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Saturday, Jul 13, 2024

NFT Town

The fast-growing market for nonfungible tokens, or NFTs, is creating a big impact in Los Angeles.

Two years ago, few were even familiar with the concept of NFTs. Yet sales of NFTs last year reached nearly $25 billion, according to market analyst DappRadar. That was up from less than $100 million a year earlier.

An NFT is a type of cryptoasset in which each token is unique and therefore isn’t “fungible” in the way Bitcoins are all worth the same amount. An NFT is typically attached to a specific digital asset such as a virtual trading card, a video clip or digital art, and acts as a kind of certificate of authenticity. NFTs are bought and traded on a digital ledger called a blockchain.

Some of the industry’s explosive market growth is being driven by Los Angeles-based businesses – and many of those companies are forming strategic connections with artists, entertainment companies and brands to bring Hollywood stars and franchises into new virtual spaces.

Dave Broome, chief executive of Century City-based Orange Comet Inc., transitioned directly from Hollywood into the NFT business. Co-creator of reality show “The Biggest Loser” and head of Twenty Five/Seven Productions, Broome launched Orange Comet alongside a team of founders that includes pop icon Gloria Estefan, musician and producer Emilio Estefan and former National Football League star Kurt Warner.

Broome said when he first began learning about NFTs, he found that most of the products being sold and traded were unexciting pieces of digital memorabilia lacking in imagination and production value.

“I said, ‘Look, let’s try this,’” said Broome. “Let’s take the Hollywood approach and bring cinematic storytelling into the world of digital collectibles.”
Through partnerships with AMC Networks Inc. and Pow! Entertainment Inc., the company has already unveiled NFT collections themed around “The Walking Dead” and comic book hero Chakra the Invincible.

Broome said the “Walking Dead” NFTs in particular illustrate the company’s approach to the technology. The line of collectibles includes glossy images and video files which give owners access to future “drops,” in which rare collectibles will be offered for sale. Some of these files include original cinematic material connected to characters and scenes from the show.
“It looks like a film or television production at a very high quality,” said Broome.

More interactive

While Orange Comet is bringing Hollywood production to the world of NFTs, Electromagnetic Productions is betting that NFTs have a role to play in Hollywood.
The newly launched film and television studio was founded by investment manager Mark Kimsey and former MGM Holdings Inc. chief executive Roger Birnbaum. Kimsey said the studio aims to fully integrate NFTs into the production process, from start to finish, as a means to create more interactive experiences for viewers and fans.

“NFTs hit our radar and it became very clear to us that this was a technology and a capability that would be very effective in creating community around our (intellectual property),” Kimsey said.

While NFTs are mainly seen at this point as collectible items, they have a range of potential uses, from ticketing applications to the distribution of digital content itself. Kimsey said EMP is exploring all these options but is primarily focused on the technology’s potential as a tool for fans to interact with one another and build community.

Already, many collectors connect with one another through online networks that can be accessed only by fellow NFT owners. Kimsey said these networks could be used by studios like EMP to run ideas by diehard fans and give community members access to behind-the-scenes opporttunities, keeping fans engaged and generating buzz for features in production.

“That will be a community that we hope is connected to EMP for a very long period of time,” Kimsey said. “There’s a perennial process of creating stories and there’s always a community that exists around that. We just want to be as close to it as possible.”

EMP is already selling digital tokens that can be used to access community events, said Kimsey. The studio aims to enter production on two or three film features and up to five television shows by the end of the year, he added.
Here’s a look at some of the other big players in the rapidly expanding industry:

LFG NFTs Corp., dba Autograph

HEADQUARTERS: Brentwood

CEO: Dillon Rosenblatt

FOUNDED: 2021

FUNDING TO DATE: $205 million

 

WHAT TO KNOW: Helped along by the star power of co-founder Tom Brady, LFG NFTs Corp., which does business as Autograph, is one of the fastest growing companies in the NFT industry. Launched just last year, it has already raised more than $200 million to build a platform for NFTs affiliated with star athletes and celebrities.

The company has already found success with a series of NFT “drops” linked to athletes like Naomi Osaka, Simone Biles and Brady himself.

A partnership with fantasy sports and betting site DraftKings Inc. has facilitated the sale and trading of Autograph’s sports themed NFTs, and the company has also partnered with Billboard and Lions Gate Entertainment Inc. on the creation of NFTs linked to celebrities and film franchises.

Autograph pulled in $170 million in its latest funding round, led by Kleiner Perkins and major blockchain investor and advocate Andreessen Horowitz. With that funding, the company said it planned to line up more partnerships with rights holders and famous personalities to attract more super-fans to its platform.

QUOTE: “This really (emerged) from a concept of bringing together the most amazing brands and people to provide new fan experiences,” said Chief Executive Dillon Rosenblatt. “Today, we are becoming a really unique Web3 media company able to curate communities and launch collections.”

OneOf Inc.
HEADQUARTERS: Los Angeles, Miami
CEO: Lin Dai
FOUNDED: 2021
FUNDING TO DATE: $63 million

WHAT TO KNOW: A major concern for many would-be NFT collectors and enthusiasts is the technology’s environmental impact. Most NFTs are minted using a proof-of-work process that prevents fraud and counterfeiting but requires a high amount of electricity to complete.

Environmental advocates have raised concerns about the energy consumption needed to produce these digital items, and OneOf Inc. is one of several companies focused on producing “green NFTs.”

