In the past few years, Hollywood has faced some serious challenges and changes. Aside from the pandemic stalling production, disrupting long-held distribution cycles, and causing theaters to push back releases, another giant has threatened the status quo the entertainment industry has enjoyed for several decades.
This other great disruptor is technology.
Blockchain, in particular, has been making waves in a variety of industries, including entertainment. While there are several different applications for blockchain technology, Non-fungible tokens (NFTs) have some serious implications for the entertainment industry.
So, what are NFTs?
The acronym NFT stands for non-fungible token. Something that is non-fungible is unique and non-interchangeable with something else. In the case of NFTs, a token is a unit of value or asset that exists on a blockchain. Simply put, an NFT is a unique digital asset that exists on a blockchain.
For the most part, NFTs bought and sold today exist on the Ethereum blockchain. Blockchain technology here is a critical element of NFTs’ scarcity, security, and uniqueness. The way the blockchain system records and tracks information and transactions makes it difficult to replicate or steal NFTs. For the entertainment industry, this could mean a major breakthrough in reducing fraud and increasing transparency.
An NFT can be anything digital from digital art to memes to music to tweets. Buyers and sellers essentially determine the value of the NFT. One may not think a piece of digital art is worth much, but in fact, the highest-selling NFT to date sold for $69.3 million.
But multi-million dollar NFTs aren’t actually the norm, they’re just the ones that get the most press. In fact, NFTs make it accessible for the average joe to become a collector in their own right. Buyers can begin their NFT collections by purchasing NFTs through online marketplaces like OpenSea with Ethereum tokens. It’s important to note that Ethereum tokens are not the only means by which consumers can purchase NFTs, most NFTs just happen to exist on the Ethereum blockchain today.
How do sellers and buyers benefit from NFTs?
For sellers — whether artists, companies, sports organizations, or whoever else may be interested in selling NFTs — the benefits of becoming involved in the NFT trade are numerous.
For the sake of the focus of this blog, we’ll focus on the benefits for media and entertainment creators specifically.
First and foremost, entertainment firms can extend the life of their franchise IP with NFT offerings. Warner Bros is doing just that by offering 100,000 NFTs representing characters living in the fictional Matrix universe ahead of the December release of The Matrix: Resurrections sequel to the classic 1999 film. By doing so, Warner Bros not only maximizes an existing, already-successful franchise’s IP, they build hype around the new film. What’s more, they provide fans with an opportunity to engage with the franchise in a truly unique way. With each NFT selling at $50, the program is set to generate $5 million.
For fans, the value of NFTs is not too dissimilar from that of owning franchise merchandise and collectibles. As offering NFTs provides a way for entertainment companies to engage with fans, NFTs offer fans the opportunity to engage more with the properties, characters, and stories they love, too. What’s more, the implied scarcity of NFTs make owning one all the more exciting and valuable to the consumer. NFTs provide a fresh, new way for fans to engage with and financially support the franchises they love. Additionally, owning NFTs come with some unique rights to usage (though the creator often retains control over copyrights). Collectors see NFTs as a long-term investment as they assume they’ll appreciate in value over time.
How the entertainment industry uses NFTs today
Warner Bros isn’t the only entertainment engine taking advantage of the possibilities of NFTs. In fact, crypto research firm BigToken expects that 70% of all digital collectibles sold will ultimately derive from television, film, or sports IP. The entertainment industry is finding unique ways to use these digital assets to extend IP, engage with fans, create monetary value, and enable consumer ownership.
Here are a few ways entertainment industry players are maximizing franchise IP and getting fans involved with NFTs:
Buying one of the collectible NFT cats grants you access to a series of fun animated shorts. These shorts feature the voices of Mila Kunis, Jane Fonda, and Chris Rock, to name a few. Stoner Cats aims to “decentralize content production” by directly connecting storytellers and the audience, without the engine of big media acting as the go-between.
The over 10,000 NFTs available for sale at 0.35 ETH (over $800 USD) sold out within 35 minutes, grossing the production a total of $8.5 million.
NBA Top Shots
NBA Top Shot collectibles operate similarly to trading cards. Fans can buy highlight clips and more with Flow, a token powering the Dapper Labs blockchain. As of May 2021, Top Shot had generated more than $500 million in sales.
Pulp Fiction clips
This month, director Quentin Tarantino announced that he would be offering seven uncut scenes from his classic film Pulp Fiction as NFTs.
While fans were undoubtedly excited by this news, Miramax, the studio behind the creation of Pulp Fiction, quickly announced plans to sue Tarantino over the sale. This legal battle likely marks the beginning of high-profile disputes over intellectual property rights when it comes to NFTs.
This year Vuele, which brands itself as an NFT film distribution platform, is hosting the first ever film to be distributed as an NFT. With the star power of Anthony Hopkins and the allure of scarcity, the film first became available to 11 buyers in September, with the release of another 2,500 NFTs in October.
These are just a few examples of how Hollywood is embracing NFTs to create new fan touchpoints and upend traditional content distribution models.
A passing fad or a transformative trend?
While some have hopped aboard the NFT bandwagon, others still see NFTs as a passing phase with little logical use. While it’s impossible to tell what the future holds, the technology NFTs build upon has serious lasting power.
Here are some ways the entertainment industry can use NFTs and blockchain technology today and in the future.
- Fostering a sense of exclusivity, community, and membership. Allowing access to content through NFT ownership creates a sense of scarcity. By creating an exclusive way for owners to interact with each other and with the storylines and creators creates a unique sense of community around your content.
- Encouraging and harnessing fan creation and collaboration. Building off of the first point, using NFTs as keys for access to content, you may also allow the community of NFT-owners you’ve built to help write the story and share ideas.
- Forging a deeper connection between fans and artists. One of the most exciting opportunities in NFT-funded and run content is that it can remove the middleman — the studio, distributor, other multi-million dollar corporations that may be traditionally involved in the process — from the picture. This enables fans to directly support and possibly influence their favorite content and creators. At the same time, creators can receive direct funding and input to support their work. By decentralizing content creation and distribution, we put the power back into the hands of creators and fans.
- Embrace new content distribution models. We watched in the past year or so as the pandemic completely turned traditional distribution models upside down. NFT-based access and funding can help create a new form of content distribution that breaks down the barriers associated with traditional distribution cycles and eliminates friction in content creation and consumption.
Keep up with what’s next in the entertainment industry
Here at Invoke, we keep our finger on the pulse of entertainment industry happenings and developments. We’ve watched in the past year as the pandemic has accelerated changes in the industry. Follow along for more industry insights and stories.
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