The ubiquitous presence of NFTs is irreversibly disrupting the landscape of media. From artists to photographers to musicians to videographers, the ability for creatives to mint and sell their own digital media has been long overdue. Now, Hollywood and the film industry wants its piece of the pie.
Worth over USD 200 billion annually, the global film industry serves as an international pillar of economic wealth. But yet, investors thus far have had little exposure to it. Sure, investors could turn to the stock market to take a shot at theatre stocks such as AMC or media behemoths that have film arms such as Disney, but neither are pure film plays, let alone specific movie bets.
Investing in film developers only provides investors with a wide net. Even if you could invest in Marvel without Disney, you’d be investing equally in the hugely successful Avengers as well as the hugely disappointing Eternals.
The NFT model instead offers investors a way to invest in individual film projects, allowing investors to choose which films they wish to back. Whether it’s for diversification purposes or simply for laser targeted investment, choice is invaluable for investors.
The Indie Scene
As with most NFTs, their main purpose is to provide independent artists with the ability to license their work. The same is true for filmmakers, whether they’re indie or internationally acclaimed.
NFTs first infiltrated the indie scene last year. Independent filmmaker Trevor Hawkins’ Lotawana made history in March 2021 by becoming the first feature film to be sold as an NFT. Listed on NFT marketplace OpenSea, anyone is eligible to buy a Lotawana NFT. The entire film can be purchased, as well as stills and clips.
For the feature film itself, each of the 1,000 NFTs equates to one share that has voting and royalty rights. Money raised from the sale of NFTs goes towards costs incurred to make Lotawana. Of course, investors can flip these NFTs, and a share of the proceeds will go to the team behind Lotawana.
Usually, independent filmmakers rely on distributors to (as the name would suggest) distribute their films. However, securing a deal with distributors has proven to be a barrier for filmmakers, who are required to sell the film’s rights for distribution. NFTs instead allow independent filmmakers to sidestep agents and distributors, who soak up a sizable amount of a film’s earnings.
Selling NFTs to fund a film can be a strategy explored before its production, as well as afterwards too.
Even locally in Singapore, the appetite for NFTs in film is growing. The release of Jack Neo’s Ah Girls Go Army was accompanied with a giveaway of 8,888 NFTs to boost ticket sales. NFT owners are promised first dibs on Ah Girls Go Army merch and events, as well as access to future NFT drops from in the collection.
Furthermore, platforms such as OpenSea provide direct exposure and access for film producers to reach their audiences – an otherwise tough feat for independent filmmakers. YouTube is even looking into providing features for creators to use NFTs on the platform. Whilst filmmakers aren’t their targeted creators, the video sharing platform’s interest in NFTs reaffirms the potential NFTs offer to creatives.
NFTs in film are not just an underground indie phenomenon either. Two-time Oscar winner Anthony Hopkins’ most recent film Zero Contact was the first film to be released on Vuele – the world’s first NFT viewing platform.
Zero Contact was produced remotely during the peak of 2020’s global pandemic, heavily relying on Zoom to record scenes. Hopkins stars as a tech titan who develops a machine that could either be the solution to mankind’s problems or the end of life on Earth.
Vuele dropped 11 NFTs of the film with the “Platinum Edition” NFT selling for 20 ETH alone. The “NFT drops mark an incredible new step for the feature film distribution industry as well as film collecting and fan engagement”, Vuele said in a press release.
Each winner of the NFT auction will be edited into the film and receive a signed digital artwork of the film poster, the ‘making of’ film, a Crypto Generative Art by REMO x Dcsan and a Vuele “Golden Ticket”.
By having a household name such as Hopkins attached to the film, Zero Contact has established credibility not only for itself as a feature film, but also for NFT-driven films in general. Hopkins’ involvement has elevated the status of NFT films to a more mature level.
The success Zero Contact achieved in the NFT space recently caught the attention of international film distributor Liongate’s Grindstone Entertainment Group, which will release the film in May. Zero Contact’s journey demonstrates how indie NFT films can blossom into global phenomenons.
NFTs have already been pushed to the forefront of pop culture, and the craze has spilled over to the acting community too. Reese Witherspoon, Eva Longoria, Lindsay Lohan, Ashton Kutcher, Mila Kunis and Jane Fonda are just a few A-list celebrities in Hollywood who either own NFTs or are involved in NFT projects. It’s simply a matter of time for big names to embrace NFT film projects.
NFTs in Tinseltown
Hollywood has yet to fully embrace using NFTs to fund blockbusters, but the industry is rapidly warming to the technology. Earlier this month, Quentin Tarantino’s first Pulp Fiction NFT sold for USD 1.1 million. Titled “Tarantino NFTs”, the film director is offering the original handwritten screenplay from the film broken into several iconic scenes minted as one-of-a-kind NFTs.
Warner Bros has also been selling Matrix inspired NFTs on OpenSea to coincide with the release of Matrix 4. The film studio released some 100,000 NFTs for USD 50 each. Last year, the company also released NFTs for Space Jam Legacy.
