Where the Puck is Going
Hockey superstar Wayne Gretzky is quoted as saying, “I skate to where the puck is going, not where it has been.” I was recently talking with a young founder in the web3 space, and we ended up speaking about where the puck may be going in the sector. I keyed in on two trends that I think will be important in 2023. There are opportunities for startups in these areas that I’ll break down here.
First, I am impressed by the early success of Reddit integrating NFTs. They accumulated 2.5 million active wallets within months of adding digital collectibles to their social media platform. This is roughly 5% of their 50 million daily active users, an excellent participation rate. Reddit has shown other social media companies the upside of embracing NFTs, and I expect many more to follow next year.
Last month, Instagram announced they are piloting a program to allow creators to sell NFTs to their followers on their much larger app. Instagram is starting with a small group of creators, but if the test goes well, we can expect this to be broadly added. This is a much bigger opportunity as Instagram has 10x more daily active users than Reddit, over 500 million.
Elon Musk’s search for more engagement and revenue at Twitter could also lead to that platform adding support for NFTs. Last month, Twitter began experimenting with NFT tiles. These tiles allow for larger pictures of NFTs with direct links to marketplace sites like OpenSea for faster trading. Elon has long supported Crypto initiatives, it’s possible Twitter does more here.
I think this trend will continue and intensify in 2023. I would expect other platforms like YouTube, Spotify, Snap, and more to consider how they can support their creators in selling NFTs to fans. This is a “where the puck is going” one for me, so the question is what a startup can do to capitalize on this trend. These huge consumer apps have likely already picked their partners for minting of these NFTs, so I’m not looking there. They will want to work with big, established minting platforms and not something just recently launched.
Currently, I’m thinking more about how startups can support the customers on these giant consumer platforms. Fans are going to want tools to figure out which NFTs to buy. They are going to want to compare the offerings between the creators they love and the different platforms. They are going to want to track their holdings to know what they are worth over time. These will be messy as it is likely the social platforms will use different minting solutions and blockchains. I think there is an opportunity for startups to get ahead of these problems as millions of new users will onboard to web3 through these consumer apps.
The second big trend I’m watching for 2023 is the potential boom in NFT gaming. Back in June, I wrote extensively about how I believe gaming will bring millions into web3. I spoke about games that will likely minimize the Crypto economics and focus instead on the benefits of blockchain with freely traded assets and interoperability. I reviewed the huge money that has been invested in the sector with startup leaders coming out of the biggest and most successful game developers. All these factors continued in the second half of this year, and I still expect the first major U.S. hit video games built around NFTs in 2023.
I would encourage startups to think about what they can do ahead of this blockchain gaming trend. Ask yourself what gamers will need to play these games, find and buy the best NFTs, and track their assets. As with the social media NFT trend, it’s likely too late to build minting platforms or marketplaces. These are already established, and the best game studios will want to stick with the battle tested ones. I’m thinking more about content or information around the best new games. Players will need to sort through the new game offerings, and maybe this will come from a dedicated news or content source. I’m also interested in some type of Bloomberg for gaming NFTs. There is an opportunity for a data site for gamers to evaluate assets with info on price, features, and more on the large number of NFTs likely coming soon.
If you’re a startup founder looking at the NFT space, I hope this article has helped you think about ways to capitalize on two of my top trends for 2023. Try to get yourself to one of these places where the puck is going next year, and you’ll be positioned for a big opportunity.
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