Transforming the movie ecosystem
Creating thriving global economic community powered by blockchain
Last fall we’ve shared our initial thoughts on how new decentralized technology stack could be applied to solve some of the challenges that the entertainment industry was facing:
In this piece I would like to share my views on how recent developments in decentralized web and blockchain…medium.com
In my previous post I have mentioned several areas where blockchain technology and smart contracts will shape the…medium.com
While these thoughts were pretty raw and abstract, I was surprised to receive positive feedback that clearly showed that we were on the right track.
We’ve spent last several months laying out the architecture and figuring out details of what we believe will become the foundation for the future of movie and TV industry. This is our vision and our plan.
Having worked in the video distribution industry for the last 6 years, having served millions of movie-lovers and having dealt with quite a number of creators/producers, we have a pretty good sense of what people like and what they don’t like. While people are generally positive about online video services, these are the problems and challenges that were identified:
for creators and producers:
- Funding a new movie production and marketing is a complicated and a daunting task;
- Producers and creators don’t have a direct and easy access to their audience;
- To distribute a movie, producers have to be at mercy of global platforms (Netflix, Amazon, iTunes), which dictate tough terms (up to 90 days go-to-market time, 30%+ fees, 90 day payments) and don’t provide uniform and granular viewership statistics;
- Unexplainable prices and restrictions;
- Complex, fragmented and inefficient discovery experience.
Divided by the walls of the superpowers
It appears that the problems that both creators and consumers are facing are rooted in the way the whole industry is structured and operates.
Historically, the power of movie production and distribution belonged to a handful of the top Hollywood studios (a.k.a. The Majors). However, driven by the power of internet and the movement towards online video, the market has significantly changed in the last 10 years. The power now belongs to Netflix, Amazon, iTunes, Disney and YouTube:
- Netflix and Amazon dominate the global streaming subscription market and are leading the way in content production;
- iTunes and Amazon dominate the global video on demand market;
- Disney dominates the box office and plans to launch its own subscription service soon;
- YouTube dominates the global ad-supported video market.
These 4 companies (excluding YouTube, which is counted in advertising market) represent about 60% of the global online video market (including both movies and series) in terms of revenues. The rest of the market consists of some 15,000–20,000 independent producers and studios worldwide (The Indies).
It should be clear to anyone that such a hyper-concentration or hyper-centralization is bad for the industry. While this was pretty understandable in the context of 20th century (the capital markets were more centralized, the costs of film-making was prohibitive due to expensive equipment and materials, marketing channels were limited and inflexible), it looks totally wrong in today’s context of global connected world.
The “wall of the superpowers” divides creators and viewers, limits access to data and relationships graphs, which results in the absence of free market for movies and shows, meaning the lack of free-flowing capital and the lack of fair pricing. The only way to “fix” this is to create a global truly transparent and liquid market for the movie industry.
How then is this achieved? If the value of this industry is in its decentralized nature (one can say that true creators are “decentralized” by nature;-)) the industries problems cannot be solved with centralized “tools”. Creative industry is better served by decentralized solutions. Thankfully, the last couple of years have seen a huge boost in technologies for decentralized and distributed web, such as blockchains, trust-less peer-to-peer systems and crypto-currencies.
Our vision: transforming the ecosystem
We believe that the outlined challenges could be addressed by creating a global ecosystem, a community of people who are passionate about movies and shows, make their living out of them, or are just willing to support this industry in one way or another. We see three main enablers that should power such an ecosystem:
Language. In order for the industry to become connected, transparent and efficient, it has to speak the common “language”. By language we mean a unified set of entity types, data formats, relationships. Having such a language will create reliable reference points with regards to creators, owners, rights, licenses, and the dynamics of the rights and licenses. Think about a unified global registry of rights which is not owned by a single entity but is supported and verified by the whole community (a sort of structured Wikipedia that runs on a blockchain network). Having such a registry would enable true license portability (once you’ve licensed a movie you can watch it on any service you like) and fantastic content discovery opportunities (because of cross-linked metadata). Long gone would be complications, lawsuits and losses around licensing arrangements (latest $1.6B Spotify case is a good example). This appears to be a very complicated task, however we’ve made some good initial progress with it.
