Non-Fungible Tokens Market size is expected to grow from USD 3.0 billion in 2022 to USD 13.6 billion by 2027
🗣 The major factors fueling the NFTs market include the increasing influence of celebrities giving momentum to NFT’s adoption; the gaming industry revolution; and the slow but continuing rise in the demand for digital artworks. Moreover, increasing the available use cases of NFTs in supply chain management, retail, and fashion, and doubling on efforts of industry giants toward making Metaverse a reality, would provide lucrative opportunities for NFT vendors.
👉 Driver: Revolutionizing the gaming industry
One of the important factors behind the exponential increase in demand for NFTs is that they have extended the horizon from music, videos, and sports to other streams, such as Metaverse and gaming. In 2017, Enjin was one of the first mainstream gaming companies that merged blockchain technology with its infrastructure and issued a gaming cryptocurrency, ENJ, that is officially whitelisted for use in Japan. Also, with the advent of Pplay-to-Eearn (P2E), players can buy, sell, and trade earned-in-game assets. For example, games such as Axie Infinity and Splinterlands, enable users to mint rare in-game assets into NFTs and pile up transactions related to buying or selling these assets. Data on DappRadar shows that Splinterlands alone generated more than 4 million transactions per day on Aug. 7, 8, and 9 of 2021, while the entire Ethereum network generated an average of 1.2 million transactions per day. According to Forbes, Axie Infinity witnessed a surge in user growth in the Philippines when it offered players an alternative source of income during the pandemic. Hence, the gaming industry, especially the play-to-earn blockchain gaming model, has established itself as an immense growth opportunity for NFT.
👉 Opportunity: Efforts of industry giants towards making Metaverse a reality
The Metaverse is a vision of an internet-enabled virtual world where people have avatars and interact with digital assets through Augmented Reality (AR), Virtual Reality (VR), and Extended Reality (XR). This is developing rapidly with the evolution of blockchain technology and industry experts believe that NFTs are going to be the revenue model for the Metaverse. Presently, virtual items are the revenue model in video gaming, generating USD 175 billion in business annually. Since the Metaverse will have digital avatars, NFTs will enable direct access to real-life identities and digital avatars in the Metaverse.
NFTs are expected to be used in various metaverse use cases, such as user interaction, socialization, and transactions. For example in 2019, an NFT-based token was used as an entry ticket for the NYC-NFT event. After the success of this event, many others started using NFTs as an entry- ticket, fueling their further adoption of them in the Metaverse. With major players, such as Meta and Microsoft investing in the Metaverse, projects are focused on introducing massive transformations for online interaction.
For example, Decentraland enables the virtual purchase of the real estate in Metaverse, showing the places where users own Metaverse real estate by using land tokens. Industry experts also believe that in Metaverse, NFTs can be used in the form of currency, which can be used for transactions as well as for purchasing and trading virtual digital assets. Hence, the Metaverse is expected to be the biggest opportunity for NFTs.
👉 Challenge: High and hidden fees
NFT transactions are associated with high and hidden gas fees, which most first-time users are either unaware of or ignorant of. Many NFTs are based on the Ethereum blockchain, with ERC-20, ERC-721, ERC-1155, and some other token standards being used for issuing smart contracts. The Ethereum blockchain, in particular, uses the proof of work mechanism to determine its value, which causes high gas fees, which is one of the challenges faced by the NFT Marketplace these days.
As discussed above, Ethereum is working on reducing this limitation by moving from a proof-of-work model to a proof-of-stake model through which the energy per transaction could be reduced to as low as 35Wh, resulting in reduced gas fees.
👉 By end-user, the media and entertainment segment is expected to have the largest market share during the forecast period
In the media & entertainment industry, NFTs have the potential to completely transform the way films are made, produced, and distributed, democratizing this unilateral industry in the process. To demonstrate the future of NFTs in the world, the NFT community Arabian Camels is making a USD 50 million Hollywood film called Antara.
NFT is especially useful for budding filmmakers and artists who are hardly visible in the industry. For big production and elite film franchises that have millions of followers, NFTs provide a unique opportunity to solidify their fandom in the Metaverse. Because of this, multiple production houses, such as Disney and Lionsgate, are already working on developing their own NFT marketplace. The integration of NFTs into the entertainment industry can lead to enabling users to actively participate in every step of film production and distribution and will allow viewers and creators to connect beyond the screen, taking the industry to unimaginable dimensions.
👉 North America to hold the largest market size during the forecast period
The Americas is expected to be the largest contributor in terms of the market size in the global Non-Fungible Tokens market. Unlike other platforms, OpenSea, an American company, does not impose a fee to mint NFTs. The platform charges a payment on the final sale price, which is presently 2.5%.
Organizations are coming up front with many developments and partnerships to explore and make people aware of the trends and uses of NFTs to help them monetize their work. For example, Lagunitas Brewing Company recently became the first beer brand to enter the NFT segment in Latin America. With their partnership with Byte, Lagunitas has minted NFTs representing the quintessential elements of a traditional backyard. The presence of major NFT marketplace vendors such as OpenSea, Larva Labs, Cloudflare, Dapper Labs, etc., is also expected to create lucrative opportunities for NFT users in North America.
👉 Key Market Players
Major vendors in the global Non-Fungible Tokens market include:
Cloudflare (US), Gemini Trust (US), OpenSea (US), Semidot Infotech (US), Dapper Labs (Canada), The Sandbox (China), Axie Infinity (Vietnam), Rarible (US), Art Blocks (US), Foundation (US), Superrare (US), Mintbase (Portugal), Larva Labs (US), Appdupe (India), CryptoKitties (Canada), Sorare (France), Yellow Heart (US), Onchain Labs (China), Solanart (France), and Gala Games (US).
👀 So, what are your opinions on this week’s prediction? Do you believe Non-Fungible Tokens market will rise as quickly as expected? We are eager to hear you, let us know in the comments! 👇