 lucky fans were selected and given the NFTs. Foreign media reported that McDonald’s future plans also include the metaverse and they are expected to launch downloadable multimedia files including artworks, audio and videos, and NFTs. In the future, new business models of “virtual restaurants featuring physical and virtual goods” and “operating online virtual restaurants featuring home deliveries” could happen at any time.

In addition to cases of individual product NFTs in the food industry, the world’s first “Edible NFT” was recently launched in Taiwan. The “We are What We Eat” performance art was co-created by EchoX, Michelin chef Andre Chiang, VR Gold Award director Hsin-Chien Huang, and contemporary performance artist Billy Chang. Andre Chiang said: “Cooking is a type of performance art. Octaphilosophy is extended through this cross-border cooperation, so that memories are no longer just memories, but a key to the future world."

Case Study 04

Taiwanese NFT has great success! Taiwanese PILI instantly sold out on international platform VeVe

International NFT platform, VeVe Digital Collectibles (hereinafter referred to as VeVe), launched the sale of PILI NFT digital collectibles’ “PILI Fantasy” series on February 7. It included four popular characters in the “War of Dragons”: Su Huan Jen, Feng Cai Ling, Ye Xiao Chai, and Hua Shen Feng. The 30552 sets were instantly sold out at a price of $40 per set. International netizens were amazed that the VeVe website was flooded, and the popularity of the PILI NFTs was comparable to DC, Marvel, and Disney.

This PILI NFT trend from Taiwan also attracted the interest of well-known international news media Reuters that made a special report: “Taiwan puppeteers look to NFTs to keep their art alive.” After the rebranding of the PILI puppet theater, to implement its brand management strategy of penetrating younger markets, issuing NFTs was an attempt to develop a new business model and to rejuvenate traditional craft brands. Therefore, we hope that Taiwanese puppet theaters have more opportunities to showcase themselves on the international market in the future.

Case Study 05

How can NFTs be used by brands and markets?

In the past two years, leading companies such as McDonald’s, LV, and other brands have all rushed to enter the NFT market. Today, NFTs are not only a commodity but also an emerging marketing method. However, from the perspective of the NFT market, due to the high threshold for entering NFTs and the immature market, the supply exceeds the demand, and there may be concerns about hype and bubbles in the future.

After sharing several cases of different industrial applications of NFTs in this article, think also provides several perspectives for brand owners and marketers to consider as to whether brands should enter the market:

Before entering the market, think about whether NFT products are in line with the core values of the brand:

NFTs can become popular because of brand cross-border co-branding, KOL\celebrity effects, and brand future development. Because of breaking news, the brand’s fame will increase rapidly in a short period but it is also necessary to consider if such marketing methods attract consumers beneficial to the brand, and if they have the opportunity to become loyal customers in the future? Suppose a company invests a lot of resources but attracts the wrong audience or even loses its original customers. In that case, it’s not worth the loss.

Original business opportunities with collectible value and historical representation can take the opportunity to enter:

For example, the “CryptoKitties” case mentioned at the beginning of this article. Because NFTs are unique and inseparable, if the brand’s products also have these characteristics, or the brand itself has a complete image character IP, and the support of a certain scale of brand loyalists, it may be possible to think about how to apply the characteristics of NFTs experimentally to develop new business models.

The NFT market has become hype and the brand’s future plans need to be carefully considered:

Because the application of NFT products is still in the early stages of development, there is extremely high market volatility. When commodities are hyped by major media and communities, market volume and value will increase. Still if there is negative news, there is also the possibility of a rapid decline, resulting in the commodity being difficult to sell which leads to market bubbles.

References｜CryptoKitties official website, McDonald’s official Twitter, Courtesy of Lamborghini, Ledgerinsights, Marie Claire, We Are What We Eat official website, cryptopotato, u.today, nftboard, nft.org.tw, Business Next, blocktemp, Line official

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