In short:
- A new report by Activate technologies reveals that the hype cycle for NFTs and the metaverse is over, with greater maturation of both markets in the near future.
- NFTs are becoming less like investments and more like tools to build community, while the metaverse is ready for targeted corporate investment.
- The NFT market is still bent towards the younger, more affluent demographic in the United States.
A new report by Activate Technology reveals that the non-fungible token (NFT) and metaverse hype is over and that both sectors will need targeted corporate interest going forward.
The future holds new use cases for NFTs to aid companies in building brand loyalty, while the metaverse will need sustained corporate development.
NFT use will change to community-building
According to a new report released by the company, NFTs have gone past their peak bubble. Accordingly, the hype surrounding the space will gradually decrease.
NFTs will become mature products, with blockchain and Web3 driving greater utility for the tokens. Companies will also capitalize on the space to build communities around their brands. Buyers will also benefit from a sense of belonging.
Starbucks is already offering the Starbucks Odyssey experience that uses NFT collectible stamps that will give owners access to unique coffee experiences.
Additionally, the report revealed the shift in the demographics of current NFT market participants. It defines participants as those who “researched, discussed, browsed, bid on, purchased, displayed, sold, or created NFTs in the last 12 months.”
The number of U.S. participants increased from 12% in 2021 to 18% in 2022. Still, less than one-third of the U.S. population is still unaware of what NFTs are. Forty-three percent of NFT participants came from affluent households with incomes of $100K or more.
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NFT sales in primary and secondary marketplaces, excluding LooksRare, have exceeded $23B in 2022. Most NFT owners are now buying them for display on social media and collections. This is unlike earlier in the NFT cycle, when people bought and traded NFTs as speculative investments.
Only 51% of adults 18 years or older bought them as investments in 2022, compared to 76% last year. Nineteen percent more buyers are using them for display purposes, while 4% more are treating them simply as digital collectibles.
Twelve percent fewer are buying them because of novelty. Two percent more are buying them to support an artist or athlete.
Loyalty programs will take the place of “cool” NFTs. When brands put out NFTs for consumers, they used to try to look cool and innovative. Those times are over now. People don’t care about NFT stunts or art. Brands will keep changing. Customer loyalty programs are the next big item for NFTs. Smart brands will follow the lead of companies like Louis Vuitton and Starbucks, which use NFTs to give customers access to special experiences and perks.
• When employees use metaverse collaboration, they will be a bright spot. Forrester thinks that metaverse technology will become more popular over time through what they call the “reverse consumerization of IT” effect. This is when people use the tools at work, get used to them, and then start using them for personal. The first step on this path will be to add metaverse-style experiences as a feature, not as a separate product, to collaboration suites. For example, Microsoft is putting its Mesh components right into Teams, which will let people use avatars to move around in 3D virtual spaces and do digital whiteboarding together.
We believe that at least three more of the big collaboration services, like Google, Slack, Webex, or Zoom, will add 3D metaverse-style features in 2023.
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