Web3 a hot topic at SXSW despite bear market and declining interest in NFTs

Giant bunnies in trendy outfits placed alongside cartoon characters with rainbows pouring out of their mouths lined the streets of South by Southwest (SXSW) last year. This is because two nonfungible token (NFT) projects – Doodles and Fluf World – dominated SXSW 2022.

Yet these projects were nowhere to be found at SXSW 2023, showing the lack of interest in NFTs this year. However, this should not come as a surprise. With crypto prices down, combined with falling NFT prices and trading volume, very few projects seem to be focused on digital collectibles. Instead, SXSW 2023 was overrun by big brands and consultancies boasting the promise of Web3.

Brands discuss Web3 strategies at SXSW 2023

Avery Akkineni, president of Vayner3 – a Web3 consulting firm founded by Gary Vaynerchuck – told Cointelegraph that Web3 is moving beyond the new moment and into a strategic implementation, which is why the technology has become a hot topic for business leaders at SXSW in year. She said:

“Web3 technology has the potential to disrupt many industries, from finance to healthcare to social media, by enabling more secure, transparent and efficient systems. This increased interest in Web3 is crucial because it signals a shift towards the next era of the Internet, which is more immersive, personalized and user-friendly.”

Akkineni added that she believes all brands should take the time to understand Web3 and strategize against it. “Brands will leverage Web3 in different ways, from creating community-owned channels to implementing blockchain-based supply chain management systems,” she said.

To put this into perspective, Vayner3 and cryptocurrency exchange Coinbase hosted a brunch during SXSW that included a panel discussion titled “Web3 and the future of customer engagement: How brands can stay ahead of the curve.”

Rachel Weiss, vice president of L’Oreal Bold Ventures – the strategic venture fund of L’Oreal – stated during the panel that Web3 enables the beauty industry to allow “ownership of beauty.” She said:

“What does Web3 mean for the new creative economy around beauty? What are the new expressions that will be built around beauty using this new technology? And what does it look like to be a fan of a brand? These are all things I think Web3 will strengthen. And it will put what we built at Web2 on steroids with a new way to engage for the next generation of beauty consumers.”

It is important to point out that Bold Ventures recently announced an investment in Digital Village, a US-based startup that helps brands create digital identities and assets in virtual worlds. In addition, NYX Professional Makeup, a subsidiary of L’Oreal, was integrated into The Sandbox last year to display voxelized makeup looks on avatars, contributing to the concept of consumer ownership.

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While Weiss expressed excitement about Web3’s potential to transform the beauty industry, David Lee, head of Samsung Next, pointed out during the discussion that Samsung’s portfolio companies and partners are still waiting for a “ChatGPT moment” to take on Web3. He said:

“I think ChatGPT was an interface that people just understood, but that was after years and years of basic research, marketing and experimentation. I think the same thing is happening right now. We’re seeing a lot of experimentation, especially among brands, to engage with Web3 . But I don’t think we’ve found that ChatGPT moment yet.”

However, this has clearly not stopped companies from engaging in Web3 activities. For example, Coinbase had a large presence at SXSW, focusing heavily on its recently launched wallet-as-a-service, or WaaS, product.

Leonard Law, product manager for WaaS at Coinbase, told Cointelegraph that WaaS was aimed at solving one of the main adoption pain points: wallets. Law noted that WaaS was important to showcase during SXSW because of the large Web3 presence. “WaaS at SXSW was about connecting the right technology with the right brands and helping those brands build strong, direct relationships with their customers,” he said.

Law elaborated that WaaS makes the Web3 wallet onboarding process easy for end users, as a username and password are the only elements required to access Coinbase’s Web3 wallet. “Easy onboarding will lower the barrier for users to get on the chain, opening up Web3 experiences for the masses.”

A number of official SXSW 2023 panels also focused on Web3 initiatives. For example, there was a featured session titled “Building an Open Metaverse” which included a conversation with Timmu Tõke, CEO and co-founder of Ready Player Me – an avatar platform focused on interoperability.

After the panel, Tõke told Cointelegraph that the metaverse is an important part of Web3 since so many people spend time in virtual worlds. He explained that brands are interested in establishing a presence in the metaverse. “We’ve seen people make billions of dollars a year selling virtual assets in games, or in the metaverse. Web3 plays an important role because it enables a set of technologies that will allow consumers to finally own their virtual assets,” he said.

The NFT presence was small but focused

Tõke said NFTs are likely to play an important role for Web3 platforms in allowing consumers to own digital assets. He shared that brands have become wary of launching NFTs due to current market conditions: “They don’t want to associate their brands with something perceived as declining in value or popularity. We saw this thinking when the market crashed, where many brands told us they like the concept of the metaverse but don’t want to involve NFTs.”

While this may be, Nicole Behnam, founder of marketing agency Beyond Media, told Cointelegraph that while there weren’t many people talking about NFTs at SXSW this year, communities still rallied due to the previous NFT hype cycle :

“Existing NFT communities and gatherings are still putting on events, activations and panels for holders. We’ve been talking about utility for quite some time, and we’re finally starting to see what teams are following through.”

Natasha Hoskins, co-founder of social decentralized autonomous organization (DAO) Boys Club, told Cointelegraph that DAO is interested in how Web3 technology can be applied to real-life experiences. She explained that Boys Club launched a physical and digital NFT drop with Boys Club Zine, the group’s magazine.

“The conversation around NFTs has matured from PFPs [profile pictures] to an all-around practical, functional use. It’s less flashy, so less visible in a noisy environment, but this shift is important for NFTs to become a credible integration into everyday apps, Hoskins said.

Excitement for Web3 despite market conditions

All things considered, it’s remarkable that Web3 had such a large presence at SXSW this year, given current market conditions coupled with the Silicon Valley Bank collapse that took place on March 10 – the first day of SXSW 2023.

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Tara Fung, co-founder and CEO of Web3 development firm Co:Create, told Cointelegraph that the mood at SXSW for the first two days was muted:

“Personally, I found it difficult to be present and engaged when we wrestled with questions about where a significant portion of our working capital was and whether we would ever get it back.”

However, Fung noted that on March 12, word came that depositors from Silicon Valley Bank would be protected, which changed the SXSW environment. “We started to see more of that euphoria and buzz that SXSW is known for,” Fung said.

Regarding the crypto bear market, Law explained that developers see bear markets as a great opportunity to build: “This is what continues to create a lot of excitement in the space.”