BlockbusterDAO: A New Experiment in Harnessing the Power of Tokenized Nostalgia
Many believe GameStop was saved from bankruptcy by retail trader-fueled nostalgia. Can the same work for the iconic Blockbuster franchise, but in a new tokenized DAO form?
Payment integration is not the only thing FinTech revolutionized. By pushing the envelope of convenience, FinTech sparked the growth of crowdfunding campaigns. Last year, in North America alone, crowdfunding funds increased by 33%, generating $17.2 billion. On average, such campaigns manage to raise about $29k.
However, as we near the end of 2021, we are seeing the evolution of crowdfunding through decentralization. More specifically, tokenized DAOs – decentralized autonomous organizations – are ending the year with a bang.
After all, DAOs are resistant to deplatforming while providing a transparent form of staking and voting through tokens. Notwithstanding the potential of its success, BlockbusterDAO shows another possible through smart contracts. In this case, the DAO aims to revitalize the spirit of the long-lost video-rental store chain, Blockbuster
How and Why Does BlockbusterDAO Want to Resurrect Blockbuster?
BlockbusterDAO is both a Twitter handle, having joined the platform this month, and a name for a new DAO. Its stated goal in a recent Twitter thread from December 25th is to raise enough funds to buy the Blockbuster brand from the current owner, Dish Network, a satellite TV provider with a 15.6% market share in the US.
From the thread, it is clear that BlockbusterDAO wants to buy the brand to achieve the following objectives:
- Transform the Blockbuster brand into a DAO platform for streaming videos and fund film projects.
- Raise $5 million to beat counter-offers for the Blockbuster IP brand from Dish Network.
- The funds would be raised by selling NFTs, where each NFT would cost 0.13 ETH.
- If successful in buying the Blockbuster IP, it would be registered to the DAO.
We have seen variations of this approach in play before. ConstitutionDAO, a collective of politically-minded crypto enthusiasts, attempted to buy a rare copy of the U.S. Constitution at Sotheby’s after having raised an impressive $27 million within a week of its launch. However, even though the auction house estimated the selloff price between $15 – $20 million, Ken Griffin outbid the DAO at $43 million.
This may be a double-edged sword for such crowdfunding campaigns. They rely on public traction, but this also brings unknown bidders out of the woodwork. The nostalgia for days long gone is a big factor as well, having changed from negative to positive.
Moreover, a Netflix documentary came out in 2020, titled The Last Blockbuster, depicting the last remaining Blockbuster retail store in Bend, Oregon. It is safe to say this further increased the nostalgia factor, and the Blockbuster price tag with it. In Q3 2021, Dish Network reported a total revenue of $4.45 billion, so $5 million for the brand to BlockbusterDAO would constitute 0.1% of the company’s earnings.
BlockbusterDAO seems to be aware of this problem, proposing to “begin awareness and PR campaign to build pressure to sell“:
However, it was also the case with ConstitutionDAO that they managed to raise well-above the initial threshold, overshooting it by 137.42%. If that happens again, fortunes may turn out differently.
Unfortunately, ETH gas fees are so severe and volatile, they alone amounted to $800,000 to $1 million in refund expenditure, according to figures pulled by Richard Chen. Whatever happens, the DAO funding collection and refund mechanisms clearly work. Even if BlockbusterDAO fails in its original mission, we are seeing a new trend emerge in real-time.
Outside of costly ETH gas fees, DAO funding provides a non-mediated guarantee of refunds thanks to smart contracts. In turn, this creates public confidence and trust.
Likewise, both BlockbusterDAO and ConstitutionDAO have made good grounds in informing the public what is possible with smart contract blockchains. These are all tailwinds for future overfunded projects with secondary goals that may turn into Big DeFi juggernauts.
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Why Did Blockbuster Fail?
The story of Blockbluster is eerily similar to GameStop. Launched in Dallas in 1985, Blockbuster’s in-store video rental business model grew to a massive network of 9,000 outfits across the country. Unfortunately, it couldn’t last long beyond its peak in 2004 when Blockbuster scored $5.9 billion in revenue.
The mass adoption of broadband internet, cheap storage, and on-demand online video, all conspired to erode Blockbuster’s business model. This was further exacerbated by eliminating late fees, exerting a cost at around $200 million, alongside the unsuccessful launch of Blockbuster Online. Moreover, the emerging Netflix had no brick & mortar baggage.
Lastly, the CEO of Blockbuster, John Antioco, made a critical mistake. He could have bought Netflix in its early stage for a mere $50 million, according to Netflix co-founder Marc Randolph in his book That Will Never Work. This was just after the dot.com bubble crash, so Netflix was in dire straits having to still rely on an unprofitable DVD-by-mail rental service.
Fast forward to Blockbuster’s bankruptcy in September 2010, and there were no avenues of profit-generating revenue left to explore.
Do you think BlockbusterDAO will find traction? What kind of institution would benefit most from DAO funding, staking, and governance? Let us know in the comments below.