In its initial days, blockchain technology was seen as an experimental gimmick with no foreseeable practical applications but then came the era of cryptocurrencies. Powered by blockchain under its belt, cryptocurrencies swept past all growth estimates. After proving its worth this new world of blockchain became the focal point for tech communities and newer digital innovations began to expand the blockchain ecosystem.
After cryptocurrencies, the next big entity to have grown from the blockchain stable is NFT or Non-Fungible Tokens. NFTs are irreplaceable digital tokens that establish the ownership credentials for an asset. In simple terms, if the ownership of an asset, say for example a rare painting is transferred via an NFT to a purchaser by the painter, then the ownership credentials during the sale are recorded in a blockchain system and cannot be altered by anyone. There has been a rapid increase in the level of attention that NFT’s are drawing in recent times. In fact, July of 2021 witnessed nearly USD 1.2 billion worth of NFT sales which is amazing for a technology that is relatively new in mainstream adoption though the concept of NFT has been around since 2014.
So, Will NFT be a passing fad as some experts opine? If it were to restrict usage to selling single high-value collector’s items, then the case may be true. But, at the heart of NFT, there lies a mechanism to help the entertainment industry prosper and monetize their creative assets beyond traditional forms wherein creators are often ignored, and middlemen make all the money. The entertainment industry can become the single biggest beneficiary of NFT in the coming years.
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Benefits of NFTs in digital entertainment
We have seen how the world transitioned into a digital-first ecosystem when the COVID 19 pandemic hit and threw normalcy out of gear. Digital channels were a respite for billions for their daily needs of work, shopping, education, and entertainment. The shift in paradigm to digital is likely to remain even after the pandemic settles down. This opens a whole world of possibilities for the entertainment sector.
Now let us examine the top benefits of NFTs in digital entertainment–
- Greater participation in revenue cycle
- Promote smaller or individual artists
- Promote ownership economy
- New content experiences
- Better compliance
Greater participation in revenue cycle
An artist or musician can record an original score and then sell their work directly to fans via an NFT system. They can even sell the file to distribution companies via the NFT framework. The owner of the original content can set an NFT feature that pays them a royalty or percentage commission for every digital resell that the content is subject to either by an initial purchaser or by a distribution company. This setup helps content owners get direct involvement in the revenue system for their creation.
Promote smaller or individual artists
While famous artists and entertainment studios have a lot of channels to distribute and monetize their content, there are lesser-known artists who struggle to monetize their work due to limited patronage as well as due to the large commissions that distribution platforms make by playing the role of middlemen. With NFT’s this can be eliminated as smaller artists can build up an audience using any social media channel and then launch their own NFT tokens which fans can purchase and reselling of their original content can be programmatically enabled to contribute royalty for every sale irrespective of when the sale transaction happens.
Promote ownership economy
NFT can be the perfect solution in eliminating the risks of fake ownership claims for assets. With digital ownership credentials securely stored away in blockchain, it becomes impossible for counterfeit ownership credentials to be created and circulated. This allows both content creators and purchasing buyers to exert more control on how their legitimate transactions are safeguarded and can ultimately be the death knell for online piracy through advanced encryption-based file transmission methodologies.
New content experiences
With rising consumer demand for AR/VR goods, the future of entertainment can become entirely virtual. Entertainment content can be made immersive and real-life using a combination of visual animations and immersive technologies. Once these are done, NFT’s can play the role of guarding access to the original content and prevent imposters from gaining access to it. This will reshape the online entertainment industry and promote more de-centralized innovation in the field. Imagine setting up entirely virtual worlds where digital concerts, exhibitions, and other interactive events can displace traditional exhibition and convention themes. NFT can become the backbone of enabling genuine transactions and authenticity for virtual events.
Better Compliance
The entertainment industry often faces the whip for regulatory and legal compliance framework violations when content is distributed globally. The policies, costing, legal, and other ownership rights can vary from country to country. NFTs can play the role of autonomously governing compliance and regulatory audits to ensure that content owners remain compliant with the laws of the land where their content is sold or consumed. The ownership credentials can be customized to include specific localized regulatory frameworks which will automatically be enforced once the content is up for consumption in that geography.
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Closing thoughts
NFTs have the potential to reshape the entertainment sector drastically. With improvements in internet penetration, online awareness, and a rising preference from the millennial population for consuming content online rather than in physical avenues, the future looks very promising for NFT’s. It can become the central component that establishes genuine, authenticity, and ownership when entertainment becomes a digital-first industry and with events like the COVID 19 pandemic showing the necessity for such an approach, it is only a matter of time before NFT’s become a daily affair in the entertainment sector.
