How Entertainment Industry are Leveraging NFTs: Opportunities and Challenges

NFTs have been utilized in digital art, games, and music for a long time and have recently been used in the film and television industry. These NFTs provide an effective solution to piracy and other intellectual property disputes. It is transforming the expansion of the entertainment sector. In addition, production companies can benefit from an additional revenue stream. Additionally, filmmakers can adopt a fresh approach to distributing their creations by allowing viewers to possess fragments of the film. This opportunity strengthens the connection between filmmakers/creators and their audience. In this blog, we will dig deeper into how the entertainment industry, like Hollywood, is leveraging NFT in 2023.

What Is NFT?

NFTs represent unique digital assets that leverage blockchain technology, particularly the Ethereum network, for ownership rights. Those tokens are similar to digital certificates that ensure transparency and trust in every transaction among the parties involved. It is exclusively maintained on the blockchain ledger. This provides an assurance to creators/artists for the royalties for their creations for life without being apprehensive of property theft.

How To Mint NFT?

  • As an artist, you will need to make an informed decision:
    • You can choose between a crypto exchange or a crypto wallet. 
    • Followed by that, you must select a suitable NFT marketplace, such as Foundation, OpenSea, or Rarible, to launch your artwork. 
    • Before launching your creation, you can then finalize the terms and conditions, including royalty and payment agreements. 
  • As for NFT investors, it is crucial to understand the process of minting NFTs and the real-world applications that make them an increasingly popular investment vehicle.

NFTs In Entertainment: Use Cases And Trends

When considering the implications of NFTs in the entertainment industry, it is noteworthy that the movie industry is not limited to producing just blockbuster hits. Rather, they have expanded their offerings to include intriguing NFT collections that are sure to captivate cinephiles. This development is exciting and reflects the industry’s commitment to innovation and engagement with its audience.

According to industry experts, the global Entertainment sector is expected to experience significant growth in the coming years, with a projected CAGR of 6.65% from 2022 to 2027. This growth trajectory is predicted to result in a market volume of approximately US $42.54 billion by 2027. These estimates demonstrate the sustained popularity and profitability of the Entertainment industry on a global scale.

NFTs are enabling small-scale indigenous artists to gain exposure in the Entertainment industry. With that, big names such as Reese Witherspoon, Bob Iger, and Rupert Murdoch are also investing in this technology to create TV shows and movies. The growing interest in NFTs highlights the potential for emerging artists. It represents a promising sign for the future of the Entertainment industry. It is vital for industry stakeholders to stay informed about emerging trends and technologies to remain competitive.

Did you know that some of the popular films you’ve seen have their own NFTs? 

From iconic classics to recent box office hits, get ready to add them to your crypto collection. Buckle up and read on to find out which NFTs you might want to bring home!

  • Zero Contact, a Hollywood feature film, became the first full-length film distributed and released as an NFT on Vuele, a direct-to-customer NFT platform. Customers could choose from two bundles: Exclusive Edition and Collector’s Edition. This movie grossed nearly $100,000 as NFT. 
  • In the Mood for Love, directed by Wong Kar Wai, turned part of his film into an NFT. He auctioned off unpublished footage for $545,756.75 at Sotheby’s. 
  • Dune released the digital collectibles for the film featuring sculptures and weaponry. However, more attention was drawn to an art book called Jodorowsky’s Dune, which was auctioned for almost $3 million by an anonymous NFT group named Spice DAO. 
  • Bollywood also joined the NFT trend with Kabir Khan’s 83. It collaborated with NFT Labs and Social Swag to launch digital collectibles on Polygon Blockchain, consisting of autographed physical cricket memorabilia, digital avatars, video scenes, posters, and images. The NFTs offers a chance to own a piece of Indian cricket history, according to Atharva Sabnis, CEO of NFT Labs.
  • Hong Kong-based television industry picked up steam with TVB’s Barrack O’Karma 1968, offering 1,000 LanBo NFTs for fans to collect on the Ethereum blockchain.
NFT in entertainment industry

Potential Benefits Of NFTs In Entertainment

Non-fungible tokens (NFTs) have emerged as a novel and unique way of monetizing products and services in various fields. 

