Why Film Producers Are So Excited About the Metaverse: ‘Everybody’s Dream Can Come True’
When film producer John Baldecchi describes the metaverse, he doesn’t envision the elaborate virtual worlds and avatars as seen through bulky VR headsets or the visions imagined by “Ready Player One” and Mark Zuckerberg. But he does see the future.
For Baldecchi, whose credits include “The Mexican” and “Happy Death Day,” the metaverse could change the way Hollywood does business and redefine who owns what in the online ecosystem.
The combination of blockchain and cryptocurrency is slowly starting to enable what many see as the true potential of the metaverse, he said. And that will disrupt not just how we watch movies, whether that’s via VR headsets or engaging with others virtually while watching a film, but it will change the process with which movies are bought, sold and financed — as well as who controls the rights to what the next generation of creators develop.
For many producers like Baldecchi, making movies in the metaverse isn’t about creating a VR landscape that looks like a video game. And it goes beyond selling NFTs or finding new ways to crowdfund indie movies. All of these things can be done today. But if you’re a producer who owns IP and with the power of the blockchain, you can develop, finance, produce and distribute your movie without relying on middle-man banks, financiers and studios, suddenly everything about how Hollywood has made movies for decades can be turned on its head.
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“The thing that I care most about is how do we take IP and tell stories that we want to tell and not be beholden to other folks who have different ideas about what they want to make,” Baldecchi told TheWrap. “I don’t need to be inside of it. That’s not to me a game-changer, because what I care about is the story there. And if you’re in Mark Zuckerberg’s multiverse, that doesn’t change anything for me. What I want to be able to do is tell stories that we can’t figure out how to tell any other way.”
As of today, there are few, if any real-world examples of how film producers use metaverse technologies to change the way they make movies. But it hasn’t stopped players big and small from scrambling to make sure they’re not left behind in the digital arms race. In February, Disney tapped a former theme parks executive to lead its metaverse strategy. Former Disney CEO Bob Iger joined the board of a digital avatar company called Genies helping to craft a virtual marketplace of creators. And Korean entertainment giant CJ ENM recently took a minority stake in Hyperreal, a company that develops hyper-realistic avatars for use in the metaverse.
“These giant companies are all pushing heavily, heavily, heavily into this area. That’s not something you want to ignore. And these are the same companies that are making content. So that tells you something,” Baldecchi said. “Again, it’s real early. So how do we as storytellers, people who own IP and want to tell stories, maximize what the technology has to offer?”
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“It’s a new frontier”
The metaverse can be imagined as Web 3.0. If Web1 offered the ability to connect online, send messages and interact in a new way, our current Web2 is defined by the advent of video and apps. The next evolution, or Web3, will unify all those disconnected apps and forms of communication and commerce across digital worlds.
Web3 encompasses a wide range of technologies, but it can be confusing to think of it squarely in terms of virtual reality or watching a concert or a movie in cyberspace. In fact, virtual reality (VR), augmented reality (AR) or hanging out with friends on the web in a virtual video game space like “Fortnite” are all things you can do right now. Technology will one day help improve all those things, though the gushing over the metaverse usually refers to something else.
Ted Farnsworth, the former chairman of the failed movie-ticket subscription service MoviePass, is excited for what he believes could be a seismic shift in how to develop projects centered around IP. While real-use cases are still in the very early stages, Farnsworth believes that artists and filmmakers who can cultivate niche groups of fans and develop loyal followings based on intellectual property will be able to use Web3 to develop, finance and directly distribute movies and other content.
Farnsworth recently went public with a company called Cryptyde — part of his ZASH holding company — that aims to tap into the many young artists who have already discovered the ability to use blockchain and NFTs.
“It’s a new frontier,” Farnsworth said. “Especially in the last year since the pandemic, this has changed from just an idea about the metaverse to it’s fully blown, and every major tech company in the world is going after it trying to figure out who’s going to be first.”
Among the many opportunities, Farnsworth imagines how Web3 can let artists provide behind-the-scenes access to a fan base, through unique NFTs authenticated through the blockchain. The technology can also offer downstream merchandising opportunities so fans can purchase content directly from the artist — bypassing studios and more traditional entertainment companies — and potentially use those items across other digital platforms and ecosystems. And he knows that the wealth of possibilities will create a host of questions about how artists work to protect their digital likenesses in the metaverse.
But the digital arms race has already put up roadblocks as multiple parties all try and determine who controls what in the metaverse, with the lawsuit between Quentin Tarantino and Miramax over the director’s release of “Pulp Fiction” NFTs just one example of how real-world ownership is getting complicated in worlds governed over the blockchain. And it begs the question whether any of this will make a difference when it comes to the biggest blockbusters produced for hundreds of millions of dollars and marketed at the widest possible audience.
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“Can you do that for movies?”
If Web3 sounds like a bakery full of pie-in-the-sky ideas without a clear application for how it actually affects making filmed content, that doesn’t mean people aren’t in the trenches trying to crack that code, and there are real-world examples that point to how it might all work.
