Blockchain & The Entertainment Industry
“The person who says it can’t be done shouldn’t interrupt the person doing it”
Hollywood — The Comeback Kid
Content is king and Hollywood has always been considered the king of kings. The film studios monopolized theatrical distribution around the world, the big three networks were the only outlets for television, and the record labels controlled the radio airwaves. Hollywood not only made the law of the land, but ruled with an iron fist. The thing is, when you sit on top of the world, someone will inevitably come for your throne.
For the entertainment industry, the fall came by the way of digital revolution and the Internet. The MP3 wiped out the record business, YouTube democratized content creation, and Netflix helped eradicate Blockbuster stores from neighborhoods around the country. While Hollywood still carries an illusion of glamour, it has been dethroned by the FAANGs (Facebook, Apple, Amazon, Netflix, and Google) of the world.
Hollywood may never regain the luster of its Golden Age again. But if it can embrace change and fight its risk-averse nature, blockchain technology might be the key to fuel a major comeback.
Opportunities For Blockchain In Entertainment
While the entertainment industry faces many challenges today, here are some of the areas in which blockchain can provide solutions:
- Disintermediation
Every industry relies on middlemen to more efficiently connect producers to consumers, and entertainment is no exception. For instance, movie studios are left with no option but to use wide-reaching distribution companies to reach a larger audience. Whether it’s theatre chains, foreign distributors, or OTT services, there are tolls at each release window — 30% here, 70% there, sometimes even more. Blockchain projects like Contents Protocol (Disclosure: I joined as an advisor in April 2018) and Playgroundz are building peer-to-peer networks that allow studios, publishers, and developers to distribute and monetize content by connecting directly to the end users. - Transparency
Access to reliable data has always been a problem for stakeholders in entertainment. Creators often have no idea how their content performs after getting distribution. For example, Nielsen ratings have estimated television viewership for decades, relying on just a small sample of US households to help set advertising rates for broadcasters. Despite the imprecision, both TV networks and advertisers have continued to trust it because no better alternative exists. New services like Netflix and Hulu claim to have the answers with big data and algorithms, but they don’t share their findings with content providers. TV-TWO and Slate are two projects that want to use blockchain to accurately provide analytics to anyone seeking viewership information. - Immutability
With the proliferation of the Internet, copyrighted content such as photos, articles, and books have been widely distributed without consent. Even if a photographer, journalist, or author finds that their rights have been infringed upon, little can be done to find justice. That’s because registering each work is time consuming, and many creators don’t think it’s worth the investment. With blockchain streamlining the process by verifying ownership of uploaded files, Binded and Poet have emerged as two of the more visible projects tackling this dilemma. - Collaboration using smart contracts
In an industry based on collaboration, outsourcing remote teams is a necessity, but finding the right people and managing the entire process is a daunting task. Smart contracts, or code enforcing an agreement based on pre-determined rules, can help when implemented on a blockchain. Imagine a world where video game publishers can find developers from all over the globe, track their contributions to a new title, and pay their wages by setting up smart contracts. This is the vision of Bounties Network and Qravity. - Digital rights management using smart contracts
The Internet gave us the amazing ability to share anything with the click of a button, but it also opened up a Pandora’s box for DRM. With the invention of the MP3 as a tool for sharing and streaming audio, record labels saw purchasing and licensing music become a thing of the past. Now, instead of selling copies of an MP3 and not knowing how they’re used, musicians are able to upload a single master file to a distributed ledger and allow access with smart contracts. Not only is this useful for tracking granted licenses, but it can provide valuable data to the artist about his or her end user for implementation into future work. Ujo Music and JAAK are two projects working on digital rights management and content licensing in their own ways. - Micro-transactions
Today, if people want to watch their favorite YouTube star, they can either sit through inconvenient advertisements or pay a subscription fee to get around them with YouTube Red. The choices are limited, and existing options actually help the platform more than the creator. Using blockchain, the concept of “skinny bundling” can be taken to the next level. With micro-transactions on decentralized video platforms like Lino (Disclosure: I joined as an advisor in July 2018) and Verasity, consumers can virtually “stream money,” paying creators directly for the content they consume.
