Three letters that elicit an almost immediate reaction today are N-F-T.
Unique pieces of virtual content—like artwork or music—NFTs’ ownership details are stored in a digital ledger (blockchain). They can’t be copied, substituted or subdivided–making them collectible by nature–and are inextricably linked to the emergence of Web3 and cryptocurrency technology.
Some estimates have priced the NFT market at US$1.7 trillion, and the most recent activity on NFT marketplace OpenSea tracked trading at approximately US$4 billion this past January alone.
If your head is spinning, you are not alone. There is a tidal wave of information and techno talk that has clouded the market and obscured the potential opportunities for creators and consumers who wouldn’t know a Dogecoin from a Dodge Ram.
However, the technology’s proponents in the kids space are starting to embrace the NFT concept, which they see as much more than just an additional licensing category. They insist it has the potential to reshape the kids and family marketplace by giving creators and IP-owners a new way to forge an ongoing relationship directly with consumers.
While big names like Mattel have already jumped on the bandwagon, the true power of NFTs emergence still remains to be seen.
Early Days Yet
One reason for the hesitation and skepticism around NFTs right now is simply a function of how early it is.
“We are at day one of week one of month one of year one for NFTs right now,” says Darran Garnham, founder and CEO of Toikido, a UK-based toy company. The company is just starting to test the technological waters and has recently inked a partnership deal with VeeFriends, tech entrepreneur Gary Vaynerchuk’s NFT project.
Steven Wolfe Pereira, CEO of the creator’s platform Encantos, is an early champion of the technology, and agrees with Garnham’s sentiment. “We are at the GeoCities phase of Web3,” he says. “It’s so early now that there are going to be lots of different permutations still to come.”
One of the obvious and most significant barriers to entry for consumers is that NFTs are traded in cryptocurrencies, which to the uninitiated are confusing and intimidating. While new user-friendly platforms are emerging to smooth out the use of crypto, clearly it is still a tremendous barrier to entry.
At this point, no one could reasonably expect kids themselves to be able to use crypto to purchase NFTs (or maybe even their parents!). Wolfe Pereira says the entire NFT landscape needs to go through an “Apple-fication“—where the technical inner-workings begin to recede and a more consumer friendly, frictionless interface emerges. With the deluge of investment in Web3 and crypto, he believes this is imminent and sees no reason to throw the digital baby out with the binary code bathwater.
“When the World Wide Web first emerged, everyone was putting up websites,” he says. “Some of them were just a brochure on the web and you might have thought ‘what is the point of that?’ But we didn’t just dismiss the idea of the internet. We are now at that point with NFTs.”
Because of headline-grabbing prices for some NFT products (like artwork) and sky-high valuations for some blockchain-based companies, it’s easy to view NFTs as just another vehicle of speculation: primarily designed for money making and susceptible to pump-and-dump schemes. However, NFT enthusiasts in the kids space insist that NFTs are not a get-rich-quick scheme, arguing that the adrenaline-fuelled day-trading aspect should not obscure the potentially revolutionary nature of the technology.
“When I realized that the next wave of the internet is going to be about the ownership economy and how everything will be organized through a token, that’s when I started to really appreciate the power of the technology,” says Wolfe Pereira.
When the dust settles, Wolfe Pereira adds, NFTs will offer consumers true value, not inflated monetary returns, or they will not survive.
Canada’s Toy Mint has developed Minted Teddy, a new NFT built around the ideals of compassion and sustainability.
LA-based Invisible Universe is entering NFTs through a partnership with athlete Serena Williams and her IP, Qai Qai (inspired by Williams’ three-year-old daughter’s doll of the same name). The company is developing long-term plans around the IP including a web series and gaming, and is also in the planning stages for a Qai Qia NFT drop, expected later this year.
Tricia Biggio, Invisible Universe CEO, says it is imperative that NFTs offer “utility,” a word used heavily in the blockchain world to refer to something’s ability to be useful in a concrete, real-life way.
“You need to feel like you are giving the audience something to do with it,” Biggio elaborates. For example, first-run Qai Qai NFT owners will have a chance to participate and contribute story ideas and character arcs to a planned animated series starring the new IP, not unlike a reward for crowd-sourced content funders.
“It will be the first metaverse project animated series inspired by NFTs,” Biggio says. The 50-ep series will be launched on social media platforms including TikTok, Instagram and Discord.
“There is a participation premium,” says Zoran Kovacevic, CEO of Vancouver-based Toymint, the company that developed the NFT Minted Teddy (pictured). “It’s a known principle that people will pay more for something that they have actually helped develop.”
Kovacevic echoes Biggio’s idea that NFTs should offer users a variety of utility. A new release or “drop” of 10,0000 Minted Teddys is expected in April. The newly minted (minted is crypto-speak for “produced”) NFTs will straddle both the real world (each purchase will include a plush toy), and the metaverse (a digital avatar is also included). The new 10,000 NFTs will be added to the 1,111 Minted Teddy NFTs currently in circulation.
“That is just the beginning,” says Kovacevic. “We are constantly talking about developing more and more utilities, including ongoing discussions with gaming companies.”
For both Toymint and Biggio, the modus operandi is to give owners something more than a piece of digital information for their investment.
Tied in with the idea of utility is the community-building capability of NFTs. This core concept is absent from most narratives that frame the NFT as a purely speculative commodity. Yet it is perhaps the key to the technology’s future–especially when it comes to kids.
For example, the Qai Qai NFT was developed to leverage the community of fans surrounding the emerging IP (and its famous founder) and there are myriad examples of rallying points around movements such as climate change (Beeple). In April, LA-based Bureau of Magic set out to create an NFT-based franchise for Amazon’s Lost in Oz animated kids series. Launching in June, it is a membership-based experience in which an NFT purchase unlocks access to a short film and a 3D-printable toy line. Critically, it will be credit-card accessible and not just crypto-based, in order to increase access to families.
The community for Minted Teddy, on the other hand, is being built on shared values, such as sustainability, harmony and thoughtfulness, ideals that will be interwoven through all aspects of the program. The plush bear version of Minted Teddy, for example, is being manufactured with sustainable materials and equitable work practices.
“We want the Teddy to represent the kind of world we would love to live in, to inspire the next generation,” says Kovacevic, “rather than just playing Fortnite and shooting each other.”
Both Qai Qai and Minted Teddy will leverage social media platforms like Twitter and Discord to give their communities a way to coalesce and communicate.
“These communities are like old-fashioned fan clubs,” says Garnham. “Personally, I have gotten to know some great people in totally different sectors through [an NFT community]; it’s really fascinating.”
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Three letters that elicit an almost immediate reaction today are N-F-T.