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NFT mania hits Hollywood: ‘It’s found money’

The tokenized digital art craze has hit the entertainment biz, and producers, studios, and talent agencies are mining NFTs in search of the next ‘Star Wars.’

NFT mania hits Hollywood: ‘It’s found money’
[Source images: vi73777/iStock; Jake Blucker/Unsplash]

Several months ago, Dawn Olmstead, chief executive of the Hollywood production and management company Anonymous Content (Schitt’s Creek, The Revenant) received a call from one of her executives. “Do you know what an NFT is?” she was asked. 

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A fine art and film student in college, Olmstead was well aware of how NFTs, or nonfungible tokens, were starting to blow up the world of fine art, thanks to the exclusivity inherent in the format. As digital files that are stored on a blockchain network—the same infrastructure used by cryptocurrencies like bitcoin—NFTs offer a unique digital certificate of authenticity that makes them impossible to fake. Thus like works of art, they amass value as they are bought and traded. By late 2020, the phenomenon was well underway as crypto artists were selling NFTs for millions of dollars. In March, Beeple became the poster child for the burgeoning industry when his NFT collage, Everydays, went for $69 million in an auction at Christie’s. In sports, NFTs had also taken off. By the time of Beeple’s mega sale, NBA Top Shot, an NFT trading card system that hawks digital reproductions of NBA highlights and other art, had generated $230 million in sales. 

But NFTs hadn’t yet arrived in Hollywood.

Until, that is, Olmstead’s colleague at Anonymous, director of business development Zack Hayden, called her up and asked about them, mentioning a conversation he’d been having with singer Shawn Mendes and his film production company Permanent Content about NFT artist Micah Johnson. Johnson’s character Aku, a young Black boy who wears an astronaut’s helmet and a backpack, had spurred a $2 million sale in February when the first chapter of a 10-part story dropped. Olmstead, who was early to mine podcasts for other platforms while she was running NBCU’s Universal Content Productions, sensed another “IP-generating lane where we can find stories,” she says. Soon thereafter, a deal was made between the two companies to develop Aku into movies and TV shows.

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“Aku is not just going to be an NFT,” Olmstead says. “It’s going to grow itself out. If you think big, you can look at Walt Disney creating this little short with a Mickey Mouse character and then building a world around it.” 

In intellectual-property-hungry Hollywood, NFTs have fast become the new frontier, and their popularity has set off a gold rush mentality as studios, producers, and even talent agencies scour for new revenue streams in the wake of COVID-19’s crushing effects. This enthusiasm hasn’t waned even as the NFT market has lost some heat from those heady days of . . . well, just a few weeks ago. According to a recent sales study by Protos, on May 3 there were $100 million in “crypto-collectible” sales on that day alone. But during the first week of June there were just $19.4 million in NFT sales. The number of active NFT wallets, or the accounts used to purchase the tokens, fell from more than 12,000 to 3,900 between those two periods. 

The opportunity, though, is simply too great for anyone in Hollywood to be too worried about this pesky dip. Beyond seeing NFTs as a way to generate new characters and stories to blow up into multimedia franchises (video games, graphic novels, and so forth) NFTs are also viewed as a way to reconfigure existing properties for legions of fans, as the NFT market did with the NBA Top Shot. Seeing as the latter approach is essentially dusting off content that in some cases is decades old, the model represents the kind of jackpot that hasn’t been witnessed in Hollywood since the DVD market sent studio revenues soaring back in the 1990s. 

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[Source images: Rost-9D/iStock; vi73777/iStock; Jakob Owens/Unsplash]

“It’s all upside. It’s found money,” says Chris McGurk, chairman and CEO of Cinedigm Digital Cinema. Cinedigm’s dedicated NFT film label, Fandor Selects, is preparing to release classic films like John Sturges’s The Capture as digital collections of film memorabilia, GIFs, and interviews as well as restored versions of the films themselves—on the blockchain. “It’s expanding the business in an era when a lot of markets, physical DVDs, and the theatrical business” have been decimated, McGurk says, adding, “There haven’t been many positives in this industry as traditional markets have contracted. People have been getting laid off, things have consolidated. I think NFTs are a brand-new market that could be a good upside for the business as long as people approach it the right way.”

What the “right way” is, however, is up for debate as players double down in experimentation mode. NFT as a movie? TV show? Collectible? Thorny issues like how to divvy up rights among artists and IP holders are still being worked out, as are questions of how an NFT property coexists with offshoots on other platforms, seeing as an NFT can itself continue to grow. (Johnson’s Aku NFT, for example, is evolving in new chapters that he’s releasing). For the moment, these questions are being pushed aside, or at least put on hold, as Hollywood gears up to ride what it believes is its next big wave, a wave that is, some believe, bigger than anyone yet comprehends.

“NBA Top Shot is one of the most valuable moneymakers in this space,” says Jules Urbach, founder and CEO of Otoy, a cloud graphics company whose OctaneRender software is used by crypto artists such as Beeple and Pak. “However, it is for a very specific kind of fan and experience. Having a highlight of a basketball play is great, but would that translate to a Star Wars movie?”

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A HOLLYWOOD BEEPLE EFFECT? 

