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What the Hell are Digital Collectibles (and Why Have I Never Heard of Them?)

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Digital Collectibles, DCs, NFTs …they’re all names of a surprisingly broad and rapidly growing product group with the potential to become massive worldwide in the coming years. So why have most people never heard of them?

(I, fortunately…or perhaps. unfortunately…have already forgotten more about them than most people will ever know.) In fact, DCs could be considered a subset of a much better known market segment which includes in-game items, virtual goods and all the other stuff gamers buy and collect within their favorite MMOs, RPGs, FPSs, and battle royale games. The difference being that Digital Collectibles, by virtue of ‘blockchain’ technology holds the promise that these items are unique, in that they possess the following traits currently missing from your run-of-the-mill $2 gun from Fornite:

  • Only exist in digital format but are “owned” by you just like a real bottle of wine or Star Wars action figure.
  • Can be sold, traded, even put in your estate like a real object.
  • Can be created in limited edition with rarity established. Your Digital Collectible will be minted as “1 of 100” or similar just like any real-world collectible
  • In some cases, your Digital Collectible can become increasingly rare and “one of a kind” as you make it more unique over time.

“Well,” you say to yourself, “that’s pretty damn cool. So, what’s the catch? I’m a (gamer/collector/tech savvy nerd-type) and this should be pretty well-known info if it were real.”

So true. And yet, it is real and has been for a few years now with massive brands offering Digital Collectibles including Major League Baseball, FIFA, Paramount Pictures, Marvel, Disney, F1, and many more. Which only serves to deepen the mystery as to why these products are still completely unknown to the very markets they’re begging to conquer?

Still Early

Despite being around for a few years now, the DC market is still very much in its infancy. This has a lot to do with the technology required to impart those cool attributes listed earlier. Blockchain, as a technology, is really cool. What’s not so cool is the fractured state of the blockchain ecosystem, with dozens of standards and platforms and such. Bottom line: the blockchain world as it relates to Digital Collectibles has yet to get its collective act together to create a global standard for buying, selling, trading, etc these Digital Collectibles. As some platforms and standards rise to the top over the coming months, the smoke should clear and clear winners will emerge, which should help to consolidate the industry and create a cohesive global marketplace.

Got No Game

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Most Digital Collectibles fall into two categories: Pure Collectibles and Game Collectibles.

Pure Collectibles are just that — digital products acquired for the sake of collecting them. Collectors like the ability to complete sets, search for rare and unique items, display and show-off their acquisitions, and hopefully watch their investments rise in value. In this way, Pure DCs are no different than sports memorabilia, art, or wine.

Game Collectibles are exactly what they sound like: digital collectibles within a game. Collecting these items not only satisfies the pure collecting aspects of completion, search, investment, etc., but they have the added benefit of providing a competitive advantage in a game. This is a huge attraction and is why in-game purchases are the #1 revenue generators in the entire gaming industry… to the tune of tens of billions of dollars per year.

So, shouldn’t that fact alone make DCs more known and relevant? It should be, but it hasn’t for the simple reason that no one has actually heard of any of the games that offer digital collectibles! This is because DCs have yet to be embraced by the big guys — EA, Activision, Epic, Tencent, etc, etc. It’s why you don’t see DCs in your favorite mobile, PC, or console games…yet. Stay tuned though!

Just a Toe

So, earlier when I mentioned all those big brands and entertainment companies that have gotten into the digital collectible space? Yeah, well, I should probably caveat that by saying that, while they’re technically “in the space” they’re not “all-in.” While some have make bigger bets than others on DCs growing into a major revenue stream, none have fully backed it and put the resources behind it yet that they do for real-world goods like action figures, toys, and apparel. The reason for this, as mentioned, it’s still early and the market hasn’t yet grown to be viable.

“But how will it grow without the support of the brands” you ask? Good question. It’s a Catch-22. A ‘chicken and egg’ problem. But as more start-ups license these brands and slowly build the recognition, the market will grow and, eventually, you’ll see real money being made by these brands and the explosiveness of growth will finally be realized. Until then, speaking for one of those start-ups, we’re happy to have them dipping a toe for now and giving us the opportunity to bring their IP into the world of Digital Collectibles.

