NFTs Stop Movie Pirates and Fuel Film Fandom

What began as faint murmurings on internet message boards has ignited into a global phenomenon – a Rorschach test for the masses – and people are choosing sides. Many believe non-fungible tokens (NFTs) are just another fantastical fad, something born and doomed to the ether. Others believe NFT’s ability to be sold or traded will provide significant value to a rapidly evolving digital economy that’s facing the rise of cryptocurrencies and metaverses.

Many in Hollywood are fully embracing NFTs. In fact, some directors already debuted and distributed their cinematic masterpieces as NFTs. They’ve used blockchain technology to finance their movies. Look around and it’s easy to see movie studios selling digital collectibles to eager fans who seamlessly toggle between real and digital worlds using mobile phones, laptops and smart TVs.

If entertainment’s early adopters are right, NFTs could help transfer creative power to the people while nurturing audiences of all shapes and sizes.

What Are NFTs?

These “tokens” are unique and immutable and can represent anything from digital art to real-world objects. An NFT is like an original piece of art: one of a kind. They’re like a physical collector’s item exclusively in the digital realm. Twitter founder Jack Dorsey sold his first ever Tweet as an NFT for nearly $3 million.

In early 2022, reports surfaced that software-as-a-service giant Salesforce could build a cloud-computing powered service for articles to create content and release it on the marketplace, which surpassed $23 billion in 2021, according to app store Dapper Radar.

This new market is made possible by the blockchain – a digital public ledger that’s transparent, decentralized and distributed, which makes it easy to verify the ownership of both digital and physical assets. At first, this seemed fix for cryptocurrency, but now the digital authentication process is used for everything from art and music to domain names, real estate and, yes, films.

NFTs contain proof of authenticity and ownership, according to Debarshi Chaudhury, CEO of software development and consulting firm Quantilus Innovation Inc.

“The term ‘non-fungible’ means something is unique or the only of its kind. And … each NFT has its own unique value,” Chaudhury wrote in an article for Forbes.com. 

“This authenticity for each digital asset is possible because each token has a verifiable metadata and transaction log that can help prove the history of ownership. And the blockchain provides the security for these tokens, keeping all this data safe and almost impossible to replicate.”

That’s the first of many reasons that NFTs appeal to Hollywood, which in recent years has struggled to cope with a surge in online piracy.

“With the help of blockchain technology, media and advertising enterprises are able to eliminate fraud, reduce costs and increase transparency within critical and time-consuming business processes,” explained a 2021 report by Industry Research.

“Further, blockchain technology helps the media and entertainment companies to effectively protect Intellectual Property (IP) rights.”

Cultivating Community

NFTs are designed to stop pirates and have the ability to fuel fandom, according to Rick Dugdale, CEO of Enderby Entertainment and co-founder of Vuele, an NFT film distribution platform where people can collect, watch and trade NFT movies.

“We look at NFTs as a way to build a community and fan engagement around the films that are being released,” said Dugdale, who directed Zero Contact, starring Anthony Hopkins. It debuted on Vuele and became one of the very first NFT films in the world.

Dugdale explained how it came about: “It was a film that was shot at the beginning of the pandemic, when we all had to look at ourselves and say, ‘How do we make a film if we can’t be in the same room together?’ We strategized a story idea and quickly came up with the script and shot this film in 17 different countries. We'd been toying around with blockchain distribution already. That’s when I said, ‘Let’s see if we can create something with this film.’ And that’s where we jumped in and launched Vuele.”

On Vuele, people can purchase and own an NFT to gain exclusive access to a blockchain film. They can get collectible components that aren’t typically offered at theatrical or with Blu-ray release, Dugdale said. 

“You get to be part of a community that’s global and there’s only going to be a certain amount of NFTs released, especially as we go forward with the sequels,” he said. “So you’ll get early access to the universe.”

As Vuele acquires a larger catalog of movies for its marketplace, it hopes to become a Netflix for NFTs.

