Few industries have had to adapt as dramatically to digital and transform as the film and entertainment sectors. Gen Xers witnessed VHS triumph over Betamax in the VCR wars, the first major format to bring movies into households. Before the VHS tape, TV ruled and entertainment was dispensed at the discretion of network programmers who dictated what you were going to watch and when.
The format transformed again to DVDs, which offered greater audiovisual output quality with HD and Surround Sound and sometimes included bonus content such as behind the scenes interviews, bloopers, and documentaries, not to mention box set packaging with supplemental merch.
The Band of Brothers Box Set DVD bonus documentary with the real heroes of the 101st Airborne Division, the first parachute infantry, and their families, reduced me to tears. I always choke up reciting the lines of Sergeant Dick Winters whose grandson asked if he was a hero in the war. It brought the real story to life for me and the sacrifices they made to keep our world free.
As the age of broadband dawned and download speeds improved, companies like Apple attempted to corner the market in digital media sales of movies and TV box sets. Within a few years, the DVD was flatlining, and streaming now ruled. Today, we consume most of our movies and TV shows via streaming services such as Netflix, Disney+, or Hulu. During the pandemic, many big movie releases went straight to streaming, leading to an outcry from beleaguered movie theaters.
Streaming effectively put an end to special edition DVD products as one-size-fits-all subscription models were introduced. NFTs offer the opportunity to reintroduce collectible movies and TV shows. As the NFT hype of early 2021 begins to recede, many industry sectors are examining opportunities to capture some of the value that’s been poured into digital art NFTs.
Fans were willing to pay for a limited-edition DVD that came with exclusive extras such as cover art, cast interviews, director’s cuts, blooper scenes, and merchandise. Could the entertainment industry be shaken up again, this time by the emergence of NFTs, to revive fan economies and the market for special edition products and collectibles?
Solving Blockchain’s Storage Challenge For Film NFTs
One core challenge is that legacy blockchains cannot store data, meaning that until now, it has not been possible to issue anything other than short videos as NFTs. Dapper Labs smash-hit NBA Top Shot trading game turned it into a multi-billion dollar blockbuster. While exclusive clips undoubtedly hold value for eager fans, there’s an opportunity to capture larger file sizes on NFTs.
Halsey Minor, who previously founded CNET and Salesforce, is now heading up VideoCoin, a project aiming to remove the limits for video NFTs. VideoCoin has teamed up with decentralized storage service Filecoin to crack the storage problem. The aggregated storage capacity of the entire Filecoin network already exceeds over 2.5 billion gigabytes – enough to store 725 million 1080p high-resolution movie files.
VideoCoin has recently announced the development of NFT “proof of ownership”. Problems could emerge with NFTs if the issuer goes out of business putting tokens at risk and decreasing their value. Proof of ownership uses an encryption key with cross-platform compatibility, meaning that the NFT keeps its market value independently of what happens to the issuer.
VideoCoin isn’t the only project to enter the market with a blockchain-based video platform. Theta has attracted investment from Samsung and Sony to develop its peer-to-peer video distribution network. Theta is building its own network of storage and distribution and will accommodate the number of nodes to host all the video content on its network.
Decentralizing Video On The Blockchain
VideoCoin and Theta share some common goals. The streaming markets are extremely centralized in a small handful of large companies, including the cloud storage firms that host the videos. Decentralization offers the opportunity to redistribute some of the control, which would be to the benefit of smaller filmmakers and studios. Furthermore, the use cases for these platforms isn’t limited to movies and TV and can be extended to other genres such as sports, concerts, and event-driven broadcasts.
While VideoCoin and Theta are currently squaring up to take on the video NFT markets, there are other plays entering this space. Audius is attempting to do for music what VideoCoin and Theta are doing for video, and there are opportunities for these new platforms to expand into new verticals in future.
Minor believes that the NFT revolution is only just beginning and has an ambitious vision for the future stating, “I think NFT’s will go places that have not been described yet, and even that NFT’s as an acronym will disappear. Your driver’s license is an NFT. It’s an object digitally stored that confers ownership. That idea is known; it just does not use blockchain yet.
“What’s happened is the industry has stumbled into the most important enterprise use case, the one IBM has been describing in millions of dollars of advertising. Crypto has seized upon that same technology and now it’s turned into a new kind of gold rush. It’s interesting companies like IBM couldn’t understand what they had.”
Of course, all of this assumes that there’s a market of eager fans willing to buy NFTs for the opportunity of owning their favorite media title and new swag. When considering the market for movies and TV shows, there was an established market of DVD collectors that existed before streaming came along, so it seems plausible that fans with a propensity to collect would wish to re-engage.
