Saving the movie business, which didn't know it needed saving
How NFTs can proliferate within even the most protected verticals
Somewhere, right now, in a french cafe:
“Do you prefer movies or films?”
“Films, of course. I stopped watching movies at age 12”
“How do you define each term?”
“Look it up bro, it’s all on the blockchain”
Investing in movies is like swallowing glass
It’s no secret that the film industry is changing quickly. Being from Park City, Utah, I’ve watched Sundance morph from a festival where movies came in unsold looking for movie studio buyers to a festival where almost all movies that enter Sundance are pre-bought on streaming services before the festival even begins, ready for your living room two weeks after the festival.
These services should take a hint from the movies they scoop up: there’s neither a climax nor a resolution. It’s a numbing amount of content.
After speaking with various film festivals, we discovered the abysmal economics of indie films: in an average year, indie movies are made at an average of $1M each. These movies gross an average of 80 THOUSAND dollars each. An average loss of $920K.
In other words, by randomly selecting an independent film made in the US over the past twenty years, there’s a 3.4% chance it was a profitable project for its backers (Stephen Fellows). 1 in 30 aren’t odds that most would even get out of bed for.
Some might look at this chart and say that streaming services give indie films the chance to profit without releasing theatrically. Especially in a post-covid world as theater attendance continues to plummet, movies need a home (Seeking Alpha). While it’s certainly true that streaming is a place for movies to land, they are completely lost in the shuffle of the millions of choices.
At movie festivals B.S.E. (before streaming era), movies had hope of being picked up by studios that would propel them to superstardom. There was at least some chance for indie films B.S.E. to become the next big A-List film. The value proposition for “the Sundances” has been muddied. We are eons away from Little Miss Sunshine and galaxies away from Sex, Lies, and Videotape.
I will subscribe
Barry Diller astutely pointed out that no one makes movies anymore, but rather 100-minute stories that streaming services instruct creators to make to fill specific genre slots. It’s a game of quantity, not quality. Drive subscribers, you win. If your movie doesn’t fit the way the movies are sold today, good luck finding a home. Streaming services have already slotted their releases out through 2023, so they could care less about how special a film is.
There will always be mega-A-list titles like Fast and Furious 9 that receive the full red carpet press treatment; big advertising budgets and hype campaigns to get people excited. However, most movies that used to be considered “big productions” no longer receive that treatment, because streaming services simply use movies as signup bate. Once they have you as a subscriber, the title you choose to watch is irrelevant to the powers that be.
The European Film Academy president, Agnieszka Holland went as far to say that streamers were “a non-curated, big black hole where our more fragile and personal products can disappear and vanish” (Deadline).
Maybe, just maybe, there’s a world where movies have a place to live that removes the ceiling for how big they can get while allowing consumers to watch and engage with the movie, its creators, and each other like they would at a film festival.
Enter Stage Right - NFTs
There’s another part of the world that cares and values about how “special” an asset is, where a single JPEG-based NFT sold for $69M. This world cares about who gets paid and who creates value. It’s about removing power from the platforms that chain creators hostage to entertaining their users, like a joker performing for aristocrats. He who controls the eyeballs controls the universe.
The early movers in NFTs, such as Beeple was in art, were handsomely rewarded. 3LAU sold 3 songs for $11M, as he was early and engaged with the crypto-community passionately.
Vertical by vertical, the dominoes are falling. Indie films don’t call studios to purchase them anymore, because streaming services are the only companies that can underwrite the risk for smaller budget films as they have already outlaid gargantuan sums of capital to drive traffic. Without studios, non-A-list films need a marketplace for distribution. Otherwise, these films, no matter how special, have to beg streaming services to insert them as a footnote in history next to Jackass 12 and an Arthur remake.
NFTs have created a new value chain opportunity which is multiples larger than what was previously possible for non-A-list titles. Film festivals and indie films that don’t get scooped up by streaming have to find a new angle, a new way to engage their audience.
Pivot until you’re dizzy
Adapting to new mediums for owners of intellectual property is part of business, and it’s not a new concept. For example, an entity that owns a record label like Motown records owns the whole library through time even as platform shifts: 45s → full albums → 8 tracks → cassettes → digital → streaming (and if the content was made today, they would be NFTs). Each time the platform moves, a new revenue stream presents itself, but Motown and its future owners need to ensure their library is well equipped to be part of each shift.
Here’s the hard part for the movie business: the “crypto-natives” that understand NFTs are far from cinephiles that flocked to Sundance and its imitators. These are collectors who spend 12 hours a day on Twitter and Discord showing people all the assets they are collecting, and we are tasking them with saving the “broken” movie distribution business (I put “broken” in quotes as there are beneficiaries of the streaming model).
Better yet, if the cinephiles see the light that crypto-natives see, they can support their creators (writers, directors, actors) by participating in this new economy.
A possible solution, and the inspiration for the topic of this month’s newsletter
En Passant Digital recently started working with Vuele.io on their upcoming movie, Zero Contact, starring Anthony Hopkins. Vuele is an NFT Movie platform where only holders of the NFT can view the film. This allows viewers who want to see Zero Contact to pay to own the right to stream the movie anytime they want. They are betting that fans of the film will show their support by paying for the NFT to watch the film.
NFT price x quantity sold = revenue.
Assuming the average NFT price is $20, you’d have to sell 50,000 to break even for a million dollar movie. However, the average NFT price will likely be much higher, as platforms can build in additional functionality for NFT holders of that film (e.g., limited movie artwork, gate film communities). A similar model is being utilized by Stoner Cats, and they have the support of Ethereum creator Vitalik Buterin.
In my last blog post, I referenced the Zero Contact movie as a notable new project, so we are excited to be on board.
Notable NFT News:
Fantasy sports and sports betting firm DraftKings launched its new NFT marketplace this week in collaboration with Auograph.io, Tom Brady’s NFT platform.
Axie Infinity, a play-to-earn Ethereum-based game, has topped 1 million daily active users (Source).
60,500 Spider Man NFT Collectibles launched by Marvel Entertainment and Orbis Blockchain Technologies Limited sold out on Veve’s marketplace, generating over $4M in primary sales.
PleasrDAO, an investment collective, used NFTs as collateral for a $3.5M loan from Iron Bank.
Talk to us!
If you are looking for an expert* opinion on your NFT project, or want to talk generally about the market, please reach out for a no-obligations 20 minute phone call. We have a number of technology partners at En Passant Digital that help us execute layered NFTs, some of which may be helpful for your project.
Let us know what you’d like to read about in our next edition. This is a new initiative, and we want to make sure it’s as useful as possible.
Email: bryce@enpassantdigital.com
*Anyone who claims to be an expert is a charlatan. They are generally snake-oil salesmen who probably also told you to buy OneCoin. From the last 4 years of our experience, we’ve realized that there are no experts in the space, as it changes by the second.
About the author: Bryce Baker is the co-founder of En Passant Digital, an NFT-focused agency bringing innovative market guidance and strategy to top-tier brands & celebrities.
Our other co-founder, John Tabatabai, has led investments for Crypto VCs and consulted for projects across the NFT space. He recently had an active role in advising, designing and creating the mechanics and infrastructure for the famous B20s, aiding in creating more than $250,000,000 of value in less than 45 days.
Kolivervanessa@gmail.com