Non-Fungible Tokens may provide the underpinning for your next blockbuster digital product.
Non-Fungible Tokens have been in the press as of late, seemingly making the leap from a novelty technology looking for an application, to driving seven-figure daily trading volumes in NBA’s Top Shot, and technology leaders are likely being asked for more details about NFTs, and whether they apply to your organization.
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It’s easy to get caught up in the connection to blockchain, cryptocurrency and a host of complex technologies, but the simplistic explanation of NFT technology is that it allows a unique version of a digital asset to be created, which can then be sold or transferred. Just as an autographed photo of a famous athlete might be more valuable to collectors than a regular photo due to its unique nature, so too can digital assets be “signed” using NFTs.
This creates an intriguing business model that combines the power of digital products: near-zero incremental cost for inventory, ease of moving and storing, and near-instantaneous delivery with the power of a physical asset that derives part of its value through its uniqueness and collectible value.
NFTs in practice
Listening to the latest hit song on Spotify or streaming a movie on Netflix have become second nature to consumers, to the point that many of us have forgotten about special edition movie releases that contained extra commentary, outtakes, or alternate cuts of the film with an entirely different ending. These special releases were often produced in limited runs, and in some cases only a single copy was produced. Perhaps the best example of this was Wu-Tang Clan’s Once Upon a Time in Shaolin, which fetched $2 million at auction in 2015 and ultimately became yet another element of intrigue in the legal saga of pharmaceutical CEO Martin Shkreli.
NFTs eliminate the need for a physical copy of a one-of-one, or limited run of an asset, and has seen early success in creating “collectible” digital art and even limited-edition sports highlight videos.
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In a more recent example, Vuele, a partnership between blockchain technology platform company CurrencyWorks and Enderby Entertainment, hopes to do for the movie industry what Top Shot did for sports by providing collectible, early-release and special edition films. The company’s first feature film is “Zero Contact,” starring Anthony Hopkins. Film buffs can purchase unique digital items ranging from the film’s trailer, to early access before even film critics get their copies, to a special one-of-one edition with extra content unique to that single digital version of the film.
Like other digital assets, each can be traded or auctioned, and price points starting around $20 to target a large population of the film collector community. I was able to speak with the co-head of Vuele, Cameron Chell, who has a long history in the technology space, having started with cloud computing at accounting software maker Great Plains before the term entered the everyday lexicon.
Perhaps the most interesting aspect of Vuele is that it squarely targets general consumers rather than crypto fans or technologists. “From an end-user experience, it looks and acts like Netflix, but underneath the interface is what is essentially a crypto wallet,” Chell said. Vuele uses CurrencyWorks, which is essentially a fintech startup that serves as the blockchain underpinnings for several companies, and collaborating with the existing Hollywood ecosystem provides a means for Vuele to accelerate its time-to-market by leveraging both an existing content pipeline with an existing technology platform.
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In addition to looking for these accelerators, when asked what other leaders should be thinking about when considering whether NFT is relevant to their companies and products, Chell suggested that leaders “think of NFT as an adjunct to your existing product portfolio versus a true disruptor.” In the case of Vuele, that means incremental fan revenue for film studios, incremental engagement, and even incremental market traction by offering something unique and differentiated to a segment of film fans that spills into the general public. Chell even mentioned that this incrementalism could apply to individual actors or directors who could create special behind-the-scenes content that might be turned into a unique digital asset as part of the traditional film production process, allowing for deeper fan engagement as well as additional revenue outside the typical film distribution channels.
It’s intriguing to watch something that’s been with us for a century come full circle, with films originally tied to a single set of hard-to-duplicate physical assets, evolving to a string of bits that could be duplicated at will, to a hybrid that brings the best of the digital and physical worlds together. If your company creates, distributes or manages either digital or physical content, investigating the potential for NFT to bridge the two worlds just might add the incremental revenue stream that Chell hopes to capture in the film world with Vuele.