Digital Merchandising and Memorabilia
Projects are already paving the way for digital movie memorabilia. One example is Terra Virtua which has previously released NFTs based on content officially licensed by the Godfather trilogy. OpenSea also offers a selection of digital movie poster NFTs.
So far, the offerings have been limited to already-released movies. However, if the appetite for NFTs sustains, it seems realistic we could soon see digital movie merchandise used to promote upcoming releases. Mogul Productions, a decentralized film financing project, has highlighted the market gap here, and Forest Road, an NFT platform for independent filmmakers, raises the idea of indie filmmakers monetizing NFTs as a means of funding their work.
Lisa Sun, President at Mogul Productions, believes that these new ways of financing could spark a new trend for indie filmmaking adding, “There are too many great films out there not getting made, due to the studios holding all of the power and making it nearly impossible for the little guys, including indie filmmakers and movie fans, to have their voices heard.
“With NFTs, movie fans can engage with the filmmakers and their favorite projects in deeper, more meaningful ways, from voting for which films they want to watch, to earning engagement points that are redeemable for prizes like one-of-a-kind film posters, red carpet tickets, and invitations to exclusive events.”
A series of exclusive NFTs were released for the feature film Deadpool 2 by Atom Tickets, Marvel, Fox Filmed Entertainment for people who had purchased a movie ticket. Sony and Goosebumps also release an NFT set of digital trading cards that use blockchain technology to guarantee their authenticity. Both NFTs were co-developed and offered on the GFT Exchange.
There’s even a buzzing secondary market for this kind of merchandise, which ties into another benefit of NFTs – programmable revenue sharing. Someone selling an NFT digital movie poster or collectible via a secondary market that’s programmed to do so, can automatically redistribute a share of sales to the rights holders, creating a further incentive for studios and filmmakers to get involved.
IP Owners Finally Get To Know Their Fans
For 100 years the film business has been hidden behind the cloak of distributors and has never been able to establish a one to one relationship with movie goers. Early day theatrical and exhibitor releases, to movie rental and Big Box chains, to today’s streaming services are built on the backs of Hollywood’s intellectual property owners who “own” the fan relationships.
Mitch Chait, co-founder of GFT says, “The big blockchain opportunity for all IP owners is the ability to engage and exchange value directly with customers.”
In 2016 GFT began to invent ways to leverage the unique proposition of using blockchain and NFT’s to build such relationships. Using catalog and new productions they helped their customers develop properties that resulted in meaningful and sustainable revenues streams for them, and value and excitement for their customers, a win-win.
“This is just the beginning or the courting stage of these newfound relationships,” says Chait, “IP owners can now target and engage their customers directly, through a fully disintermediated value chain, driving efficiencies on their end, which enables their ability to give more value with greater frequency and delight to customers.”
With this model, studios can redirect promotional and marketing spend directly into the pockets of fans. The emergence of super-fans can be attributed to value driven promotions that include NFT’s born from rare snippets from a popular film, to premiere tickets and soon to be released films. Legendary film maker Joe Dante (Gremlins, The Howling, Trailers From Hell), has created a series of NFTs to influence fans to connect and engage with new productions.
This also extends beyond film and to all IP. In the last month GFT enabled several popular entertainment icons to develop NFTs and campaigns to drive awareness, retention and excitement around their products and releases, including the NBA Hall of Famer Yao Ming, bundling his premiere Yao Family Wines ‘The Chop’ with an NFT and legendary comic icon George Lopez’s launch of his new line of beer at Kroger using NFTs as a collectible promotion.”
“For IP owners, the blockchain is a two-way highway lined with essential psychographic data leading to customers where value flows both ways,” said Jonas Hudson, a GFT co-Founder, and an ex-Warner Bros promotions and marketing executive, “By leveraging blockchain and NFT’s, studios can now monetize down to the pixel, literally.”
“The Studios have spent decades uncovering ways to derive value from catalog and movie props and we’ve taken this model to a whole new level by converting catalog and prop properties into compelling and perpetual revenues streams, our secret sauce at GFT.
“The future for IP owners is bright, as more money, data, transparency and connectivity to fans occurs, today’s friction from middleman will become a thing of the past,” adds Hudson.
Nobody is suggesting that the film industry attempts to recreate the hype-driven NFT bubble we’ve seen in early 2021. A more sustainable approach would be to replicate the success of markets in physical merchandise and limited-edition DVDs, but in a 21st century digital NFT format with new concepts for fan economies and one to one engagement, that is environmentally friendlier and accessible to everyone.
Most of the world is non-fungible and everything than can be tokenized will be. Get your tickets, popcorn, and a front row seat for this epic entertainment thriller, coming soon to an NFT near you.