Money. Money is the lifeblood of any industry, any market. It facilitates transfer of value, making it universal and simple. One can say that the mankind has done pretty well in making fiat money global and universal medium, however this is simply not true. Traditional fiat money is issued and regulated by governments, and its always subject to controls and hurdles of various kinds. For example, you cannot simply create a global distribution video service, precisely because every user will have to pay in his/her native currency that will have to pass through a multitude of aggregators and transmitters and checkpoints (credit card acquirers and integrators, banks, Visa/MasterCard, interbank systems like SWIFT). Thankfully, now we’ve got a viable alternative — a set of crypto-currencies (Bitcoin, Ethereum, etc.) that are ubiquitous, peer-to-peer and decentralized.
Infrastructure. When it comes to online movies and shows (digital video), there are lots of tasks that are being done redundantly and inefficiently by multiple parties around the world, such as transcoding (converting a movie/show to a format suitable for processing and distribution), protection (applying encryption as per currently available DRM systems), packaging (formatting video files for streaming / download) and delivery (storing the video files on origin servers and distribution via content delivery networks). There are hundreds (if not thousands) of video services all over the world; imagine how much money is wasted because every single service has to deal with all the steps above? Imagine a world when a content creator can once (and just once) upload his/her creation onto a distributed network and assign a set of rights/licenses, so that this creation is simultaneously available to all video services in a secure fashion and could start to be monetized immediately? Great news is that this problem is well understood and there are already several attempts underway to solve it, plus there is a set of suitable technologies that fit in.
Creating efficient markets
When the industry adopts the decentralized foundation, we envision rapid development of the following free markets:
- Marketing and Discovery
Each market will be working as a connected part of the whole ecosystem. Crucial part in this ecosystem will be played by people who will be empowered by distributed technologies and will create multiple network effects:
- People will be able to directly sponsor (fund) movies and participate in the “box office” proceeds;
- People will be able to participate in creative process, co-authoring and co-creating movies and shows;
- People will be empowered to share content they like and motivated by the guaranteed referral fees;
- People will help distribute content, creating a massive peer-to-peer CDN while being rewarded for their participation;
- People will be able mine and anal to curate content and use the power of their network connections to spread the word and bring new members to the community.
Creation of these markets will have profound effects on the industry:
- Easily accessible money will allow faster creation of better content;
- Wealth and transparency of the data will allow fair valuation for the content, enabling fair competition, and again, resulting in better content;
- Transparent end-to-end communication and collaboration between creators and consumers will significantly improved efficiency of marketing (from creators’ end) and of discovery (from consumers’ end);
- Efficient and competitive infrastructure markets will drive down the variable costs for the content;
- Lower costs coupled with dynamic pricing for the content and with better discovery will make content much more accessible and affordable, and will bring additional audiences (converting “pirates” to ecosystem members).
As I mentioned before, our team has deep first-hand knowledge of how the industry. Zeen was started 2 years ago as a global content discovery platform, but always had a bigger vision — to help transform the industry, making it more inclusive, ubiquitous and fair.
Now, empowered and inspired by the new decentralized technology stack, we’ve set our course to deliver the foundation for the new movies and shows ecosystem, step-by-step.
The diagram above outlines the layered structure of the foundation:
- Global metadata and licenses registry (“The Language”): in closed alpha-testing;
- Media licenses monetization layer (“The Money”): in closed alpha-testing;
- ZeenMovies hub: in closed-alpha testing. We’ve reached an agreement with a worldwide indie movie distributor to get their content into the hub after the testing is complete, so once we launch the foundation, there will be lots of great content to see;)
Aligned with our vision of an open thriving ecosystem and community we’ll be open-sourcing the code along with other fundamental ideas once they reach a decent completeness stage.
In order to reach out to the community and bootstrap the ecosystem, we are also discussing potential partnership with several open-minded industry players to set-up a showcase video service, operating on subscription model that will demonstrate the benefits of the foundation we are building.
Laying out our vision of the global thriving movie industry ecosystem we don’t pretend to know “the only way”, or “the best way”, we simply want to start the ball rolling. So our message to the industry is this: let’s lay the groundwork for the new economy that will work in the interests of people who make movies and watch them. Let it be inclusive; in the end, it’s all about people who make this industry go around. Let’s share, discuss, co-create and move forward!
Thanks for reading this. Stay tuned, more details to come shortly. Please don’t be shy and clap as many times as you want! ;-)
Special thanks to Charles Liburd for discussions and contributions.