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Network Media Group (TSX.V: NTE/OTC: NETWF) is a company that will be of interest to many Armchair Trader readers: it has one foot in the world of sports and entertainment, and now another foot in the fast emerging world of NFTs – non-fungible tokens.

The NFT market is just starting to emerge, and we strongly believe that it represents so much more than the art world. NFTs are unique tokens that can represent ownership of a specific asset – like a digital image – that can also be freely exchanged on exchanges like OpenSea. NFTs are considered to be one of the platforms supporting the emergence of Web 3.0.

NFTs already support the creator economy, helping writers, digital artists and musicians to interact more directly with their fan base and to profit according to their popularity. It is a brand new model that can extend also to athletes, celebrities and Hollywood superstars.

The growth of the NFT market has been impressive. Although still relatively new, we can see a range of uses for the tokens, including future utility for investors. The numbers speak for themselves on this one: last year trading in NFTs hit US$17.6bn (according to L’Atelier, a research firm owned by BNP Paribas), that’s an increase of 21,000% against 2020. Traders were able to generate a stunning US$5.4bn in profits from buying and selling these tokens. By the end of last year over 2.5m crypto wallets were being used to buy, sell and store NFTs. And the biggest category for demand within the NFT universe: collectables.

The origins of Network Media Group

Network Media Group has established an award-winning reputation for creating premium feature documentaries and documentary series that showcase some of the world’s most iconic personalities in pop culture, sports and entertainment. The company has the sort of contacts – indeed, the network – to get access to stars and those who can assist with the sort of behind the scenes documentaries Network likes to make.

Recent films and series the studio has made cover subjects like Muhammed Ali, Patrick Swayze, the emergence of punk rock, Richard Pryor and Johnny Cash. It also has the relationships that allow it to profitably distribute its content into a market that is now larger than ever thanks to the advent of multiple streaming services. It has won a wide range of awards within the film industry for its work.

Content is distributed through a range of blue chip partners, including the likes of Apple TV, MGM / EPIX, Amazon Prime, YouTube Premium, CNN, Paramount Network and Sky.

While the pandemic was in full force, Network like most other studios had to delay production on the sorts of documentaries it likes to make. That has now changed and the company, in its latest set of results, said current numbers were not indicative of future operations. It has a full slate of projects, valued at over C$16m, and according to its CFO, Darren Battersby, physical production has now returned to normal, and the bulk of the company’s projects already under contract should be delivered to partners in the course of fiscal 2022.

Network NFT Studios, of course, is the company’s new initiative, founded last year and headed up by digital assets expert Tom Lombardi. He was formerly a managing director at 3iQ Digital Asset Management, a Director of Wave Financial, and Head of Growth at Ethereum Enterprise Alliance. He is an adjunct professor of finance at Pepperdine University.

Network NFT Studios and a new content revolution

The creation of Network NFT Studios is the perfect complement to the existing Network Media Group film making business. It will be seeking to create NFT opportunities by leveraging the existing Network relationships with big name stars and their estates. Lombardi sees many synergies and opportunities that exist around content creation, intellectual property, story telling and with the engagement of global audiences.

The venture is tapping into a market which is growing rapidly, and in which we anticipate a company like this will find a ready demand. Network NFT Studios will be able to focus on the manufacture of digitally native content, including art, music, photography, film and 3D imaging. It aims to build a network of supporters who will be its evangelists within the NFT space, helping it to further grow its reach. The key here will be to maintain engagement, delivering further experiences for NFT holders ‘beyond the drop’ – e.g. exclusive access and a social flywheel. There are a wider ranger of opportunities here than say, simply owning an image; further experiences and access can follow for owners of tokens.

Network NFT Studios will be developing some very interesting blue chip IP here, not simply relationships it already has, but new ones it is also working on. The company can also act as a route into the NFT market for certain properties and estates that don’t have that expertise or market access at the moment. This should deliver additional revenue opportunities (e.g. consulting fees and revenue share). NFTs are also increasingly being recognised as a means of further brand extension within the corporate world, and Network NFT Studios could be well positioned to capitalise on this demand as well.

The company says it has some very exciting new projects in the pipeline as we go forward into the rest of the year, both within traditional media and also its new digital operation.

“We believe the magnitude of the projects set to deliver in the year ahead have strong commercial potential and will create unbounded new opportunities for Network,” said CFO Battersby.

Related

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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