With more than 500 million cricket fans in India, and Bollywood and regional cinemas swaying over the Indian populace, an NFT marketplace for just cinema and sports in India has the potential to cross US$ 1 billion in value in the near future (subject to conducive regulatory policies), according to TMT (Technology, Media, and Telecommunications) Predictions 2022 report by Deloitte.
The report stated that India will see an uptake of NFTs – something that is more than just a collectible. Fractional NFTs have the potential to appeal to the masses and other generations apart from Gen Z, subject to clearer policy and regulatory standards (awaited). Exciting use cases for NFTs are still in their infancy, similar to the initial days of internet.
India is seeing initial action in this area with NFTs on favourite moments of movie superstars and memorable cricketing events getting initiated.
Consider this fact – key movie celebrities, such as Amitabh Bachchan, Rajnikanth, Salman Khan, and Kamal Hassan, launched NFTs in 2021. These NFTs included an autographed digital version of vintage posters, movie collectibles from blockbusters, and digital moments of famous movie characters. Amitabh Bachchan’s NFTs went under the hammer for more than Rs 7 crore, while Rajnikanth offered 60 odd NFTs from his important films.
Cricketers such as Sunil Gavaskar, Yuvraj Singh, and Rishabh Pant are also a part of this bandwagon. These early movers are expected to catalyse the market. In November 2021, the International Cricket Council (ICC) announced its plans of offering its more than 1 billion cricket fans an opportunity to own digital collectibles of memorable ICC moments. This move is expected to enable fans to not only own the game that is close to their heart, but also engage with the game and its players in a new manner.
Given the global trends and the government of India’s pending policy/regulatory framework in this area, sooner than later, an NFT-based market on movies and sports will become a reality in India.
Entertainment and sports NFTs will disrupt the industry in India
The uptake of NFTs (subject to favourable regulations/ policies) can affect the entertainment and sports industry in many ways.
1. This has the potential to bring non-millennials to active digital channels. Non-millennials may want to own, participate, and trade in cricketing moments of the 80s or 90s, or have a share in the digital impressions of events/movies from those times.
2. Such demand will allow media players as well as players in arts, museums, and private collectors to monetize digital content they own (whose monetisation is now mainly based on visual impressions on media or OTT platforms).
3. With the potential value associated with these NFTs, walletising them with the ability to liquidate in the marketplace could give rise to innovative financial transaction models.
India will see a unique marketplace in NFTs (rather than being mere collectibles). Utility and fandom value will drive the NFT uptake in India. Such NFTs will drive different business models. For example, NFT owners may be part of an invite-only club. They can get an opportunity to interact with superstars in person or online, have access to the pre-release screening of new movies, and even engage with sportspersons after a match. Over a period of time, NFT owners may be able to collectively vote on the direction a script may take in an online series.
Selling video clips of prominent movie moments is the most common and lucrative application of NFTs in the entertainment industry. The value of such NFTs will depend on the star and the movie whose part is NFTised, the fan following of the superstar, and additional content provided. For example, a dialogue from a prominent movie climax scene by a superstar with commentary by the same person could be sold in an auction, while many similar video clips could be traded in an online marketplace.
Online gaming is on the rise in India as more people are taking up gaming in a serious manner. As a result, NFTs on game merchandise will see an upswing in the next few months. With metaverse applications picking up, the uptake of NFTs will only increase.
Clarity of regulatory/policy regime is essential to realise the business potential
Though the “Cryptocurrency and Regulation of Official Digital Currency Bill 2021” is yet to be presented in the parliament, the proposal in the Union Budget 2022 to tax the gains from the income tax standpoint arising from transacting in virtual digital assets (such as NFTs) is seen by many as the government’s first step in this area. In the case of GST, deciding the taxability of digital assets is a complex task that involves classifying these assets as goods or services as actionable claims; and determining a place of supply, ownership, IP, taxability in cross-border transactions, etc. As the exciting possibilities in the new virtual world are knocking, policymakers will have to re-think the conventional concepts and provide comprehensive yet timely guidance to addresses this emerging phenomenon.
India will see a volume-focused market driven by fractional NFTs
The NFT market in India is expected to be volume-driven; an average traded value of an NFT would be lower than the global average. This does not come as a surprise given a majority of Indians’ penchant for the stored or resale value of things that they own. This factor will drive the market for fractional NFTs that simply divides the ownership of NFTs into multiple fractions, thus lowering the entry barrier for the masses.
NFTs offer a potential monetisation avenue for government-owned artefacts
Although the private sector is seen leading in this space, NFT opens a space for the government to aid in monetisation. For example, the sports ministry may consider NFT-ising famous moments of Indian athletes or sports stars in events such as Olympics or Asiad, or the Ministry of Information and Broadcasting can NFT-ize digital footage (owned by the ministry) of historical events. Such initiatives by the government can help kick-start this market, and create platforms for Indian art, culture, and entertainment (which will have a global reach and demand).
In an ideal scenario, the NFT marketplace will not have intermediaries and allow content owners to directly connect with the audience. Similar to the way OTTs disrupted the traditional television industry, NFTs will bring disruption in media and allied agencies. This disruption will result in newer and innovative models of fan engagement across the entertainment, arts, and sports industry.