  • It provides an exclusive experience for fans, which is beneficial for celebrities while offering a new revenue stream for businesses. 
  • The benefits of NFTs are numerous, with uniqueness being one of the most significant advantages. 
  • NFTs cannot be duplicated and are securely stored on a decentralized ledger, which adds to their authenticity and value. 
  • Additionally, NFTs can create unique and exciting experiences for fans, fostering a stronger connection between fans and the people they admire.
  • NFTs offer ownership and authenticity to digital assets by guaranteeing sole ownership and immutability of the asset’s history. The authenticity of NFTs is hard coded within the token, signed by its creator, and verified by the entire network, making it impossible to alter. 
  • NFTs also offer future benefits to owners as the smart contract governing an NFT can program it to act in certain ways when it meets certain conditions. NFTs can be used to tokenize digital items, allowing fans to own part of the work and receive a cut if the asset becomes a big hit. NFTs can also enable setting up royalties, allowing creators to benefit from the true value of their work.
  • NFTs can be beneficial in the entertainment industry, particularly for event ticketing, as they protect the community from ticket fraud. NFT ticketing helps protect the community by creating a unique, blockchain-based asset that can be verified and authenticated, preventing scalpers and fraudsters from taking advantage of buyers.

Moreover, the hype and excitement surrounding NFTs have contributed to their popularity and increased their adoption. This has led to more celebrities and businesses investing in NFTs to monetize and engage with their fans. Despite the benefits, NFTs comes with some potential risks. Since they are stored on a blockchain, they face similar cybersecurity threats as other cryptocurrencies. 

  • The NFT market is still relatively new and volatile, with prices fluctuating frequently. This volatility can make it challenging for businesses and investors to determine the true value of an NFT. 
  • Regulatory measures for NFTs are still unclear, and how they will be treated under various legal frameworks is uncertain.
  • Another potential risk is the possibility of NFTs being used for illegal activities, such as money laundering or financing terrorist activities. This is a risk that is inherent to any new technology that gains popularity rapidly. 
  • Additionally, the technology behind NFTs is still evolving, and unforeseen risks may emerge in the future.

How Your Business Can Leverage NFTs For Growth?

As a business, you can capitalize on the opportunities presented by non-fungible tokens (NFTs) in the entertainment industry. You can create NFT marketplaces or even integrate NFTs into their platforms. The following are the steps to achieve this:

1. Understanding NFTs

You need to deeply understand NFTs, what they are, and how they function. NFTs are unique digital assets stored on a blockchain network, verifying their authenticity and ownership. It can be used to represent ownership of digital assets such as art, music, and video games and ensures trust and transparency.

2. Identifying Opportunities

As a business, you need to identify the opportunities presented by NFTs in the entertainment industry. For example:

  • NFTs can be used to represent ownership of exclusive content, such as music or videos, which can be sold on a marketplace to fans or collectors. 
  • NFTs can be used to create unique experiences for users, such as providing access to exclusive content or VIP experiences.

3. Building NFT Marketplaces

With a development team, you can create NFT marketplaces where users can buy, sell, or trade NFTs. These marketplaces can be built on top of an existing blockchain network, such as Ethereum, Binance Smart Chain, etc. If you have an in-house team, your team must have the necessary technical expertise to create a secure and user-friendly marketplace that integrates with the blockchain network. You can also outsource an NFT marketplace development company to assist you at every stage of the process.

4. Integrating NFTs Into Existing Platforms

App development companies can also integrate NFTs into existing entertainment platforms, such as music streaming services or video game platforms. For example, a music streaming platform can allow artists to release exclusive NFTs that represent ownership of their music. Users can then buy these NFTs and gain access to exclusive content or experiences, such as backstage passes or meet and greets.

5. Working With Content Creators

You can also work with content creators to integrate NFTs into their platforms. For example, a video game developer can create NFTs that represent unique in-game assets, such as weapons, armor, etc. These NFTs can be sold to players, who can then use them in the game or trade them with other players.

6. Marketing And Promotion

You need to market and promote your NFT-based products and services or your marketplace to your customers. This can be done through various channels, such as social media, influencer marketing, and targeted advertising. Additionally, you can partner with celebrities, artists, and content creators to create buzz around your NFT marketplace, products, and services.

What Are The Challenges Of NFTs In The Entertainment Industry?

Here are some of the legal concerns surrounding the creation and sale of NFTs in the entertainment industry:

1. Intellectual Property (IP) Concerns

NFTs can be based on copyrighted works, and their development and sale may infringe on the IP rights of the original creators. Therefore, artists and other creators need to ensure that they have the necessary permissions and licenses to create and sell NFTs based on their work.

2. Contractual Obligations

Creators may have contractual obligations with publishers, record labels, or other entities limiting their ability to create and sell NFTs. These contracts may need to be reviewed and revised to ensure that creators can legally create and sell NFTs without breaching their contractual obligations.

3. Securities Regulations

Depending on how NFTs are structured and marketed, there may be a consideration for securities subject to strict regulations. Failure to comply with securities regulations can result in legal and financial penalties for both creators and buyers.

