NFTs, or nonfungible tokens, are something of a Rorschach test.
The craze for the technology, which verifies ownership of unique digital assets, has swept across content industries in 2021. But will NFTs mature into a long-term business for Hollywood?
True believers herald them as a major market-disrupting force, with the full impact unfurling over the next decade or more. Skeptics, though, see a FOMO-fueled trend that’s as overheated as the Dutch tulip bulb craze of the 1600s.
Lately, there’s practically been a new NFT announcement every day. The diverse roster of companies, brands and artists hopping on the bandwagon include Warner Bros., Disney, Lionsgate, Fox, ViacomCBS, WWE, the UFC, CNN and the Academy Museum of Motion Pictures. In music, those catching NFT fever range from K-pop superstars BTS to Lil Nas X. Last week, Quentin Tarantino said he plans to auction off seven uncut scenes from “Pulp Fiction” as NFTs on OpenSea, the world’s largest NFT marketplace. (Even Variety is getting in on the action, with plans to sell a selection of NFTs of famous headlines and front pages via the Sweet marketplace.)
For media and entertainment companies, NFTs represent a new way to monetize intellectual property and keep fans invested — literally — in their brands. “Nonfungible” means NFTs are not interchangeable in the way currency is: The value of the content is established by buyers and sellers.
Most of Hollywood’s NFT releases have been experimental toes in the water. Their true power has yet to be realized, says Creatv Media’s Peter Csathy, an industry consultant and investor who insists, “NFTs are not the flavor of the month. It’s absolutely a new business model for content creators.”
The eye-popping sums of money changing hands over NFTs have been hard to ignore. In the first half of the year, total NFT sales reached $2.5 billion, according to DappRadar, a research firm that tracks such transactions — and that tally ballooned to $4.2 billion in October 2021 alone. Much of that trading activity is transacted via volatile cryptocurrencies, and many buyers are presumed to be speculators betting that they can flip NFTs for a profit if they accrete in value.
Most media companies insist they’re not out to make a quick buck, however.
Warner Bros. on Nov. 30 is launching the sale of 100,000 NFTs of “Matrix”-inspired avatars, each one as different as snowflakes. At $50 a pop, that could net a $5 million windfall out of the gate. But for the studio, the event is more about promoting the Dec. 22 release of “The Matrix Resurrections” and getting fans to participate as ambassadors of the sci-fi franchise.
The company has previously released NFTs for “Space Jam: A New Legacy” and at October’s DC Fandome but is taking a wait-and-see attitude before doubling down.
“There’s still a lot to be defined,” says Pam Lifford, president of WarnerMedia’s Global Brands and Experiences division. “My opinion is some form of NFTs is here to stay. But it’s going to evolve.”
The goriest NFTs of the 2021 boom have come from Lionsgate, which released a batch of “Saw”-inspired video collectibles (just before Halloween, of course) through DraftKings’ marketplace for Autograph, an NFT platform co-founded by NFL QB Tom Brady. Six of the limited-edition “Saw” NFTs quickly sold out — pulling in more than $500,000 in sales. However, Lionsgate also sees NFTs primarily as a way to extend entertainment franchises, including “John Wick” and “Mad Men,” into a new, fan-focused medium as opposed to raking in buckets of cash.
“If we do our job right, it’s profitable right off the bat. But it’s bigger than just revenue generation,” says Jenefer Brown, Lionsgate’s head of global live, interactive and location-based entertainment.
Disney is selling a series of “Golden Moments” NFTs on VeVe, a mobile-first digital collectible platform, featuring iconic characters and items from its popular properties for its inaugural Disney Plus Day promotion this week. It’s partly designed to drive up streaming subs: In select markets, customers who purchase an NFT from the “Golden Moments” collection will also receive a three- or 12-month credit for Disney Plus.
By contrast, Fox Corp. is betting that NFTs represent a sizable revenue opportunity in their own right. In June, Fox Entertainment and its Bento Box Entertainment unit formed Blockchain Creative Labs, an NFT business and content studio with $100 million in funding to launch initiatives for Fox and third parties.
“We are building a business,” says Scott Greenberg, CEO of BCL and Bento Box. “We are not a marketing or consumer products division of Fox Corp.”
In its first initiative — “to get our sea legs,” Greenberg says — BCL launched The MaskVerse, an NFT destination for Fox’s hit competition show “The Masked Singer,” selling three-packs of NFTs for $20 each.
BCL has since inked a deal with WWE to produce and distribute NFTs based on the wrestling entertainment company’s talent and tentpole events. And it’s signed a pact with SXSW as the conference and festival’s first blockchain sponsor. (P-MRC, the joint venture that owns Variety, is an investor in SXSW.) Through the deal, SXSW will mint its first-ever NFT and Blockchain Creative Labs will pitch artists, filmmakers and brands on using its NFT services to finance and distribute content.
In what may be its most ambitious project, BCL next year plans to create a dedicated digital marketplace for Dan Harmon’s animated comedy “Krapopolis,” set in mythical ancient Greece. Following their broadcast on Fox, the show’s episodes could be sold as NFTs — which would be a test case to explore if the tech can enable an entirely new window for originals or replace the home-video window. (Fox and BCL haven’t finalized plans at this point.)
“It all comes back to the fans supporting the creator, and the creator having control,” Greenberg says. “But there’s still room for companies like us to provide infrastructure, marketing and support.”
In the spring of 2022, ViacomCBS is planning to debut an NFT platform, featuring characters from brands including BET, CBS, Comedy Central, MTV, Nickelodeon, Paramount Pictures and Showtime, in partnership with startup Recur. “This is definitely an opportunity for us to continue to monetize our library – both for the rare collector and the common collector,” says Pam Kaufman, president of ViacomCBS Consumer Products.
ViacomCBS, for now, is mum on what NFTs will be available at launch. But Kaufman rattles off a list of fan-favorite properties the company has licensing rights to, including Star Trek, “SpongeBob SquarePants,” “Blue’s Clues,” “Teenage Mutant Ninja Turtles” and “The Godfather” movies. “I think we have some of the most in-demand consumer IP out there in the entertainment industry,” she says.
One indie film project is claiming to have seen a hefty payoff from NFTs. “Zero Contact,” financed and produced by Enderby Entertainment, stars Anthony Hopkins as a tech mogul whose followers discover — after his death — has created a machine that will be either the solution to humanity’s problems or the end of life on Earth.
To distribute the film, Enderby formed an NFT movie platform called Vuele as a joint venture with financial-tech company CurrencyWorks. In September, Vuele auctioned 11 limited-edition premium NFT copies of “Zero Contact” for a total of $100,000. Vuele plans to release another 27,500 copies of the movie (at prices TBD) and, in a bid to create artificial scarcity, that will be it.
“There’s something cool and cult-y about films that people want to own or collect,” says Rick Dugdale, CEO of Enderby and co-founder of Vuele. He says the initial 11 buyers were cinephiles or crypto enthusiasts who wanted to own a piece of history.
Adds Dugdale, “Not every film will work on the blockchain. But basically, we sold 11 DVDs for $100,000. It’s hard to not see that as a big success.”
To be sure, the rush into NFTs could represent a bubble, says Wedbush Securities equity analyst Daniel Ives. But, he says, “Ultimately, it feels like early innings of a market that’s ready to explode — in a good way.”