We live in an increasingly interconnected digital world that has altered the very ways in which we communicate, work, shop, consume entertainment, and live. This digital overhaul has even made standard currency an anachronism in its own time as crypto value such as bitcoin surges in usage, popularity, and widespread acceptance (Kansas City Chiefs tight end Sean Culkin become the NFL’s first player to convert his entire salary to bitcoin in April). As the economy evolves in conjunction with cryptocurrency, it serves as a catalyst of change from within for the surrounding industry.
NFTs, or nonfungible tokens that are impossible to fake and represent unique one-of-a-kind value, have become the latest creation yielded by an ever-fluid online economy. Their surge is perhaps best punctuated by recent blockbuster art sales, including a $69 million purchase of 5,000 all-digital works by Wisconsin-based artist Beeple. The jaw-dropping, eye-opening transaction immediately elevated the decreasingly niche crypto asset to mainstream relevance.
Despite NFT sales reportedly sinking as much as 95% this past month after reaching a fever pitch peak in May following months of increased traction, the new unit of value has moved beyond its origins and into Hollywood’s world of media and entertainment.
Earlier this month, Fox Entertainment announced that it was investing $100 million in a “creator fund” for the NFT space through a new business venture called Blockchain Creative Labs. This came on the heels of a May announcement that the company’s animation studio Bento Box Entertainment (Bob’s Burger’s) was developing the first-ever animated comedy series curated entirely on blockchain. The 2022 series, Krapopolis, hails from Rick and Morty co-creator Dan Harmon and includes a marketplace for digital fan-oriented transactions such as GIFs, character art, and more.
In the last week, Marvel Entertainment and Orbis Blockchain Technologies Limited, a digital collectibles company operating the VeVe Digital Collectibles App, announced plans to launch a global digital collectibles experience for Marvel fans and collectors in 2021. The initiative will allow fans to purchase and interact with official Marvel NFT digital collectibles including comic books and figurines.
In a recent live-streamed discussion, Jay-Z (Shawn Carter) and Twitter and Square CEO Jack Dorsey opened up about the possibility of adding NFTs to music streaming service Tidal, per Coinbase Bytes. Jay-Z sold a majority stake of the streamer to Dorsey earlier this year. In the live stream, Carter talked about his support for blockchain technology while Dorsey raised the possibility of compensating musical artists with NFTs.
“You look at Bitcoin and how it enables people anywhere in the world to contribute and to become artists themselves and also to receive tips or grants or donations without having to go through any third-parties, there’s a lot of power in that,” Dorsey said. “And I think the spirit of what NFTs represent, the spirit of just looking critically at how artists are compensated and improving that is something that we want to spend a lot of time and a lot of our focus going forward to make sure that we’re just looking deeply at entirely new ways to give artists the right tools to help them and to build.”
Within that context, NFT contracts can be structured so that the original creator is due compensation for any future additional sales of their work as well. In speaking about the benefits of blockchain, Carter said he’s “pro-artist” and that he supports NFTs because it “benefits the people who consume and love art and the people who are making it.”
Manager and producer Michael Sugar, of the firm Sugar 23, told Coinbase Bytes that “the NFT boom has led to a sizable shift in the creator economy by effectively cutting out the middleman known as distribution. Clients and producers can reach their audiences where they are.”
In March, Legendary Entertainment launched two new exclusive NFT collections with celebrated fan artist Boss Logic and Terra Virtua Ltd in connection to blockbuster Godzilla vs. Kong. Together, they each offered a unique line of digital collectibles and artwork related to the long-awaited monster mash-up film.
According to NonFungible.com, overall NFT sales went from a seven-day peak on May 9 of $176 million to $9.3 million on June 15. The recent deceleration of the NFT economy poses a great risk to these entertainment media companies wagering nine figures on the future of the crypto-asset. But it also represents an opportunity to unlock hidden value.
The appeal is locking engaged fans and audiences into ongoing micro-transactions in these digital marketplaces. In some ways, it’s an extension of the thriving online economy created by video games that offer in-game purchases for invested players. So for companies like Fox and Marvel, increasing investment into this space is aimed at securing a steady flow of smaller-scale purchases from a committed user base. The longer-term hope is that this becomes a consistent and familiar element of the fan experience. Ticket-buying and streaming audiences are then suddenly converted into active revenue drivers as opposed to just passive one-off consumer audiences.