NFTs Join Retail – Los Angeles Business Journal

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Non-fungible tokens are making their way into the merchandising arena, making both retailers and Web3 creators excited for cross-marketplace collaboration.
Most recently, Toonstar, a downtown-based Web3 animation studio, and retailer Hot Topic Inc. announced a partnership that will see NFT and other Web3 products sold in physical and online stores.

Web3 is the futuristic vision of the internet that includes blockchains and token-based vehicles such as NFTs.
NFTs work like other cryptocurrencies, except each token has its own unique serial number, meaning it’s attached to its own image, music, or membership. Buying an NFT is similar to buying a piece of digital art; once an individual owns this “image”, they can sell it or use it to gain 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 officially kicked off on July 21 at Comic-Con in San Diego, where a Hot Topic fan was chosen to make a voice appearance on Toonstar’s web series “The Gimmicks.”

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

Attanasio said the partnership, the financial terms of which declined to be discussed, came about because Hot Topic is “forward-thinking” in the Web3 world.
“They want to push boundaries and they want to innovate. They are interested in pushing the boundaries of Web3 and NFTs,” he said. “That’s how we connected because we both have a vision of what we can do together in Web3, both from a retail, digital and brick-and-mortar perspective and from a from a storytelling, character, and world-building perspective.”

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

Hot Topic chief executive Steve Vranes said the company has a very engaged community of pop culture fans, and with the partnership, they will be able to engage with entertainment properties in a new way.

“Hot Topic has been the destination for pop culture merchandise for decades,” Vranes said. “We believe this partnership with Toonstar will continue that legacy and together we will build some truly amazing programs.”
Companies will collaborate to create goods, but the products will be more than the typical loot.

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

“We see this as an opportunity for us to offer a digital component to products that our customers already love to collect,” Vranes continued. “Whether it’s a t-shirt, a backpack, or a traditional collectible toy, this program will help us accelerate that connection.
According to Attanasio, retail is an essential element in building the Toonstar franchise.
“Entertainment is going to be what’s going to integrate Web3 and NFTs,” Attanasio said. “And part of that 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 physical and digital products.

NFTs and digital assets change monthly and revolve around a cultural theme. The theme of the month: photography.
“We have over 75 unique NFTs from photographers who have captured everything from music to sports,” said Doug Scott, Subnation Co-Founder and Chief Creative Officer.

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

“This is an opportunity for us to educate consumers on ‘what NFTs are,’ showcase them in a physical environment, and help them integrate into this brand 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 grow in a world where physical goods have a “digital twin”.
“When I purchase a bag, I receive an NFT with it that authenticates the bag [and] it verifies and authenticates me as the owner of the bag upon purchase, and I get a digital twin that my avatar…in the metaverse can actually carry,” Scott explained. “Where we see the market is that physical assets will have a digital twin that will be represented by NFTs, and the market will grow around those types of assets.”

Scott said he can see more retailers in the fashion and electronics world integrating NFTs into their business models.
Cryptocurrencies and NFTs have struggled in the market, but Scott said he believes events like Fred Segal’s will provide opportunities for new buyers who haven’t purchased blue chip NFTs, ranging in price from $10,000 to $75,000 and more.

“I don’t think it’s a secret [the NFT market] is having some growing pains… we’re going to come out the other side and I don’t know what it’s going to be like, but I know there are some amazing things being built in the Web3 space right now,” Attanasio said. “It’s construction season.”

NFT 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 effort to salvage their lackluster careers and regain relevance in the wrestling world.
The first season’s 20 weekly episodes were written by Dave Ihlenfeld, David Wright, and nearly 5,000 NFT holders linked to the series.

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

“Each of the episodes is community-driven, which means that at the end of each episode there 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 next week’s episode.”

The collaboration of the holders does not stop there. Collectors also have commercial rights and can write their own story for their Gimmick character, which is then posted on the Gimmicks Wiki page. They can also participate in ongoing voice and art contests.
Additionally, NFT owners can interact with each other through a social layer called the DIC (Decentralized Inclusive Community) punch.

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

Attanasio and Huang say they are proud of the company’s engagement figure so far, which is close to one million DIC hits.
“In the world of recurring engagement and retention in a project, these are numbers that we haven’t seen in other projects before,” Attanasio said.

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