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The NFT craze has been around since 2017, and it’s clear why many people are eager to jump onto the bandwagon. Interestingly, people around the world have spent a total of $174 million on NFTs since November 2017. NFTs can revolutionize the film industry since they are built on the bedrock of crypto technology, which means that they have a long-term value that will last. Several examples of how NFTs have fully transformed other industries like art, music, and games, but for the film industry, at least not yet.
What are NFTs?
Non-fungible tokens are digital assets that represent a wide array of real-world objects like films, virtual real estate, art, music, in-game items, etc. An NFT is an original piece, and it’s impossible to exchange it with another, like cryptocurrencies. Also, unlike cryptocurrencies, you cannot divide an NFT into smaller denominations because they exist as one whole item.
People transitioned to NFTs because each NFT is easily verifiable and contains distinguishing information distinct from any other NFT. In layman’s terms, NFTs can mitigate the creation and circulation of any fake collectibles since anybody can track each NFT to the original owner. An NFT encodes its transactions on the blockchain to contain records of who minted it first and the proceeding sales.
Many NFTs work under one of two Ethereum token standards, the ERC-721 and ERC-1155, which are designs created by Ethereum. They allow software developers to easily organize their NFTs to match the crypto ecosystem like wallets and exchanges.
Few Examples of NFTs Transforming Industries
Blockchain game CryptoKitties was the first to indulge in NFTs, where users could buy, sell and collect unique digital cats. Many people got so involved in the game that it began to slow Ethereum transactions. Interestingly, one kitty raised $140,000 in May 2018.
The creator of Nyan Cat, a gif from ten years ago, was sold for 300 Ether in February (almost $500,000). The hope was to inspire future artists to get into the NFT universe to get proper recognition for their work.
One of the most sold NFT to date is an artwork by crypto-artist Beeple called every day’s: The First 500 Days, which sold for $69.3 million. Another huge NFT milestone is a tweet by Twitter founder Jack Dorsey that was auctioned with a price tag of $2.9 million. These examples portray a bright image for filmmakers in the movie industry to tokenize their popularity.
Transformation of Films to NFTs
TVs ruled the film industry in the past before the VHS tape. DVDs followed the craze by offering better audiovisual output quality with HD and surround sound. However, shortly after download speeds improved and broadband emerged, streaming now ruled the film industry, and DVDs became a thing in the past.
Over time, everyone transitioned to streaming movies and films through streaming services like Netflix and Hulu. However, the Covid-19 pandemic caused several big movie releases to switch to streaming, which resulted in an outcry from struggling movie theatres. A market of eager fans willing to purchase film NFTs for the opportunity of owning their favorite film will see NFTs in the film industry reach mainstream adoption.
NFTs in the Film Industry
Non-fungible tokens have crept into the movie industry and promise to revolutionize the way artists and filmmakers generate money from their work. For example, a filmmaker can create a film, turn it into an NFT, and then sell it to one collector. In addition, they could act parallel to what the Wu-tang clan did in March, where they turned a 400-pound book with rare pictures of the band into 36 NFTs and later sold them.
Anyone can purchase an original NFT because it has an in-built authentication that serves as proof of ownership. However, most collectors prefer obtaining the original NFT to have “digital bragging rights” rather than the original item itself. In particular, filmmaker Adam Benzine recently put up 1st Edition ten NFTs for his 2015 film documentary, Claude Lanzmann: Spectres of the Shoah, an HBO film and an Oscar-nominated film. He hopes to utilize the NFT boom and make history by being the first to dive headfirst into the new opportunity.
More often than not, filmmakers planning to sell their films are affected by the ‘gatekeeping’ of studios and distribution companies. However, purchasing NFTs directly from filmmakers might eradicate those barriers to entry. In addition, NFTs will reduce the costs to agents and studios; nevertheless, the charges involved from buying and selling NFTs, ‘gas fees,’ may be high.
On the other hand, the film industry faces challenges with NFTs because blockchain cannot store data, so NFTs cannot issue anything other than short videos. So despite exclusive clips like Dapper Labs smash-hit NBA Top Shot trading game emerging as a multi-billion dollar blockbuster, there’s a need for NFTs to handle large file sizes in the film industry.
There are, however, efforts from VideoCoin to eliminate the limits for video NFTs. VideoCoin, together with Filecoin, has a storage capacity of over 2.5 billion gigabytes that can accommodate 725 million 1080 high-resolution movie files. Thus, it aims to crack the storage problem hindering NFTs.
NFTs offer more incentives for filmmakers to get involved through programmable revenue sharing. In particular, a filmmaker can sell an NFT collectible through a secondary market where it’s possible to redistribute a share of sales to the rights holders.
NFTs could solve issues that filmmakers have faced over the years concerning the monetization of their work. Most people consider NFTs as investment opportunities, and they bank on you and your future as a creator in the film industry. Films that are already getting noticed and gaining fanbase traction in the industry will easily attract potential investors to purchase their work. Therefore, it’s crucial for you as a filmmaker to start building on your audience so that your NFT sells at a high value.
The NFT craze is just in its infancy, and it portrays an ambitious vision for the future. However, NFTs pose an environmental risk from the vast amount of power required to process the transactions. Nevertheless, NFTs will change some challenges, like how some movies could change hands in the old days and fraudsters could take advantage of other people’s intellectual property. Even though this is not a complete replacement for the old film industry, if the appetite for NFTs endures, it could be the new golden goose for the film industry. It provides new potential revenue streams for filmmakers to control and garner more profits than the traditional film industry.