NFTs are joining retail – Los Angeles Business Journal

NFTs are joining retail – Los Angeles Business Journal

Non-fungible tokens are making their way into the merchandising arena, and that has both retailers and Web3 creators excited about the collaboration between markets.
Most recently, downtown-based Toonstar, a Web3 animation studio, and retailer Hot Topic Inc. announced a partnership that will result in the sale of NFTs and other Web3 products in physical stores and online.

Web3 is the futuristic vision of the internet that includes block chains and token-based vehicle such as NFTs.
NFTs function like other cryptocurrencies except each token has its own unique serial number, meaning it is attached to its own image, music or membership. Buying a NFT is similar to purchasing a piece of digital art; once an individual owns this “image,” they can sell it or use it to get other benefits such as exclusive content.

Under the terms of the partnership, Toonstar will produce NFTs and other digital content for Hot Topic. The deal was officially launched on July 21 at Comic-Con in San Diego, during which one Hot Topic fan was chosen to make a cameo voice appearance in Toonstar’s web series “The Gimmicks.”

The co-founders of Toonstar, John Attanasio and Luisa Huang ,said their experience working with animation studios such as Warner Bros. and DreamWorks gives them an understanding of the importance of retail in building franchise properties and expanding their community-building platform.

Attanasio said the partnership, the financial terms of which the parties declined to discuss, came about because Hot Topic is “forward-thinking” about the Web3 world.
“They want to push the envelope and they want to innovate. They’re interested in pushing the boundaries of Web3 and NFTs,” he said. “That’s how we got connected because we both have a vision for what we can do in Web3 together both from a retail, digital, physical commerce standpoint and from a storytelling, character, world-building standpoint.”

NFTs assembled by Subnation on display in Fred Segal on Sunset Boulevard.

Hot Topic’s chief executive, Steve Vranes, said the company has a highly engaged community of pop culture fans, and with the partnership they will get to participate in entertainment properties in a new way.

“Hot Topic has been the destination for pop culture merchandise for decades now,” Vranes said. “We believe that this partnership with Toonstar will continue that legacy, and together we will build some really incredible programs.”
The companies will collaborate to create merchandise, but the products will be more than the typical swag.

“I think the first rollout is going to be… cool shirts and hats that have interplay with the NFT. Expect to see more innovation on that front,” Huang said. “It’s going to be more than a shirt with a cool print on it. Everything has to have Web3, native functions.”
Vranes said fans can look forward to “innovative” ways to combine both digital and physical collectibles.

“We view this as an opportunity for us to offer a digital component to the products that our customers already enjoy collecting,” Vranes continued. “Whether it is a T-shirt, a backpack, or a traditional collectible toy, this program will help us accelerate that connection.
According to Attanasio, retail is a critical piece in building the Toonstar franchise.
“Entertainment is going to be the thing that will take Web3 and NFTs mainstream,” Attanasio said. “And part of that is, is retail.”


Just the beginning

In December 2021, Santa Monica-based retail store Fred Segal partnered with metaverse marketing agency Subnation to open an NFT gallery installation inside its Sunset Boulevard location. The interactive gallery displays digital NFTs, and customers can purchase both physical and digital products.

The NFTs and digital assets change monthly and center around a cultural theme. This month’s theme: photography.
“We have over 75 unique NFTs from photographers that have captured everything from music to sports,” said Doug Scott, co-founder and chief creative officer of Subnation.

“Some of the items that we have are limited-edition Polaroid cameras done by artists such as Keith Haring or a Supreme camera, as well as some antique cameras.”
Scott said bringing NFTs into retail spaces is significant because it can educate potential buyers on how they can interact and live with the items.

“It is an opportunity for us to educate consumers on, ‘what are NFTs,’ showcase them in a physical environment and help them on board in this whole new Web3 environment,” Scott said.

As NFTs become more available in retail spaces and the consumer base grows, Scott said the NFT market is set to develop into a world where physical goods have a “digital twin.”
“When I buy a bag, I get an NFT with it that authenticates the bag [and] it verifies and authenticates me as the owner of the bag when purchasing, and I get a digital twin that my avatar … in the metaverse can actually carry,” Scott explained. “Where we see the market going is that physical goods will have a digital twin which will be represented as NFTs, and the market is going to expand around these types of assets.”

Scott said he can see more retailers in the world of fashion and electronics incorporate NFTs in their business models.
Cryptocurrencies and NFTs have been struggling in the market, but Scott said he believes happenings such as the one at Fred Segal will present opportunities for new buyers who were priced out of purchasing blue chip NFTs, which range in price from $10,000 to $75,000 and higher.

“I don’t think it’s a secret that [the NFT market] is experiencing a bit of growing pains… we’re going to come out the other end and I don’t know what it’s going to look like, but I do know that there are amazing things being built in the Web3 space right now,” Attanasio said. “This is building season.”


NFTs and community

Toonstar’s “The Gimmicks,” produced in partnership with Mila Kunis’ Sixth Wall, is a web series about three wrestlers who recruit a rookie in an attempt to recover their lackluster careers and regain relevance in the wrestling world.
The 20 weekly episodes of the first season were written by Dave Ihlenfeld, David Wright and nearly 5,000 holders of series-related NFTs.

The Gimmicks are a collection of randomly generated NFTs on the Solana blockchain. Each one represents a unique character that “lives in the universe of [the] animated series.” The NFT holders participate in the creative process of the show by voting on what they think should happen next.

“Each of the episodes are community-driven, meaning that at the end of each episode is a cliffhanger and NFT holders can vote on what happens. It’s very ‘choose your own adventure,’” Attanasio said. “The vote determines what happens in the next week’s episode.”

The holders’ collaboration doesn’t end there. The collectors also have commercials rights and can write their own backstory for their Gimmick character, which is then published on the Gimmicks Wiki page. They can also participate in ongoing voice and art contests.
In addition, the NFT owners can interact with each other through a social layer called the DIC (Decentralized Inclusive Community) punch.

“We’ve built one of the first on-chain social layers in Web3. The ‘DIC punch’ is similar to the Facebook ‘poke,’” Attanasio explained. “It also has a direct-messaging component, so you can not only DIC punch someone, but you can actually send a message with it as well. It makes the NFT dynamic and becomes this expression of social cred, or your participation in the community.”

Attanasio and Huang say they are proud of the company’s engagement figure thus far, which is close to a million DIC punches.
“In the world of recurring engagements and retention in a project, those are numbers that we haven’t seen anything like from other projects yet,” Attanasio said.

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