Although 2021 will hopefully see the return of live events, with an extended lockdown on the horizon and a shift in consumer behaviour set to sustain an influx of online activity, virtual experiences are here to stay, either as standalone virtual events or integrated alongside a physical activation.
In one way, this is great news, because virtual events indisputably enable brands to draw in vast, global and engaged online audiences, not constrained by physical capacity limits.
But there's a crucial flip side to consider: the vaster the audience, the less exclusive an experience feels. Live audiences—whether physical or virtual—always crave the "I was there" badge of honour that is far elevated above the legacy content distributed en masse after the event. In simple terms, scarcity-driven exclusivity will always equate to value.
For virtual experiences, this exclusivity can be manually engineered in a number of ways through curbing capacity via sign-ups; hosting through channels with platform-enabled exclusivity (à la Travis Scott x Fortnite collab); integrating limited viewing slots (like the League of Legends: Wild Rift launch event) and—perhaps most interestingly—using blockchain technology, and more specifically, an application called non-fungible tokens (NFT), which act as a virtual trophy of attendance that validates attendance and accrues real value around digital experiences.
For those zoning out right now: blockchain is a decentralised database system, which makes it difficult or even impossible to change or hack the system. It's at the heart of digital currencies like Bitcoin and has wider uses from securing the transaction of medical data through to preventing luxury goods counterfeits.
Many sectors are looking for ways to integrate blockchain into their infrastructures as the technology provides security, transparency and efficiency, and it ultimately disables fraud. Also, an NFT is traded using blockchain, so it is a completely unique token representing a specific item. Unlike Bitcoin, which is exchangeable by nature, each NFT is different, making them impossible to replicate and, thus, scarce.
In their application, NFTs can and have been widely used to engineer scarcity and value among die-hard gaming fans.
Those who played Formula One's NFT-powered racing game F1 Delta Time last year saw the auction of a segment of an in-game track sell for $222,000; a record price for an in-game NFT.
And it's not just gaming that is leading the way. Big brands including Nike, Vodafone, the NFL, Samsung and Louis Vuitton are dipping their toes in NFTs which could see a further uplift in mainstream adoption.
But while NFTs have largely been used as virtual credits for virtual assets in blockchain games like F1 DeltaTime or CryptoKitties (pictured above), the use of NFTs is also expanding into assets like virtual event tickets or experience memorabilia, that by the nature of their limited supply, will accrue intrinsic value to virtual audiences.
Much like IRL live audiences nostalgically pin their gig tickets to the wall, virtual audiences can equivalently treasure a virtual crowd-caught plectrum and authenticate event attendance with unique NFTs.
Most recently, in the highly anticipated emerging virtual music industry, dance music artist Deadmau5 and blockchain platform WAX announced the sale of a limited series of NFTs in the form of digital collectibles, varying in scarcity from "Least Rare" special-edition stickers and video clips through to an "UltraRare" piece of collaborative artwork by the highly acclaimed 3D designer Sutu Eats Flies.
The fact that NFTs use blockchain means each digital collectible sold was indisputably verifiable and authentic, thus valuable.
With collectors able to buy, sell and showcase their one-of-a-kind collectibles on WAX and social media, demand skyrocketed and Deadmau5's first set of digital collectibles was valued just shy of $100k, with the super-rare audiovisual collab making up 50% of that value.
So while we may yearn for the bragging rights of live experiences and real-world assets to re-emerge, a window of opportunity lies within the exclusivity and value that can be generated by the virtual world's indivisible and unique NFTs.
There is no doubt we will see a shift this year towards the use of NFTs across all industries, with the value of bitcoin surpassing the value of gold and the growing adoption of blockchain by mainstream brands, we're just getting going.
But combine these trends with a shift in consumer behaviour towards attending virtual experiences, it becomes almost inevitable that the future value of the virtual experience economy lies in the use of blockchain and NFTs. They undoubtedly enable exclusivity and generate high value around virtual experiences and digital memorabilia.
Annabel Holmes is client partnerships manager at Unit9.