Otoy, in many ways, sits at the nexus of the NFT explosion. The company serves as an Adobe-like software provider for NFT creators. It sells NFTs on its RNDR blockchain network. And it is now helping Hollywood navigate the NFT universe. Among its board members are director J.J. Abrams; former Google CEO Eric Schmidt; former Lucasfilm CTO Richard Kerris; Mike Winkelmann (aka Beeple); and Ari Emanuel, CEO of Endeavor, whom Urbach says he talks to “every day about where the space is headed.”

Urbach also talks to Emanuel in more specific terms. He says Otoy’s collaboration with Endeavor “is to take everything that they touch . . . and provide digital representation of that. For example, we scan actors or athletes, typically for movies or commercials, and the 3D model became an asset that is a record of their face. That could become an NFT. Similarly, for UFC (Ultimate Fighting Championship), which Endeavor owns, we’re in discussions about providing a 3D pipeline blockchain for that.”  

Naturally, the emphasis is on worldbuilding. “If you buy an NFT, for example, that’s a UFC asset and you can bring that into a Fortnite game or the equivalent of that—you own it and the NFT, all those boats get lifted,” Urbach says. “Everyone has a much more valuable piece of something. That’s how, I think, Ari and I both look at this. We have to think about where these pieces connect. Even beyond the first-dimensional layer, which is building an NFT around a specific IP, what happens when you can share them on social media, bring them into a game? What happens when an artist like Beeple might take it, with rights attached, and use it, do something with it, and create a royalty flow?” 

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Otoy’s investors include Disney, HBO, and Discovery, and Otoy worked with those studios on a project with Marvel and DC Comics artist Alex Ross, whose digital collection of superhero art was recently released on the RNDR blockchain. “From the studio’s perspective, the conversations have been, ‘Okay, what made Beeple successful and how do we take our IP, and what do you suggest we do with it?'” Urbach says. 

The Ross project highlights an interesting dynamic in the burgeoning Hollywood NFT industry. How should profits be split between the artist (who in many cases drives interest and sales in an NFT) and the IP holder? How much artistic license does an artist have? Urbach says the scenario “is so new that there isn’t, even internally within a lot of these companies, a consensus on what path to follow.” But he suspects “it’s not going to be that the artist gets to go do whatever they want with the IP that they don’t own . . . . Most artists I talk to now, everyone needs to work for the IP holders.” 

MAKING THE OLD NEW AGAIN

NFT mania has caused a flurry of Hollywood announcements, such as the talent agency UTA working on NFT deals for singer-songwriter Halsey and visual artist Roger Dean. But Cinedigm’s McGurk says he’s pursuing a more “measured approach” with NFTs, “as opposed to just throwing out the word NFT to create buzz.” 

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At Cinedigm, NFTs are being used to drive a bigger business strategy: subscriptions to the company’s collection of streaming networks, including Fandor (independent and classic films); Lone Star (Western movies and TV shows); and the Bob Ross Channel (an archive of Ross’s seminal 1980s PBS series on painting). Subscribers to the channels will be able to earn digital collectible NFTs related to channel content as rewards, much like airline miles. Then there will be the restored films, such as The Capture, which will be available for sale. When asked how much an NFT bundle—film plus collectibles and other assets—would sell for, McGurk chuckles. “Beats the hell out of me,” he says, adding that Cinedigm is in the process of determining details like pricing with NFT marketplaces.

McGurk says Cinedigm is uniquely positioned to exploit the NFT craze, seeing as its streaming channels are all “enthusiast channels. I hate the word niche.” McGurk says that the Bob Ross Channel, in particular, “is obviously a huge arena to develop the NFT business,” and that Cinedigm will be talking to the Ross estate and PBS about rights issues.  

“It’s an interesting moment,” he says of NFTs. “People are trying to understand it and make money off it at the same time.” 

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Aku’s Hollywood trajectory will follow a more tried and true path. His story, which was inspired by a question that Johnson’s nephew asked him one day (“Can Black boys be astronauts?”) will follow the Hollywood development cycle with writers, producers, and directors, leading it to the screen. Olmstead says that Johnson will guide the project and that filmmakers who are hired will be approved by him; indeed, she stressed that at Anonymous, artists will be intimately involved in projects inspired by their NFTs.

When asked whether any projects beyond film and TV were being considered, Olmstead tells me, “I can see Aku becoming his own game. I can see Aku in the graphic novel space. With something like Aku that has such a broad appeal, and Micah’s art being so specific yet universal . . . I’m excited to see what he wants to do with the worldbuilding of Aku.” 

The biggest challenge, she says, is managing those worlds simultaneously, especially as the Aku NFT is still evolving with new chapters. “Once a media company gets involved and starts trying to either make a TV show or a feature, working closely with the artist, containing the world through that journey, which can be long—it can be months. So how do we together protect the journey of the movie and TV show without inhibiting Aku being out in the world, and Micah expanding that world? 

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“You’ll have two important things coexisting at one time,” she continues. “And when you have something so immediate, like an NFT, where you can spawn something weekly . . . we need to work hand in hand so both things can thrive. The challenge is keeping a lid on things and not oversaturating or going beyond expectations, or taking a left turn that maybe isn’t aligned with the initial IP. It’s something we have to be mindful of.”

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About the author

Nicole LaPorte is an LA-based senior writer for Fast Company who writes about where technology and entertainment intersect. She previously was a columnist for The New York Times and a staff writer for Newsweek/The Daily Beast and Variety

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