Big Ideas 2023 | Ark Invest: NFT Trading Volume to Increase Fivefold in Five Years, Reaching $120 Billion by 2027

ARK Invest, led by the renowned "Queen of the Bull Market" Cathie Wood, released its annual research report yesterday, titled BIG IDEAS 2023. The report covers research and predictions in the areas of digital consumption, smart contract networks, electric vehicles, and autonomous logistics. This article focuses on the digital consumption section of the report.

Articles in the ARK 2023 report:
1. Big Ideas 2023 | Artificial Intelligence as the most important catalyst for explosive growth, but with low correlation to blockchain
2. Big Ideas 2023 | Bitcoin's price expected to range from $250,000 to $1.48 million by 2030, depending on market trends
3. Big Ideas 2023 | NFT transaction volume to increase fivefold in five years, reaching $120 billion by 2027

Digital Leisure Consumption Development Trends

This section of the report mainly focuses on "Digital Leisure Consumption," including categories such as NFTs, video games, online sports betting, and live streaming. In 2022, the total expenditure on digital leisure consumption reached 6.6 trillion U.S. dollars, and the report estimates that it will reach 22.5 trillion U.S. dollars in 8 years, with a compound annual growth rate (CAGR) of approximately 17% after adjusting for inflation.

1. AI Technology May Increase People's Spending on Digital Entertainment

Due to the advancement of generative AI technology, the global average working hours are expected to decrease by 0.9% annually over the next five years, from 4.7 hours in 2022 to 4.4 hours in 2030.

Furthermore, consumers will reallocate additional time to online activities, with the time spent on online work increasing from 39% in 2022 to 53% compared to offline time.

2. Short Videos and Recommendation Engines Are Replacing Existing Social Platforms

In 2022, the global hours spent on platforms like Facebook and TikTok are similar, indicating that traditional media like Facebook may have reached its peak.

However, despite TikTok's rapid growth, its market share in search, video, and social advertising in 2022 is only 2%, around 10 billion U.S. dollars. Facebook still dominates this market segment with approximately 100 billion U.S. dollars, followed by YouTube with around 50 billion U.S. dollars.

3. Demand for Sports Betting Remains Significant, Shifting More to Online Betting

In 2022, the total sports betting amount in the United States and Canada increased by 83% year-on-year to around 117 billion U.S. dollars, with the proportion of online betting soaring from 17% in 2018 to 86% in 2022.

The report estimates a compound annual growth rate of approximately 27% for online betting transaction volume over the next five years, expected to rise from 1 trillion U.S. dollars in 2022 to 3.3 trillion U.S. dollars.

4. NFT Trading Continues to Rise, with Changes in Project Types

In 2022, NFT trading volume increased by 15%, mainly driven by collectible projects like BAYC or CryptoPunks. However, towards the end of the year, the types of NFT projects gradually shifted towards functional projects such as on-chain domains and digital membership cards.

This shift indicates a move towards potential value-driven projects rather than speculative ones.

5. Digital Assets Bring the Concept of Ownership, Accumulating More Value

The robustness of property rights and intellectual property rights is positively correlated with per capita GDP. With decentralized proof of ownership, digital assets may increase per capita online spending.

The report estimates that NFT transaction volume will grow more than fivefold over the next five years, from 220 billion U.S. dollars in 2022 to 1.2 trillion U.S. dollars in 2027.

6. The Development of Digital Leisure is Still in the Early Stages

According to the report, global consumers spend around 21% of their total leisure budget, approximately 31 trillion U.S. dollars, on digital goods and services. The demand for digital consumption is estimated to grow at an annual rate of about 17%, surpassing physical consumption by 2029.

7. Digital Leisure Revenue Expected to Reach 5 Trillion U.S. Dollars by 2030

The report defines digital leisure revenue as the income that platforms and creators derive from digital leisure spending. The estimated annual growth rate over the next 8 years is 8%, increasing from 2 trillion U.S. dollars in 2022 to 5 trillion U.S. dollars in 2030.

The top three revenue sources include e-commerce platform fees, digital advertising, and video game software and services, with NFT platforms and creator fees accounting for a small percentage.