Cannes: Is the Film Industry Really Ready to Embrace NFTs?
At the turn of the millennium, Cannes was taken over by the dot-coms. A fresh generation of technology start-ups descended on the Croisette, plastering the hotel fronts with banners and billboards and promising to revolutionize the film business thanks to this new-fangled technology called the internet. A year later, those banners were gone. The tech bubble had burst.
For Cannes 2022, replace dot-coms with crypto technology and the internet with the blockchain. Crypto and NFT-sponsored panels, parties and events are everywhere on the Croisette this year. Even the lead sponsorship of Cannes’ May 26 amfAR Gala comes from cryptocurrency exchange platform FTX. The tech start-ups crowding into Cannes this year have new buzzwords — “NFT,” “metaverse,” “Web 3.0” — but their promise to revolutionize and democratize the movie business sounds eerily familiar.
“It does remind me a lot of the internet bubble days, which I was very close to and had a front row seat to,” says Mark Kimsey of Electromagnetic Productions, a film and TV production studio that has made NFTs and blockchain technology a core part of its business model. “There were a lot of companies just doing the gold rush thing, with companies whose valuations made literally no sense [and] a whole sort of ecosystem of bad actors. But the technology lived on, and the companies that used it wisely and judiciously added to their customer base and added value to their companies.”
If anything, the technology involved in this new wave is more poorly understood than the internet was back in 2000. At the base of it all is the blockchain, a computer protocol that can be used to create a decentralized digital database. The blockchain is the digital ledger used to verify transactions made for cryptocurrencies like Bitcoin and Dogecoin and is the underlying code for non-fungible tokens, or NFTs, which can (roughly) be understood as legal deeds for digital goods or services. So you can buy an NFT giving you ownership of a limited edition of Sylvester Stallone-created digital artwork or an NFT that gives you exclusive access to Kevin Smith’s upcoming comedy-horror anthology Kilroy Was Here.
Blockchain and NFT technology can be used to build full digital ecosystems, including decentralized autonomous organizations, or DAOs, where all decisions — the greenlighting of a film project, say, or cast approval for key talent — are voted on by the users/owners of the organization, which is then carried out automatically via digital “smart contracts” without the need for human intervention.
If that last paragraph left your head spinning, you’re not alone. The technology is complicated, and the hyperbolic nature of some of the crypto-industry’s boosterism — remember those cringe-worthy Super Bowl ads? — could lead you to conclude this is all just one big con. Certainly, the crypto industry is having a bad couple of weeks as the value of several digital currencies, including Bitcoin, has slumped, and the share price of cryptocurrency exchange platform Coinbase Global nosedived, wiping out billions in market capitalization.
But even within the independent film industry — a business infamous for attracting hustlers of all shades — there are plenty of serious players getting serious about crypto.
Earlier this year, Steven Soderbergh’s production company Extension 765 signed up to support Decentralized Pictures (DCP), a blockchain-powered filmmaker platform founded by Roman Coppola, Leo Matchett and American Zoetrope’s Michael Musante, pledging $300,000 in finishing funds for fiction features or shorts projects pitched on DCP’s platform. Ahead of Cannes, DCP announced a new partnership with the Gotham Film & Media Institute that will provide a $50,000 award in the form of finishing funds for selected documentaries. DCP, which is a non-profit, claims the use of blockchain technology makes everything on its platform — from submitting projects to community voting to data insights on audience response — decentralized, democratic and transparent.
“Our mandate is to focus on supporting filmmakers from underprivileged and underrepresented backgrounds, to give them access to an industry which from the outside can be very daunting and difficult to understand,” says Matchett.
London-based film financier Goldfinch, which has backed projects like 2019 animated feature Bombay Rose and last year’s Twist, starring Lena Headey and Michael Caine, earlier this year launched FF3, a crypto crowdfunding platform for indie filmmakers that kicked off with The Dead of Winter, a horror-thriller project from Stephen Graves billed as a classic ghost story set against the homelessness crisis.
“At the moment we are just scratching the surface with the potential of this technology,” says Goldfinch COO Phil McKenzie. “Web 3.0 — using cryptocurrencies, the blockchain and smart contracts — can solve a lot of challenges that we face as filmmakers, as financiers, as distributors and as sales agents. It could change how we fund content, how we release it, how we make it.”
Using NFTs to crowdfund, by offering exclusive digital artwork or other crypto assets connected to an indie project, could be “substantially more effective” than traditional crowdfunding via sites like Kickstarter, McKenzie argues, because an NFT is a “true asset with real ownership” that gives fans a real stake. Using blockchain technology and smart contracts throughout the production and distribution process could allow companies to easily and transparently trace how funds move in and out of a project, “something the traditional film industry really struggles with.”
Some of the more ambitious crypto entertainment projects that go beyond supplementing financing or improving transparency include a DAO launched by crypto film company Film.io, which will let fans and creators invest in and help greenlight projects while earning Fan Tokens, the digital currency used on the decentralized platform, through their participation.
“This isn’t just about crowdfunding,” says Film.io co-creator Chris J. Davis. “It’s about providing our creators with a full-service kind of application to take them through every aspect of making a movie [and] connecting up with like-minded individuals who might have complementary skill sets. So if you need a lookbook or a poster, there will be people who are already part of our community who can do that and are looking for projects they can invest their time, energy and talent in.”
The complicated legality around film financing — which is strictly regulated in many countries, including the U.S. — may scupper many, even most, of the crypto-backed projects being pitched in Cannes this year. The still-nascent NFT entertainment business has yet to deliver a success story to prove its case that this new technology can be truly revolutionary.
“At the moment people are rightfully skeptical, it is very much ‘buyer beware’,” says Peter Csathy, chairman of CreaTV Media and a prolific commentator on the digital media industry. “People should be very cautious. Be afraid, be very afraid. But just because you’re afraid doesn’t mean that you shouldn’t start experimenting. … There’s going to be a lot of crap out there, a lot of people just trying to do money grabs. But ultimately, you will get some real success stories. Because this technology, the tech that underlies this, that’s real.”
Doubters should also remember that in 2002, amid the wreckage of all those Cannes dot-com failures, another company went public, betting the internet would revolutionize the entertainment industry. Its name? Netflix.