Blockchain, ETH, NFT…WTF?

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There was a time not long ago where if I were reading anything with one of the above words, I’d glaze over, tune out, and stop dead. Well, honestly I still do that. And while I’m appreciative of the fact that Blockchain technology has allowed the world of Digital Collectibles to exist, I firmly believe that, for this nascent market to grow to become mass market, all of these terms and their associated processes, platforms and mechanisms should disappear. I’m not saying that they should not be used, but just keep them behind the curtain, invisible to normal — non-cryptonerd folks.

Believe it or not, in most online marketplaces where you can go and buy Digital Collectibles, the term “NFT” is prominently featured. And the definition is most commonly provided as “Non-fungible Token.” (And therein lays the “WTF?” response.) Believe it or not, an NFT is actually just a Digital Collectible! So why not just say it? Beats the hell out of me.

In fact, it seems like the Blockchain industry is so dead set on NOT allowing Digital Collectibles to become mass market that, in most cases, you can’t even use dollars, euros or pounds to purchase them but are required to use “crypto currencies” which, let’s face it, is a non-starter for 99.9% of anyone who thought this could be a pretty cool pastime, hobby, investment or entertainment game mechanic.

But this is changing. Below, you’ll see what’s being done now and what will be done to fulfill the mass market promise of Digital Collectibles.

So What’s It Gonna Take?

Don’t get me wrong. Despite the above, I’m confident Digital Collectibles will soon become mass market. You’ll see them in ads and on TV. Large gaming companies will begin to introduce them into their AAA titles. But to help them along, there are things the companies that are creating and selling DCs can do to make this market a lot more exciting. Here are just a few:

  • Make collectibles interesting: Up until now, the vast majority of DCs are simply 2D graphics that have little creativity or uniqueness. They’re created in limited numbers and a small community snaps them up in hopes they’ll appreciate in value. The new collectible is 3D, animated, with sound and interactivity. It is viewable in multiple environments and platforms (mobile, PC, VR, AR) and can be further customized to make it totally unique and, therefore, more rare and valuable.
  • Make collecting social: As I write this, participating in the Digital Collectibles world — unless you’re on the various WhatsApp, WeChat, Telegram, and other channels with the cryptogeeks — is a very lonely endeavor. That’s gotta change (and it has) as collecting is all about sharing: it’s about displays, it’s about bragging, it’s about one-upmanship — it’s about showing…off…your…cool…shit. Social networks are global. The minute DCs become something that Instagram and TikTok influencers are getting into flame wars over…that’s mass market.
  • The ability to show off your newest acquisition on mobile (re: take a selfie in AR!) or invite contacts into a virtual space to show off your collection is just the beginning. That’s finally happening now and will evolve into massively multiuser ecosystem where everyone can participate, create their own collection and show it off in a virtual showroom, museum or ‘fancave.’ Friends lists, chat, team collections, taunts, live auctions, and so on are being added to the DC market to make it a truly global community and social phenomenon all on its own.
  • Make collecting competitive: Back to the whole gaming thing. FYI, Pure Collectibles don’t need to be a part of an actual game to make collecting fun and engaging! Just the act of collecting can become a competitive sport. Levels, bonuses, leaderboards, meta-games and more are being added outside of actual games to make the collecting competitive and engaging.
  • Make collecting rewarding: There’s nothing more satisfying than being rewarded for hard work. Completing a 1972 Topps baseball card set was incredibly hard! Being rewarded for it — in whatever form that eventually arrives — whether it be selling, giving to a child, trading for something else or whatever, is what I spent those years working towards. The same can be said, now, for Digital Collectibles. There will be rewards, lots of them for those who get in now.

Digital Collectibles are real. They’re happening now. They can be experienced on a number of online marketplaces, games and ecosystems. I just happen to believe strongly that Terra Virtua (full disclosure I’m part of the team) is leading the way in making DCs a truly mass market experience. With an entire ecosystem across multiple platforms and devices, combined with amazing content like The Godfather, Lost in Space and Top Gun along with our own IP, Terra Virtua is hastening the mass market adoption of Digital Collectibles.

Oh, and you won’t see the terms NFT, ETH, or crypto anywhere unless you want to!

Doug Dyer, Chief Operating Officer

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