Baldecchi, a partner and co-founder with the film and TV company Roundtable Entertainment, was wowed by the example of LinksDAO, a decentralized autonomous organization (DAO) that organized a small group of tech-minded golf enthusiasts to raise $10.5 million in 48 hours to try to buy a country club (the DAO, which has 9,000 members, is still in talks to buy the club). Baldecchi wondered what it would take to do something like that for a movie.
“I’ve raised money before. I had $10 maybe in 48 hours. Or you raise $2 million in 14 months. [LinksDAO] happened because like-minded people found something they were interested in and they send cryptocurrency,” Baldecchi explained. “Can you do that for movies? Absolutely. Has anyone done it? No. We’re trying to figure it out.”
Baldecchi concedes it’s no easy task trying to finance an independent film in 2022, let alone to then develop it, produce it and distribute it. In theory, a creator working within the metaverse could do all those things without any intermediaries, from banks to process your transactions to distributors who book it into theaters.
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Baldecchi’s Roundtable is in the very early days of thinking about all of this, but as a company that’s in the IP-to-commerce business, he’s trying to leverage Web3 technology to raise money, distribute content and reach an audience. What he’s observed is that the world is decentralizing and becoming “hyper niche,” with companies able to survive thanks solely to a small group of people who love what you do and are willing to pay for it.
So rather than try and target a wide audience and hope the core fans for an IP show up, with the metaverse you can instead sell shares of your movie to a core fan group by way of an NFT. And as the movie is monetized and creates value downstream, the value of those individual NFTs could increase.
“If what you’re doing is raising money by way of NFTs, that’s your initial audience right there, because they’re going to be the first ones who want to see what you’re doing… And by the way, that might be the only audience you need to make a living,” Baldecchi said. “I don’t think you need giant audiences. I think high-value audiences who love what you’re doing — smaller, high-value audiences — are probably more interesting.”
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“Everybody’s dream can come true”
Peter Luo, the CEO of Chinese companies Starlight Media and Stars Collective, which has backed big-budget studio films like “Crazy Rich Asians” and “Malignant,” has put that idea into practice with his own recently launched Metaverse Entertainment. He’s recognized that the changes at the global box office in the COVID era are forcing producers to rethink the way they fund and distribute their films, and the metaverse may be one way of removing some of the film industry’s uncertainty.
“In the traditional film industry, to make a film, creating an IP and script to actually sell the film to go to the box office, the timeframe is very long, and for investors, they want to see their money come back sooner,” Luo said through a translator. “In the metaverse, there’s many ways to utilize the IP, and the profit can be collected in multiple ways, and with a smart contract, everything is transparent. You can see how much you’re making, what are other things happening that are making your profit back with a smart contract.”
Metaverse Entertainment is a subsidiary of Luo’s talent incubator Stars Collective, which has already signed young filmmakers to cultivate their ideas. Now they’ve taken the next step by pairing filmmakers with NFT artists to give them access to the company’s own NFT marketplace. He believes Web3 will bring “major changes” to how his films are made, how IP is applied and how those films are distributed, and they hope to help talent find a more targeted audience and share in the creation and value of their artwork.
To that end, Luo’s Metaverse Entertainment has also worked closely with GameFi, which is a hub that indie video game developers have utilized to finance and launch new games via the blockchain. Game designers have innovated by letting players buy and sell in-game weapons or tools as NFTs, Luo said, and can even use those elements across other games or auction them offline. He feels films might be able to expand their reach and revenue streams in a similar way.
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“It is another world. And in this world, everyone has their own way of creating arts in all kinds of forms. That’s a place everybody’s dream can come true,” Luo said. “They can release art in every form. There’s no class, no race, no gender in this world. Everybody can be their true self.”
When Baldecchi speaks with other executives about the metaverse, he’s often met with blank stares and perplexed faces. According to Luo, roughly half of his conversations about Web3 are with people who have never heard of the metaverse and refuse to believe it will impact them in their lifetime.
“People are so used to things a certain way, and the metaverse is definitely a new concept for people to understand what it is, what’s it about. Especially with talent who have already accomplished in their career, they are very cautious and conservative when it comes to new ways to do things,” Luo said. “But when the internet was first born, everyone thinks it’s a crazy idea and it would come and go, and it takes time for everyone to learn about it and to actually use it.”
This is Part 2 of a WrapPRO special series: The Metaverse UnWrapped.
Monday: How to Lose a Billion Dollars in the Metaverse and Other Mysteries of Web3
Tuesday: Why Film Producers Are So Excited About the Metaverse: ‘Everybody’s Dream Can Come True’
Wednesday: Why VFX Companies Want to Craft Your Hyper-Real Avatar for the Metaverse
Thursday: Why Businesses Are Snatching Up Real Estate in the Metaverse
How to Lose a Billion Dollars in the Metaverse and Other Mysteries of Web3