4. Consumer Protection

Buyers of NFTs may be vulnerable to fraud or misrepresentation, as NFTs are often sold through unregulated platforms and may not be backed by tangible assets. This can result in legal action against creators and sellers of NFTs.

5. Tax Implications

The sale of NFTs may be subject to various taxes, like income tax and sales tax. Creators and sellers of NFTs must ensure that they are complying with relevant tax laws and regulations.

Case Studies

1. Warner Bros And The Lord of the Rings 

Case Study For Warner Bros And The Lord of the Rings 
Source: Dailycoin

Warner Bros, a leading Hollywood studio, and Eluvio, a web 3.0 startup, recently collaborated to create a special edition of “The Lord of the Rings: The Fellowship of the Ring” in NFT form.

  • The NFTs were launched on October 21st, 2022, and are the first-ever NFT collection developed by a major studio. 
  • The NFTs feature the 4K quality of the movie along with never-before-seen footage, immersive audio commentary, an additional camera view, and more. 
  • Furthermore, the set includes behind-the-scenes footage, augmented reality sets inspired by the film, and a special QR code that can be used as a Snapchat filter.
  • The collection includes 10,999 NFTs, with two different tiers available to consumers.
  • The “Epic Edition” costs $100 and includes three locations, while the “Mystery Edition” is priced at $30 and offers one location. 

Despite some criticism from fans who argue that the NFT collection offers “the worst way” to watch the film, Warner Bros believes that this initiative has the potential to revolutionize movie distribution and enhance the engagement of fans directly.

The success of the “Lord of the Rings” film series, grossing over $3 billion worldwide, could bring more attention to the Web 3.0 industry, making movie NFTs a potential new way to distribute movies directly to fans. The partnership between Warner Bros and Eluvio marks an important shift for the Entertainment industry, and it will be interesting to see how other studios follow suit in the future.

Disney-Backed Baobab Studios Launches ‘Momoguro’ Ethereum NFTs 

Baobab Studios, the award-winning creator of short films and VR experiences, is now venturing into the world of Web3 with its latest project called “Momoguro.” 

  • The project is a family-friendly franchise with a fantasy world filled with colorful creatures called “Momos” that can fuse together to form hybrid characters.
  • The franchise is minting NFTs and creating an NFT roleplay game on Ethereum’s layer-2 scaling solution, ImmutableX. 
  • ImmutableX will feature NFTs as a core game feature and will be released in Q2 of 2023. 
  • Baobab Studios aims to engage users in storytelling experiences through the possibilities of NFTs. The company’s mission is to create great characters and stories that inspire people to dream and bring out their sense of wonder. 
  • Momoguro’s creators emphasize inclusivity and community, which are at the heart of the franchise’s ethos. 
  • With nearly 50,000 members in its Discord server and a substantial Twitter following, Baobab Studios’ Momoguro is more than just an NFT project; it’s a community that welcomes everyone.

Let Idea Usher Help You Stay Ahead Of The Curve With NFT Marketplace Development

While NFTs are a relatively new concept, their potential to revolutionize the monetization of products and services cannot be overlooked. However, to successfully navigate the potential risks and uncertainties that come with investing in NFTs, businesses and investors need the support of a reliable and experienced development partner. That is where Idea Usher comes in. With years of experience in app development and a deep understanding of the NFT landscape, Idea Usher is well-positioned to provide top-notch NFT marketplace development services. By partnering with us, businesses and investors can capitalize on the growing popularity of NFTs and offer unique experiences to their users while minimizing their risks. So, if you are looking for the best choice for NFT marketplace development, look no further than Idea Usher.

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Q. How are NFTs changing the music business?

A. NFTs allow musicians to sell unique digital assets such as unreleased music, concert tickets, and artwork, creating new revenue streams and increasing fan engagement. However, they also raise concerns about exclusivity and the environmental impact of blockchain technology.

Q. Which industry can use NFT? 

A. NFTs can be used in various industries, such as art, gaming, sports, fashion, and collectibles. Any industry that involves unique digital assets can potentially benefit from NFTs as they allow for verifiable ownership and the creation of new revenue streams through the sale of these assets.

Q. What does NFT mean in cinema? 

A. NFT stands for “Non-Fungible Token,” a type of digital asset representing ownership or proof of authenticity of a unique item. In cinema, NFTs can be used to sell or authenticate exclusive rights to movie collectibles, such as props, costumes, scripts, and limited edition digital collectibles.

Q. What is the future of the NFT regulatory landscape?

A. The future of the NFT regulatory landscape is uncertain as the current legislative framework is not designed for the rapidly evolving cryptocurrency environment and the fast rise of NFTs. However, regulators must create regulations that balance the need for oversight without stifling innovation and adoption in order to facilitate the continued growth and expansion of NFTs.

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