19/08/2022 Why Fox Is Investing Millions in NFTs and Blockchain Technology

Krapopolis - Chicken NFT
Courtesy of Fox Corp.none

Fox Corp. operates the only one of the four major U.S. broadcast networks that isn’t tied to a major direct-to-consumer subscription streaming play. The company also is the only one among its peers that has launched a dedicatedWeb3 and NFT division.

Those two things are related, says Charlie Collier, CEO of Fox Entertainment.

“We have a competitive advantage in building a business on the blockchain,” he says. “We’re able to invest in that, instead of having a vertically integrated SVOD [subscription video-on-demand] service; we are not spending billions of dollars on content and focusing on churn.”

Variety Web3 Cover

Last year, Fox establishedBlockchain Creative Labs, a venture housed in its Bento Box Entertainment animation division. BCL’s mandate: to create, launch, manage and sell non-fungible token content and experiences as well as other digital goods.

But the strategy is not to make a cash grab for the craze around NFTs as speculative digital collectibles, according to Collier. The long-term vision for BCL is to enable new business models for content distribution and consumer engagement — cutting out the streaming-platform middlemen and, someday, allowing fans to literally own a piece of their favorite TV shows.

“This will pay dividends long into the future,” says Collier of Fox Corp.’s blockchain investments.

Collier praises Fox Corp.’s leadership, Rupert Murdoch and Lachlan Murdoch, for fostering an entrepreneurial business culture that supports making big bets. They’re all-in on the blockchain, he says. “The Murdochs have always been about looking around corners and investing in what become successful ventures.”

Fox says it is prepared to invest up to $100 million in NFT and blockchain initiatives, looking to signal its seriousness in the sector. (Collier declines to say how much the company has spent to date.) In August 2021, Fox Corp. paid an undisclosed sum to acquire a minority stake in Eluvio, a startup whose platform is designed to distribute and monetize premium content using blockchain to verify ownership and provide access control.

BCL is headed by Scott Greenberg, co-founder and CEO of Bento Box, the studio whose hits include “Bob’s Burgers.”

“As an animation company, all our assets are already digital. Our content is built on databases,” he says. Embracing NFTs and blockchain “seemed like a natural evolution for us.”

The business potential forWeb3far exceeds what you see in today’s digital-collectibles marketplaces, says Greenberg. The blockchain marks the first time you can grant real digital property rights. Greenberg offers this thought experiment: Consider an environment akin to Napster, the infamous peer-to-peer sharing service that was sued out of existence two decades ago for facilitating rampant piracy. But instead of a value-destroying free-for-all, the Web3 version would give content owners the ability to monetize every single transaction. “We’re reinventing home video,” he says.

So far, BCL has produced NFT drops for Fox’s “The Masked Singer,” on a site called the MaskVerse, which spurred more than 300,000 people to create digital wallets to collect the NFTs. It also has released digital collectibles in partnership with WWE, whose “Friday Night SmackDown” airs on Fox.

The next big test of Fox and BCL’s blockchain ambitions comes with “Krapopolis,” a new animated comedy set in the mythical world of ancient Greece from Dan Harmon, co-creator of “Rick and Morty” and “Community.” Ahead of the show’s premiere sometime in 2023 on Fox, BCL has launched krapopolis.com.

The inaugural collection of “Krap Chickens” went on sale Aug. 11, priced in Ethereum cryptocurrency equivalent to $184-$330 apiece at the current exchange rate. The NFT buyers get exclusive access to a range of perks, including token-gated access to content and private screening rooms, invitations to online meet-and-greets with cast and producers, exclusive first-look access to upcoming NFT drops, and the ability to vote on elements that will be included in the show (say, an episode’s end-credits song). NFT holders who collect enough credits may even be able to secure a spot as an “extra” in the series — with their likeness showing up on a background character in “Krapopolis,” Greenberg says.

Krapopolis.com dropped 10,420 chicken NFTs (get the numerical pot joke?), produced and illustrated by the show’s animators. For Harmon, this has been a series development process like no other, and the maverick writer is unsurprisingly just fine with that.

“‘Krapopolis’ is unlike any series I’ve had a creative hand in,” Harmon says. “Building a fully realized world and a cast of zany characters on the blockchain has never been done before, and in terms of fan experience, it will come to life in a way no other show has.”

The “Krapopolis” project is not really about generating incremental revenue through NFT sales, Collier reiterates: “It’s about having fans self-select about something they’re passionate about.” To hear Collier tell it, just as Ryan Seacrest taught Americans how to text on Fox’s “American Idol” in the early 2000s, Fox and Blockchain Creative Labs will be at the forefront of demonstrating the value and viability of Web3 in the entertainment world.

But will these business models take root and become a dominant mechanism for content distribution? Greenberg posits that a generation versed in the metaverses of Fortnite, Roblox and Minecraft — conversant with the concepts of ownership in a virtual world — is the entertainment biz’s Web3 audience of the future.

Conjuring a popular baseball metaphor, Greenberg says Web3 and NFTs are not even in the first inning. “We’re in batting practice,” he says. “The game hasn’t started yet.” About where things stand right now in the blockchain revolution, he adds: “This is like the AOL and CompuServe of what’s coming.”



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