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Sunday, Mar 3, 2024

NFTs March Into Spotlight

Non-fungible tokens have become a hot commodity and are now making their way into Hollywood’s entertainment industry.

Invisible Universe, an animation studio based in El Segundo, announced last week it had raised $12 million in a Series A funding round led by tech entrepreneur and investor Alexis Ohanian’s Seven Seven Six. Prominent digital media investors who joined Ohanian, known for co-founding Reddit, include Cosmic Venture Partners, Dapper Labs, Franklin Templeton, Gaingels, Initialized Capital, Schusterman Family Investments, Wheelhouse and 75 & Sunny.

The new funding will help the company expand its footprint to new platforms, further monetize its existing franchises and launch new animated intellectual property (IP) across social media and Web3.

Invisible Universe is an internet-first animation studio, meaning that it develops and debuts original animated IP on social media.

“Our belief is that the next generation’s favorite animated franchises will be born on the internet and will be introduced to them probably on the apps that are most likely and most often used on their phones every day,” said Tricia Biggio, chief executive of Invisible Universe. “And so, we distribute our content across TikTok, Instagram, Twitter, YouTube, really thinking about incubating IP in an internet-first way where you can iterate in near real time with the audience.”

 

Celeb partners

Invisible Universe works in partnership with celebrities and influencers including Serena Williams, Jennifer Aniston and the D’Amelio family to develop and promote its creations.

Qai Qai is a character developed in partnership with Williams based on her daughter Olympia’s favorite doll. The character’s TikTok, YouTube and Instagram accounts have more than 4 million followers combined. Since its launch, Qai Qai has become a best-selling doll on Amazon, partnered with Adobe to create a coloring book in honor of International Daughter’s Day, and teamed up with children’s social media platform Zigazoo on two lines of digital collectibles for Zigazoo followers on the app.

Recently, Invisible Universe launched a YouTube channel for the character and has produced several short videos for the platform. The company is also launching a children’s book by Williams called “The Adventures of Qai Qai.”

“For us, (internet first) means that before we think about publishing or a long-form show on a streamer, we are first using platforms that are available to us on Web2, and now with Web3, to incubate the IP … We’re not waiting for a studio to greenlight a season or tell us what our budget might be, but rather, we’re really saying, let’s look at our suite of IP like we’re a tech company putting out (a minimum viable product) and each character franchise is really that,” Biggio explained. “We incubate quickly, and we listen to audience feedback, and we iterate in real time and are able to double down on the stuff that’s really working and kind of scale back or veer away from the stuff that might not be landing as well.”

Invisible Universe makes money from YouTube and Web3 analysis. A representative of the company declined to discuss revenue or other financial figures, including how much the company gains from its YouTube subscribers.

“Beyond that, we think about licensing the IP and that can be to the streamers. We can sell long-form TV shows, we can eventually do movies and games and podcasts and other audio experiences,” Biggio said. “We really look at it as like social media is where we start it. It will remain its center of gravity, but when we’ve done our job right, you will see our characters across the shelves of your local Target, and you’ll see them on bookshelves at Barnes & Noble.”

 

Changing times

While some see non-fungible tokens as a temporary fad, several high-profile individuals and companies in the entertainment industry want to ride its popularity and take advantage of the potential new revenue stream.

Fox Entertainment has been one of the biggest media companies to move into the blockchain space. In June of last year its animation studio Bento Box Entertainment created North Hollywood-based Blockchain Creative Labs and launched a $100 million creator fund.

Last October Fox Entertainment debuted its own NFT marketplace, which it calls The MaskVerse, that allows users to buy, sell or trade tokens. Fox’s blockchain company released 10,000 “Miss Masky” NFTs, based on its reality show “The Masked Singer.”

Through her blockchain entertainment company Sixth Wall, actress Mila Kunis has invested in downtown-based animation company Toonstar’s “The Gimmicks,” a series that gives NFT holders the ability to vote on the storyline.

Launching early in the fall, Invisible Universe’s “The R3al Metaverse” is a community-driven project that allows NFT holders to influence the storytelling of the animated series, which is a parody of reality TV shows and features animated characters inspired by recognizable NFT projects such as Bored Ape Yacht Club, Cool Cats and Robotos.

 

Evolving Internet

A lot of people inside and outside of show business are still wrapping their minds around the technology, which has garnered skepticism for crypto’s tumultuous time in the market. It is, however, believed that NFTs are here to stay for Web3.

Christopher Smith, a clinical professor of communication at USC Annenberg School of Communication and Journalism, said that as the social media and content streaming eras have reached maturity, the mission in a capitalist society is to find out what’s next.

“Web3 is a work in progress. It’s not here yet; It’s not fully functional, but all of these venture capitalists, the established platform companies don’t want to lose their dominance,” Smith said. “So, you have the venture capitalists who fund visions of the future with platform companies who are already dominant, and a whole new generation of startups all trying for a position in what’s going to drive growth next.”

He added that the whole notion of NFTs is that it is a digital entity where the holders have a certain set of property rights including the ability to resell or monetize future collectability of that item.

“NFTs are very much built on the promise of the blockchain affording people a position of ownership in the future of the internet,” Smith said. “That’s a very promising proposition.”
The path of NFTs becoming mainstream is a difficult one, but not impossible.

“I would say that what you’ll see is, probably irrespective of what the broader economic climate is, whether it’s recessionary or it goes back into a full-blown growth phase, it’s going to take probably, I would estimate, over the next five years for a crypto-driven, blockchain-built entertainment ecosystem to become bona fide,” Smith explained. “It’s going to take some time and it’s going to take some simplification.”

He said Web3 and NFTs have not reached the level of simplification necessary for the average person to understand what’s in it for them.

“The opportunity for NFTs is twofold. There’s the immediate opportunity for the huge media and entertainment conglomerates that already have a treasure chest of IP…that they can render into NFT collectible formats and use as marketing tools and as promotional tools and outreach tools to their fans,” Smith said. “They’ve already seen with games, ecosystems like Fortnite and Roblox that these avatars and skins that users and fans collect generate a lot of revenue.”

The second layer, Smith said, lies with startup entertainment companies like Invisible Universe, which are creating socially driven IP that generate new characters that “a whole new generation of fans care about and participate in the life of.” These companies are representative of the notion that Web3 is going to be “a much more democratized space” with room for new players to get involved.

“I think what blockchain technology has introduced to consumers is something that is not going to go away. While gate prices are lower than they were six, seven months ago, I don’t think that the baseline consumer behaviors are going to change around it,” Biggio said. “I think that what we have seen and unlocked in Web3 is this really collaborative process that is shifting the paradigms around ownership, around what it means to participate in a community and really about what it means to incubate IP.”

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