Owen Ma, co-founder and head of partnerships at licensing specialist, Epik, spoke at the recent Pocket Gamer Connects 2022 conference in London, about the value Non-Fungible Tokens (NFTs) bring to brand and intellectual property (IP) owners in the digital world.
Ma gave the audience an overview of NFTs in the context of branding, and of the business of licensing and its role in the ongoing evolution of the metaverse.
The value of branding remains high in both real and virtual worlds. Brand affiliation allows individuals to send a signal to the world, from your choice of car (“are you a Ferrari guy or a Tesla guy?”), to your identity in the virtual environments of games.
Status, identity, membership
While the recent trend of acquiring NFTs of “JPGs of bored apes” may be viewed with cynicism by some, Ma pointed out that the reason people are paying sometimes huge sums for virtual goods, is the same reason as they pay real money for any consumer commodity, namely status, identity, membership, class, and performance.
However, it is the ability of NFTs to verify ownership of any digital item that makes them so interesting - and valuable - to brand and IP owners. The fact they can be used for any digital item opens up a range of new opportunities and "cool things", according to Ma. Not just considering product and merchandising, but also from a marketing and engagement perspective.
Ma took the audience through the business of licensing, as well as the process itself, highlighting some of the complexity it entails. From the value of personal connections, to understanding the motivations behind the brand owner, the realities of bringing major brands into games was dissected and given valuable context.
At the heart of the whole business, licensing is about "rights and legal contracts", explained Ma. While the value of licenses within games is less about instant revenue, and far more about increasing user engagement and retention. While games can benefit in the longer-term from the injection of a brand, the reputation of the brand itself remains paramount to the license holder.
Brand affiliation is a signal to the world. Are you a Ferrari guy, or a Tesla guy?Owen Ma
As such, the introduction of smart contracts, based upon blockchain technology, offers an opportunity to improve the creation and enforcement of those rights. They can remove a lot of friction and help to solve complex workflows within the branding ecosystem.
NFTs are a new ‘product category’ in branding. As they can represent anything, they enable a new understanding of ownership and extend the presence of real world brands. This is opening up entirely new opportunities for brand owners and IP creators to build different types of engagement with users and extend that brand affiliation into entirely new digital worlds.
Ma sees NFTs as the "economy for the metaverse", offering interconnectivity and force between different communities and worlds. Their interoperability, transferability and permanence are extremely important - and potentially crucial to the evolution from web 2.0 to web3, as well as the future of licensing itself.
To find out more about Epik, about licensing in games and the company’s new NFT technology visit the Epik website.