The company, which is based in Los Angeles and Miami, mints NFTs using the Tezos blockchain, which utilizes a less energy intensive proof-of-stake system to validate the authenticity of NFTs minted on its network.

Backed by music industry icon Quincy Jones, the company is also focused specifically on NFTs linked to musicians and celebrities. Already, OneOf has announced partnerships with Warner Music Inc. and the Recording Academy to produce NFTs promoting Warner artists and the Grammy Awards.

Last year, the company announced that it had raised $63 million in seed funding, which it said would be used to secure future partnerships and create opportunities for emerging artists to use its platform.

QUOTE: “We are building a technology company with an artist-first ethos and eco-conscious mission to help introduce hundreds of millions of non-crypto native users to blockchain,” Chief Executive Lin Dai said in a statement following the funding announcement.

Genies Inc.
HEADQUARTERS: Venice
CEO: Akash Nigam
FOUNDED: 2016
FUNDING TO DATE: $110 million

WHAT TO KNOW: Genies Inc. has a slightly different business model than that of other NFT companies that have popped up in recent years. The Venice-based startup gives users the opportunity to create digital avatars that can be used and displayed in a variety of online platforms.

Users of the technology offered by Genies can also create virtual goods and wearable items for those avatars in the form of NFTs. These can then be sold and traded through a digital marketplace called The Warehouse, which operates on the Flow blockchain developed by influential Vancouver-based NFT company Dapper Labs Inc.

Genies’ avatars can be made by everyday users, but the company has made a name for itself through partnerships with celebrities and record labels that have produced digital lookalikes of pop stars like Rihanna and Justin Bieber.

The company has deals in place with Universal Music Group and Warner Music, alongside players associations for the NFL and Major League Baseball, to create celebrity avatars and release NFT wearables associated with artists and athletes.

QUOTE: “We believe in the true freedom of digital identity,” said Chief Executive Akash Nigam in a January announcement. “And that means allowing everyone to have control of who they are in the digital world.”

Mythical Inc.
HEADQUARTERS: Sherman Oaks
CEO: John Linden
FOUNDED: 2018
FUNDING TO DATE: $269 million

WHAT TO KNOW: Rather than treating NFTs merely as collectible items that exist in a digital space, video game startup Mythical Inc. is developing titles in which each playable character is itself an NFT.

Mythical launched an early-access version of the first of these games, “Blankos Block Party,” last year. In the game, players can explore virtual worlds as characters called “Blankos,” which are NFTs that exist on a blockchain and thus can be owned and traded outside of the game world.

In November, Mythical announced the completion of a $150 million Series C funding round led by Andreessen Horowitz. The company said this funding would be used to enhance its blockchain-based gaming platform, which is designed to support multiple titles.

Mythical also announced last year that other game developers would partner with the company to create new playable experiences on its gaming platform.

QUOTE: “The Mythical Platform leverages playable NFTs and blockchain technology to open the doors to the economy of any game and invite the community in,” said Chief Executive John Linden in a November statement. “Soon it will seem crazy we as players ever spent time or money on games without getting real value in return.”

The Non Fungible Token Company Inc., dba Unblocked
HEADQUARTERS: West Los Angeles
CEO: Harrison Wang
FOUNDED: 2021
FUNDING TO DATE: $15 million

WHAT TO KNOW: The Non Fungible Token Company Inc., which does business as Unblocked, provides white-label services to major brands looking to experiment with NFT offerings.

Strongly influenced by Dapper Labs and its popular collectible trading platform, “NBA Top Shot,” Unblocked creates NFTs linked to specific brands or products that can then be sold, traded and even used to access real-life experiences. The company also utilizes Dapper Labs’ Flow blockchain to mint its NFTs.

So far, Unblocked has announced NFTs celebrating the legacy of hip-hop group Cypress Hill and formed a partnership with Billboard and Universal Music Group to create an NFT collectibles project called “ChartStars.”

Earlier this year, Unblocked announced the completion of a $10 million seed funding round. Participating investors include Tiger Global and Billboard-owner Penske Media Corp., along with Marcy Venture Partners (co-founded by rapper Jay Z) and pop star Shawn Mendes.

QUOTE: “What we’re building are bespoke branded solutions,” said Chief Executive Harrison Wang. “We can reskin what we’re building in two or three weeks, so we’re working with a lot of brands to spin out their own marketplaces.”

Curio Digital Inc.
HEADQUARTERS: Beverly Grove
CEOs: Ben Arnon and Rikin Mantri
FOUNDED: 2020
FUNDING TO DATE: $7 million

WHAT TO KNOW: Curio Digital Inc. launched in 2020, just before the market for NFTs began to take off. The company’s digital offerings are designed to appeal to diehard fans of specific brands and franchises, with many including original artwork.

Through partnerships with Darkhorse Comics Inc. and The Topps Co. Inc., the company has produced limited edition collectibles tied to the “Concrete Park” comic series and the “Mars Attacks” franchise.

The company also operates a platform called Blocks, which allows users to create virtual showrooms for their NFTs.

Curio announced last year that it had raised $7 million in seed funding to fuel new partnerships and support future collectible drops. In February, Universal Music Group revealed that it had entered into a partnership with Curio to support development of NFTs linked to the record company’s labels and artists.

QUOTE: It’s exciting to be in the L.A. community,” said co-chief executive Rikin Mantri last year. “The reason why we set up our (headquarters) here is really around getting close to the

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ELIJAH CHILAND Author