Too Good To Be True?
Considering the DotCom explosion of the 1990s and Web 2.0 of the early 2000s, many believe that blockchain technology signals the next wave of transformation in the entertainment industry.
Looking back, we tend to forget about the many casualties along the way. After all, Amazon wasn’t created overnight and it wouldn’t have become the giant it is without busts like Pets.com or HomeGrocer.com. The early phase of the DotCom era featured mind boggling IPOs and untested startups raising obscene amounts of money for nothing more than ideas. Drawing parallels to today, it’s easy to see that we’re still in the first act of the blockchain story. A year ago, all someone needed was an idea and a whitepaper and he or she could raise tens of millions through an ICO.
For an industry predicated on distinguishing the winners from the losers, Hollywood has been cautious at best. The focus on cryptocurrencies has distracted everyone from the value of the underlying technology. But if history has proven anything, it’s that you must innovate or become irrelevant. The industry can fight back against the next crop of FAANGs that will undoubtedly emerge, but it’s going to require taking control of the future, block by block.
Methodology: Evaluating Blockchain Projects
From a practical standpoint, my interests are found in the near-term, with the ultimate goal of building a bridge between the world we exist in now and the emerging world of blockchain. For such ventures to succeed, they must raise funds, recruit users, and establish allies to bring their visions into the mainstream.
Here is a checklist that could prove useful for exploring projects in the new frontier of decentralization:
- Credibility
Does management have the background and track record to lead a project to success? - Decentralization
Is blockchain the most efficient way to solve the problem? - Expertise in blockchain and in project’s vertical
Is the team specifically suited for a blockchain project?
Are they experienced in the sector they are trying to provide solutions for? - Existing users and/or revenue
How many businesses or consumers use their services or products?
Can they be expected to make money in the near future? - Barriers to entry
Will anything cause pain points on-boarding new users in the future? - Competitive advantage, proprietary rights
What does this project have that others do not to give them a leg up? - Scalability
Will the project realistically be able to grow?
As more regulations are established and the next wave of institutional investors enter the space, blockchain and cryptocurrencies will prove they are here to stay. There will be winners and losers, but you’ve got to buy a ticket if you want the chance to win the lottery. We look forward to sharing our thoughts on identifying real areas of need, use cases, and projects that hope to carve out their futures in the world of decentralization.
If you enjoyed this article and want to learn more about blockchain in entertainment, I encourage you to stay tuned and follow the Blockstreet publication, as we conduct a series of interviews with project leaders to provide even more insight into this emerging space.
About Teddy Zee
Teddy Zee is a Chinese-American producer of films such as Pursuit of Happyness, Hitch, and Saving Face. He served as Executive Vice President at Columbia Pictures, Senior Vice President at Paramount Pictures, President of Sony-based Overbrook Films, President of Fox-based Davis Entertainment, and now works under the banner of Teddy Zee Productions. He is a member of Academy of Motion Picture Arts & Sciences (Oscars), Academy of Television Arts & Sciences (Emmys), Producers Guild of America, and Committee of 100. In addition to film and entertainment, Zee has built an active consulting and advisory practice that spans media, technology, and commerce while bridging Hollywood with Asia. He is a believer!
Teddy’s social media: Linkedin, Facebook, & Twitter
Disclosure
Teddy Zee joined as Senior Advisor and Head of Contents Relations for Contents Protocol in April 2018. He also began serving as advisor to Lino in July 2018.
Not Investment Advice
The information provided does not constitute investment advice, financial advice, trading advice, or any other sort of advice. You should not treat any of Teddy Zee’s content as such.
Special thanks to Brian Lee for contributing to this article.
