How The Entertainment Industry Is Moving To Web3

How The Entertainment Industry Is Moving To Web3

The entertainment industry has always been driven by new technologies, from gramophones to live streaming. The growth of Web3 utilities has enabled rapid evolution of traditional entertainment, with blockchain, smart contracts, NFTs, the metaverse and decentralised finance (DeFi) providing new options for engaging audiences. While the impact of Web3 on the entertainment industry has already been profound, the Web3 shift is only just getting under way. 

Problems In The Traditional Entertainment Industry

Global entertainment is a $2.3 trillion industry, with digital formats representing an increasing percentage of that total. However, like Web2, the majority of revenues are captured by a relatively small number of large corporations and their shareholders. Regular customers, audiences and fans have few tangible ways to experience a true sense of ownership of the media and products they consume.

Blockchain technology has always held out the prospect of decentralised and user-owned services, but it took the coronavirus pandemic to catalyse meaningful change. Digital transformation was a feature of the pandemic, as so much of life moved online. Digital ownership through tokenisation soared, especially through technologies like Non-Fungible Tokens (NFTs). And, while COVID’s impact on jobs was severe and some sectors atrophied, blockchain developer demand rose dramatically as new crypto services launched to cater to this nascent interest.

The Shift To Web3

The crypto community has proven adept at applying blockchain to entertainment, and the entertainment industry has sought to use new technologies to tap into new markets. At least three technologies have proven foundational:

  • Artificial intelligence (AI) is used to generate all kinds of new content, including digital images and music.

  • NFTs – unique or limited edition blockchain tokens – are used to represent artwork and other digital items.

  • The metaverse – a term for immersive, socially-driven online environments, sometimes incorporating virtual reality and built on blockchain – has provided new ways for people to interact and access digital services.

These technologies are being deployed in a wide variety of ways, from AI-generated songs and digital art to offering new venues for entertainment. Concerts in the metaverse grew in popularity when people were not allowed to gather in person, with artists such as Justin Bieber, the Foo Fighters, and Ariana Grande performing on various platforms. Blockchain integration in entertainment enables users around the world to pay for tickets, attend events in the metaverse, and even take home mementoes in the form of proof-of-attendance NFTs.

Celebrities were quick to grasp the potential and role for NFTs in the entertainment industry. They have proven a powerful tool for connecting with fans and selling albums and art. Singer and artist Grimes (also Elon Musk’s ex-girlfriend) made nearly $6 million in just minutes selling unique artworks, and a growing number of artists and bands as famous as Kings of Leon and Muse are releasing individual tracks and whole albums as NFTs. 

It’s not just musicians, though. Sports personalities have also embraced NFTs. The NFL, for example, has sold official footage as NFTs, enabling fans to own a ‘moment’ in sporting history. Big Baller Brand (BBB) is a digital collectibles organisation that is currently holding the Big Ballerverse world tour, in partnership with blockchain play-to-earn gaming initiative Crypto Global United; the event will ultimately include NFTs of the NBA players who participate.

How Web3 Is Revitalising The Entertainment Industry

The entertainment industry has struggled to adapt to technological changes. The rise of file-sharing platforms at the beginning of the 21st century forced corporations to change their business models and ways of distributing content. Meanwhile, artists found they struggled to reach an audience without the backing of a big label. Even those who achieved success online through grassroots followings found much of their income swallowed by content platforms like YouTube. 

Web3 has given artists new options for generating income and connecting with fans. The Web3 entertainment industry is only just taking off, but is already seeing vibrant activity as musicians and artists leverage their online communities and use blockchain to fund their work. 

As well as being a means of signifying ownership of content, there is a secondary use case for NFTs as financing for the entertainment industry. Pre-selling NFTs allows artists to connect with superfans, and reward them for their loyalty by offering them exclusive content and experiences. NFTs also give them novel revenue streams, including royalties on every sale on the secondary market (the recent royalties war between NFT marketplaces Blur and OpenSea notwithstanding). That’s before you get into artists capitalising on the status symbol of NFTs themselves and even building them into their content – such as Eminem and Snoop Dogg performing as their Bored Ape avatars.

In the process, we’re seeing Web3 gain a new infusion of talent, driven by funding from the traditional entertainment industry. Well-known corporations are exploring the potential of NFTs and the metaverse, driving a growth in jobs for blockchain developers, designers, 3D artists, and more.

Old Problems, New Solutions

These benefits are being used by some high-profile individuals and situations, as digital arts in Web3 are treated both as unique investment opportunities and ways of funding specific causes.

In March 2022, an NFT of the Ukrainian Flag sold for 2,258 ETH, or over $6.5 million at the time. The money was sent to Come Back Alive, a humanitarian organisation that helps Ukrainian civilians and military. The sale was arranged by UkraineDAO, a crowdfunding initiative spearheaded by Russian musicians and well-known protestors Pussy Riot, to support Ukraine in the war. 

Opensea case study: Trump NFTs

Launched on the Polygon network in December 2022, this Trump-endorsed series of 45,000 NFTs sold for an initial price of $99 each. Depicting scenes in the life of the former President, with Trump in a variety of costumes and poses, the mint proved controversial but nonetheless sold out within 12 hours, raising nearly $5 million. Figures from OpenSea show over 12,000 ETH in trading volumes on the secondary market which, at 10% royalties, equates to almost another $2 million.

All of this has taken place in the early days of Web3. With more investment, new use cases, greater NFT adoption and growth of the metaverse, we are set to see Web3 transform not just the fringes but every aspect of the entertainment industry.