Power to the People

Indie filmmakers also are taking notice of NFTs. Director Kevin Smith, for example, is auctioning off his horror anthology, Killroy Was Here, as an NFT, according to The Hollywood Reporter, which also reported actress Jennifer Esposito is also financing her directorial debut, Fresh Kills, with NFTs and a public offering of shares for her film.

“Whoever buys [Killroy Was Here] could choose to monetize it traditionally, or simply own a film that nobody ever sees but them,” Smith told The Hollywood Reporter.

With blockchain-based crowdfunding, the audience wields more power. Slowly, the decision-making process can migrate away from the unilateral control of a select few gatekeepers at studios and toward viewers, who can democratically decide on the types of stories that they want to see.

New voices can be heard and ordinary fans who invest in projects can profit off of them as if they were bona fide Hollywood producers. With enough support, filmmakers can forego typical development channels entirely in order to create different kinds of films with different kinds of characters.

NFT Studios is planning to fund its movies in exactly this way.

“We are in the middle of 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,” film producer and NFT Studios founder Niels Juul explained in an interview with The Hollywood Reporter.

Because blockchain is a distributed computing infrastructure, Hollywood NFTs will rely heavily on cloud computing. As interest in blockchain intensifies across the industry, more cloud servers will be devoted to this nascent space.

Money Talks

Indie filmmakers aren’t the only ones who see opportunity in NFTs. Major motion picture studios also are placing big bets on the growth of blockchain.

For example, Fox Entertainment invested $100 million to create an NFT business and content studio called Blockchain Creative Labs, Variety reports.

Director Quentin Tarantino is auctioning off never-before-seen content from Pulp Fiction as NFTs, Warner Brothers is selling Matrix NFTs to promote the next chapter of its beloved sci-fi franchise and Lionsgate released limited-edition collectibles inspired by its horror movie Saw in time for Halloween.

“If we do our job right, it’s profitable right off the bat. But it’s bigger than just revenue generation,” Jenefer Brown, head of global live, interactive and location-based entertainment at Lionsgate, told Variety.

With NFTs, studios can extend and enliven their entertainment franchises. That in turn can attract a larger viewership and inspire cult-like fandoms where audiences can own and collect pieces from their favorite shows and movies.

Viacom plans to be one of the newest players in this burgeoning field, launching an NFT platform featuring characters from its programming across CBS, Comedy Central, Nickelodeon and more.

NFT merchandising options are endless, ranging from behind-the-scenes scripts to movie posters to props from important scenes and characters.

Bumps in the Road?

Blockchain seems ripe with opportunities for the entertainment industry, but it doesn’t come without difficulties.

“Education is the biggest challenge because it’s still the dawn of crypto in general,” Dugdale said. “This is just another way to watch a film…but you can still have Netflix. You can still have your DirecTV. But this is a way to collect stuff and be part of something exclusive.”

That’s why Dugdale remains bullish on the future of NFTs in Hollywood, despite the initial challenges that often come with new technology.

“I think the blockchain is going to be the main key for filmmakers in the future because that's ultimately transparency,” he continued. “Everything is going to live inside a smart contract on the blockchain. I think it’s going to be here forever and that’s kind of where we need to go to.”

Smart contracts are programming within the blockchain that allows for specific transactions or exchanges to occur between multiple parties.

“Film distribution is the first step,” Dugdale said. “While in production, you’re putting stuff up as smart contracts, whether it be the rights to certain territories, different platforms, actors’ contracts, etc. I think that's the future, engaging the blockchain as your production entity from the very beginning.”

From empowering audiences with greater creative control, distributing films to invested viewers, financing indie productions and creating a more robust fandom for shows and movies, a bright klieg light is starting to shine in Hollywood for this Web 3.0 Wild West. 

“The blockchain is going to be a huge advantage for the film business…something that we should all welcome,” Dugdale said.

Chase Guttman is a technology writer. He’s also an award-winning travel photographer, Emmy-winning drone cinematographer, author, lecturer and instructor. His book, The Handbook of Drone Photography, was one of the first written on the topic and received critical acclaim. Find him at chaseguttman.com or @chaseguttman. 

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