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Can Fox Mine Digital Gold In NFT Wild West With Eluvio Investment?

NFTs
(Image credit: Deccan Harold)

So, Rupert’s going prospecting, hoping to hit one last motherlode. That’s one way to understand the deal announced today that Fox has made a strategic investment in Eluvio, “a global pioneer for managing, distributing, and monetizing premium content via blockchain.” 

If that sounds frightfully vague and inexplicable to the billions of people who aren’t breathlessly riding the roller coaster runs of Ethereum and Bitcoin, well, I feel you. But it’s just possible that Rupert Murdoch and his boutique media joint might be onto something that other media companies should be thoroughly investigating, too. 

Also read: Fox Invests in Eluvio, Tech Company Behind its First Blockchain Series, Dan Harmon's 'Krapopolis' 

Under the deal, Fox joined Eluvio’s $100 million Series A round, a big but not unusual raise. Such strategic investments give big operators a chance to learn more about a hot new business, guarantee early dibs in any acquisition, and lock in  a nice payout or IPO stock when it’s time to go public. That Fox’s top digital dude, CTO and President of Digital Paul Cheesbrough, is also joining the Eluvio board speaks to how interested the company is. 

In announcing the deal, Fox executives made clear they believe Eluvio’s technology can make a difference in the ways Hollywood connects with and sells to its most ardent fans, and the advertisers trying to reach them. 

“At Fox, we believe that the blockchain, and the overall shift towards a more decentralized web, is providing creators with a wealth of opportunities to reach consumers with exciting new experiences,” said Cheesbrough. “The Eluvio team are the best in the business when it comes to the software and scalable infrastructure required to power live, decentralized experiences across the blockchain and our investment will help bring this technology to a wider market of content creators, media partners and advertising clients.”

Fox’s commitment indeed should boost Eluvio’s visibility with other media companies that want to create, market and sell non-fungible tokens or other blockchain-based digital assets. As the release puts it, the deal will“accelerate the adoption of Eluvio’s platform across the broader media and entertainment industry.” 

One of the many challenges of rolling out blockchain technologies is trying to pick winners. The sector is home to a bewildering array of companies and applications, often trying to solve old problems in new ways. One key for growth is standardizing on fewer platforms that can work at a larger, much more efficient scale. Picking a winner, as Fox has done, could help that process for all of Hollywood. 

Eluvio’s other media clients already include MGM and Sony Pictures, among others. It’s also worked with a bunch of the industry’s tech-focused vetting organizations, such as USC’s Entertainment Technology Center, the Hollywood Production Alliance and SMPTE. 

Fox also made much of Eluvio’s more energy-efficient architecture, anticipating another frequent critique of blockchain tools in general: they’re power hogs. 

By contrast, Eluvio’s technology “avoids the computational energy consumption, and costs, of proof-of-work blockchains through its efficient proof-of-authority consensus and seamless combination of on- and off-chain transactions.” 

For all you non-technical readers out there, that inscrutable sentence means a much less energy-intensive approach that should reduce operational costs, improve speed, and scale much better. 

Fox will be use Eluvio’s technology to create, or “mint,” non-fungible tokens around such things as digital collectibles or media assets, then marketing, selling, and storing those assets, so it can “embrace the power of blockchain economics to create significant new revenue opportunities for premium content.”

Under the deal, Eluvio will be the tech platform undergirding Blockchain Creative Labs, a Fox joint venture with its animated division Bento Box Entertainment. Blockchain Creative is building a dedicated digital marketplace for Dan Harmon’s new animated comedy, Krapopolis. It plans to use the Eluvio tech to sell digital goods, like one-of-a-kind character and background art and GIFs, and to give super fans access to exclusive social experiences.

In some ways, the deal feels both very early and woefully late. It’s clear the most intense FOMO around NFTs crested way back in February and March. But the business didn’t die away when the hype did. Industry executives tell me that deal flow in NFTs has continued unabated from those frenzied days, even if the topic’s presence has quieted on Reddit, Clubhouse, and other online echo chambers. 

Individual NFT transactions no longer attract the crazy numbers that saw a Beeple montage sell for $69 million last spring. But the total value of NFT sales and resales across the various exchanges is on the order of $2 billion a quarter, which compares notably with the sorry state of the theater business, which would be delighted to gross that much per quarter in this difficult year. 

The Eluvio deal also isn’t the first time Fox has jumped early into a new medium. 

Back in 2005, Fox plunked down $580 million for MySpace when it was still the space for an emerging social-media world. The company was criticized for what seemed like a hefty price, but more or less paid off the deal a few months later with a three-year, billion-dollar search ad contract. That MySpace later was sold off for parts (technically, $35 million) was almost immaterial after that. 

And let’s not forget that Fox needs to be aggressive about exploring green spaces in digital media, fan service and collectible merchandise. The Murdochs sold off most of their empire to Disney three years ago, leaving a very skinny organization with very little online footprint. 

The 2020 acquisition of ad-supported Tubi helped, giving Fox a much bigger online footprint ripe for cross-promotion and programming. Just this week, Tubi announced it’s partnering with corporate sibling Fox Sports to launch 10 sports-focused channels, including “near-live” NFL shows, live games from Spanish soccer power Real Madrid, and content from Major League Baseball and even the Westminster Kennel Club dog show. But that’s not near enough for Fox’s long-term stability. 

Now comes the hard part: Taking cutting-edge technologies and using them in ways that will actually work for a wide swathe of customers, advertisers, and distribution partners in markets around the globe. Perhaps the rise and fall of MySpace will provide some useful object lessons as Fox moves into the blockchain world at a new and far more aggressive level. 

David Bloom

David Bloom of Words & Deeds Media is a Santa Monica, Calif.-based writer, podcaster, and consultant focused on the transformative collision of technology, media and entertainment. Bloom is a senior contributor to numerous publications, and producer/host of the Bloom in Tech podcast. He has taught digital media at USC School of Cinematic Arts, and guest lectures regularly at numerous other universities. Bloom formerly worked for Variety, Deadline, Red Herring, and the Los Angeles Daily News, among other publications; was VP of corporate communications at MGM; and was associate dean and chief communications officer at the USC Marshall School of Business. Bloom graduated with honors from the University of Missouri School of Journalism.