I think as history looks back, 2020-2030 may turn out to be the most important decade of technological advancement ever. What has caught my interest most recently is not the stand alone technology of AI, Skins or Blockchain but the opportunity that is brought about when all three are intertwined. Similarly to social media companies, technological innovation with the prior social media company had to take place in order to create the new one. I think we are seeing something very similar here with it all being possible with the blockchain.
Let’s start first by analyzing the market opportunity. When it comes to Fortnite alone the TAM is $1.5B. There are 30 million daily active users who on average will spend $50 per year on the platform. For this exercise let’s assume that is on ‘Skins.’ That number doesn’t include Skins numbers from Call of Duty, Roblox, Minecraft or any other game where Skins is popular. Currently the Digital AI friend TAM is $5B with the market expected to reach $16.4B by 2026. As of today, the current Digital Cosmetic TAM is $60B. Not bad for technology that is just a few years old. I will step out on a limb and say by the time 2030 comes around, these markets will exponentially grow.
Now let’s address the black sheep of the family, blockchain. The total global cryptocurrency market cap is 1.75 trillion as of today. Understand there is a significant difference between the underlying technology of blockchain and the gamification of digital currencies used to operate blockchains. Blockchain is important as it relates to this topic because it created a framework for NFTs to exist. Why NFTs were significant was it provided and immutable digital certificate of ownership. If you have immutable digital ownership of an asset, this opens up a lot of opportunity.
It comes as a surprise to nobody that AI adoption worldwide is incredible. 35% of businesses have adopted it in some form, and Ai is expected to contribute 15.7 billion to the global economy by 2030. 13X from where its at today. Currently 70 million Americans use voice assistants like Alexa and Siri regularly. Generative AI tools like text-to-image models is exceeding the rate of tablet adoption in the early 2010s, indicating rapid growth. As AI evolves, I feel the AI buddy will be the next logical step and this is where the intersection will happen.
I think within the next few years people having AI friends will not be uncommon. Our friendships have already become digital through the adoption of text, social media and video chats. When was the last time you called a friend? How many in person business meetings have now defaulted to Zoom calls? I think the next step is a digital friend that exists on our phones. In 2024 100 million AI- Focused Smart phones will be shipped and optimized for Gen AI. Everyone has a phone and soon everyone will have access to a personalized AI. There are already use cases for AI therapists, AI chat bots that help with grieving for the loss of someone and of course, the AI boyfriend and girlfriend. The AI boyfriend who knows how to handle your every emotion and say the right things at all the right times? The AI girlfriend who can be projected onto your TV, dressed in whatever you want her to be dressed in and talk to you in whatever way the AI is trained to… Sooo let’s keep focused on the market opportunity.
Now that we have the hardware for the personalized AI, let’s discuss the business opportunity. I believe that customizable AI’s will lead to the next big boom in AI. I think having a customizable AI will become as common as the iPhone. What does 1000 exclusive AI’s that are trained on Taylor Swift’s likeness go for on the open market? Then that AI could be traded on a marketplace where Taylor and other creators would financially benefit when it is traded. This same thesis hold true for brands as well or even websites like Reddit or X. What if you have an AI that is trained on your favorite political subreddits? People increasingly turn to these subreddits to seek out echo chambers and connect with likeminded people. Having an AI that acts as an echochamber for your thoughts could end up being a huge hit. Instead of jumping on Reddit to discuss political topics, all you have to do is talk to your AI about how much you hate Trump or how upset Biden’s latest policy made you feel. Its hard to imagine a future where customizable AI’s are not a new way for fan bases or cliental to connect with their favorite brands, idols or platforms.
The next number in this equation is the concept of skins. Skins which have been made popular by the video game Fortnite, are a way for fans to customize their character to their likeness without it having impact on gameplay. Skins have been not only a unique way to market to fan bases but create revenue streams for its partners. Its estimated around 83 million people play Fortnite a month and spend about $7.20 on the platform. That comes out to a average monthly spend of about $600 Million. That is just on Fortnite. As stated earlier, the Skins market in 2023 is estimated to be at about $60 Billion. So if the customizable AI market is going to explode, so will customizing the customizable AI. I bet dressing your AI will be as common as dressing yourself. If AI becomes common, then the fashion market will follow. Let’s use another Fortnite example. Balenciaga launched a campaign with Fortnite to have special designer skins. They were priced 60% higher than the average skin price and sold out within an hour of going live. The undisclosed profits were shared between Epic Games and Balenciaga. Judging by the small sample size, based on game theory, name brands appeal is applicable to the digital world as well. Who wouldn’t want to dress up their Ai in their favorite team jersey or a cute little Gucci shirt? (Generated by Dalle 3)
Now this is where the blockchain comes into play. Having all these assets tied to the blockchain gives them not only tradeable value for the companies and holders, but the longevity of it not being tied to any one protocol means they can live as long as the blockchain is still executing transactions. So even if the company that made your AI goes out of business, your AI will technically still live on. If the company you bought from Skins from goes out of business, that Skin will still be available on the blockchain. Within the blockchain lies the opportunity of buying and selling these assets on the market place. If someone wants to sell their Taylor Swift AI, now they can. Ready to shed the winter jacket skin for something that is made for warmer weather? Now you can. It makes sense for companies or celebrities to utilize the blockchain marketplace because each time transaction is made, they get paid creator fees. According to DappRadar, in 2022 alone, around $1.18 billion was paid to creators through artist royalties on secondary NFT sales. The immutability of the blockchain code ensures that if royalty fees are paid out, the owners of those fees these cannot be changed. If we look further down the line, what does this look like with gaming? Utilizing the blockchain as a “layer zero” for different mainstream games means your assets are not beholden to just one game. Buying a pair of Jordan shoe Skins in Fortnite, gets you the same Jordans in Call of Duty. In theory, it would also be possible that your customizable AI can be your avatar in these games. Having that NFT or digital certificate on the blockchain ensures that the person playing the game is the true holder of the assets. I have a friend that always reminds me that technology is undefeated and it feels this type of digital integration is inevitable. I believe that the intersection of these three frontier technologies will bring about endless business opportunities for your years to come. The concepts presented in this article probably scratch the surface of what will be possible by 2030. I am here for it and look forward to building it.