Meanwhile, Lionsgate released Saw inspired video NFTs on Tom Brady’s DraftKings marketplace Autograph. Six of the limited edition NFTs rapidly sold out, earning the studio USD 500,000 in sales.
With a bank of digital characters already in its ownership, Disney’s venture into NFTs seemed like a no-brainer too. Selling a series of “Golden Moments” NFTs on VeVe, Disney’s NFTs featured beloved characters and iconic moments from its franchises.
Fox Corporation went one step further and even formed a NFT business and content studio. With USD 100 million funding to launch initiatives for Fox as well as third parties, Blockchain Creative Labs reflects the studio’s belief in NFTs as a revenue driver.
For now, Hollywood is using NFTs to capitalise on successful franchises, allowing fans to own a piece of film history. Looking ahead, Hollywood will inevitably steer towards incorporating NFTs to fund upcoming projects. This will mean that fans and investors will have the opportunity to back projects of their choosing rather than the entire studio.
Martin Scorsese’s producer for The Irishman, Niels Juul, is already planning to make the first-ever Hollywood feature funded by NFTs. Holders of the NFTs will have exclusive access to certain rights, including financial rights.
“We are in the middle of a great transition in the entertainment business where traditional ways of film funding and ownership are being uprooted due to the rapid rise of streamers and other digital platforms”, said Juul.
According to Technavio, the TV and movie merchandise market share is expected to increase by USD 79.07 billion from 2020 to 2025. From renders, to stills, to clips, to sound effects, NFTs offer a wealth of digital memorabilia for fans to collect. This is even more true when the highest grossing films in today’s age are CGI based; CGI artists themselves are growing their own fanbases.
Furthermore, the animation market is expected to hit USD 642.5 billion by 2030, and digital collectables will be easy to extract from them. “Director’s Cuts” and “Limited Editions” of Hollywood hits are ever popular with fanbases. NFTs could easily capitalise on this too.
Additionally, unlike traditional collectors’ items such as autographed film scripts or an item of clothing worn by an on-screen hero, film studios can earn revenue from the resale of their NFTs. Currently on OpenSea, artists earn up to 10% of NFTs that are bought and resold on the secondary market.
It’s already questionable as to what rights are given to you when you buy an artist’s NFT. Can you re-print it and sell it? Can you print it on a T-shirt and sell it? Can you open a gallery and charge people to see it? The legality surrounding art NFTs is murky, but when it comes to the film industry, it’s even worse.
When you buy a film NFT, you do not own the copyright and thereby do not own the rights to distribute it. With restrictions imposed on what you can do with the NFT, its value arguably depreciates. The film industry is notoriously strict regarding distribution, and quite rightly so – TV and film piracy costs the industry up to USD 71 billion annually.
Even creating an NFT in the film industry could land you in hot water.
Last year, film distributor Miramax sued Tarantino over his Pulp Fiction NFT mentioned earlier. The lawsuit alleged that NFTs do not fall under Tarantino’s reserved rights for the film, and thus Miramax accused the director of violating the company’s copyright and trademark.
Miramax was particularly concerned that buyers would be confused into thinking that the NFTs are official Miramax products. The lawsuit expressed further concern that it could set a precedent for other filmmakers.
“Tarantino’s conduct may mislead other creators into believing they have the right to exploit Miramax films through NFTs and other emerging technologies, when in fact Miramax holds those rights for its films”, the lawsuit stated.
It’s still early days for the rollout of NFTs, so the film industry is flooded with unanswered questions regarding copyright. However, as time goes on and NFTs become more integrated in the industry, we should expect more clarity on these matters. For now, fans will have to tread cautiously when utilising their NFTs for purposes other than flexing on social media.
Movies Moving Forward
Whether you believe the NFT market is a bubble or not, it’s indisputable that NFTs provide a genuine and sustainable source of revenue for artists. When applying this to the film industry – both indie and mainstream alike – NFTs serve as revenue streams for funding projects pre-production as well as capitalising on fanbases grown from established franchises.
Investors who are limited to investing in film studios rather than film projects themselves should be enthused by the prospect of movie NFTs. Likewise, those wanting to support local artists or up and coming filmmakers finally have the opportunity to put their money where their mouth is.
However, the extent to which Hollywood will fully embrace the use of NFTs is questionable. Whether revenue generated from licensing movies to streaming platforms is more lucrative than NFTs is yet to be tested, but both could be run simultaneously. Hollywood’s ultimate goal is to maximise audiences, and if the sale of NFTs can stir up interest and steer more viewers towards projects whilst generating revenue in the meantime, there’s nothing to lose.
The legality of NFTs in terms of copyrights is currently casting a dark shadow over the NFT market, but eventually these concerns will inevitably be addressed and ironed out. Whilst it’s an area investors need to be aware of, it’s certainly not a dealbreaker.
NFTs may cause a rift between producers and film developers, such as the Tarantino incident, but with A-list celebrities en masse advocating for NFTs and driving the market forward, the industry will need to consolidate around the legitimate use of NFTs.
For now, this writer is holding a positive outlook on NFTs in the film industry, with the prospect of owning a digital segment of any Scorsese film proving to be thoroughly exciting.