Can Web3 Save the Entertainment Industry?
How blockchain’s move into Hollywood can change an industry in trouble
The entertainment and media industries have long been considered industries rife with problems. From sketchy signing agreements to unfair models of compensation to cut-throat competition, the cultural engine of Hollywood seems to be a “place where they’ll pay you a thousand dollars for a kiss and fifty cents for your soul,” as Marilyn Monroe once put it. It’s been mythologized in American culture as an industry of sharks, and its bloodthirsty reputation doesn’t seem set on disappearing anytime soon.
Headlines during the last decade have only further deepened the public’s suspicion that the entertainment industry is in desperate need of fixing. For example, in 2015, two of the leading talent agencies in Hollywood kicked off a contentious four-year war over instances of hiring disloyalty that highlighted the problems surrounding surreptitious contracts. Moreover, in 2020, it came to light that many young K-pop stars had signed what’s become known as “slave contracts,” extremely unfair agreements between artists and their managers that give the latter most if not all of the power in the deal. Then, in 2021, Scarlett Johansson famously sued Disney over a streaming royalty agreement for the Marvel movie Black Widow. It’s safe to say that the entertainment industry hasn’t changed much since Hollywood’s Golden Age.
But our world is rapidly changing, and Web3 and blockchain technologies are offering solutions to problems that have long remained unsolved. The transparent and more equitable nature of decentralized technology could help fix Hollywood. Bad contracts? Disloyal middlemen? Obscure royalty distribution plans? Inequitable compensation? Blockchain can help. We’ve already written about Web3’s influence on the music industry, but how will it help improve the entertainment industry?
Blockchain technology adds more transparency to accounting and the financial ins and outs of media production.
Numbers in Hollywood are not the same as numbers in the real world. Accounting and the transfer of intellectual property in the entertainment industry have become so opaque that they’ve developed their own particular term — Hollywood accounting. Agreements surrounding compensation, budgets, intellectual property rights, expenses, and other financial components of the trade are often exaggerated or muddied, as studios and film execs jump through hoops to ensure high personal profits and low expenses. In a 2011 story about the pitfalls of Hollywood economics, The Atlantic noted that “the actor who played Darth Vader” in Return of the Jedi had yet to receive “residuals from the 1983 film,” despite it grossing “$475 million on a $32 million budget.” How? You may be wondering. Well, by way of creative accounting, the film “still has no technical profits to distribute.” Tales involving this type of seedy accounting in the entertainment industry have become commonplace.
Even if you know very little about Web3, blockchain technology seems like the obvious solution here. Thanks to the transparency and peer-to-peer nature of decentralized technologies, entertainment accounting can be rendered more stable and less opaque. Web3-based companies like Film.io have already begun offering better solutions. Started by a handful of technologists who have long bemoaned the unfair financial practices of Hollywood, Film.io uses the decentralized architecture of blockchain and the expansive tools of AI tech to help community members create, greenlight, and invest in projects without the need for shady middlemen or questionable contract agreements. Their approach allows for the direct compensation of actors and other filmmaking personnel, generating an ecosystem of trust and transparency.
Similarly, SingularDTV, a decentralized platform for distributing film & television content, created two subsidiaries called Breaker and Breaker Studios. The first is a “blockchain-based solution for entertainment rights and royalties management that enables intellectual property rights holders to gain increased visibility into tracking, management, and payment processing.” Breaker Studios handles the production, financing, and distribution of the community-funded projects. Both of them together interact to create a truly decentralized film industry, which is starting to commonly be called DeFiFi (decentralized film financing). Startups like Film.io and Breaker are paving the way forward for more equitable, transparent Hollywood economics.
NFTs can empower audiences and drive fan engagement.
When the Internet (as we know it today) became entirely ubiquitous in the early 2000s, many entertainment companies began capitalizing on its world-building powers by producing Web-based video games and interactive digital spaces. In 2003, Disney released the massively popular Toontown Online, an RPG (role-playing game) filled with playable Disney characters that allowed users to interact with each other in the Disneyverse. While not the only beast of its kind — seemingly every studio rolled out online RPGs around this time, from Nickelodeon to Lucasfilms — Toontown seemed to establish the foundation for how entertainment companies could reach new and younger fans online through digital playable worlds. Gaming introduced a whole new audience to Disney, Lucasfilms, and other entertainment companies. Since Toontown and the RPG craze of the early 2000s, however, studio-based games have taken the back seat, as gaming companies like Blizzard and Ubisoft have assumed the RPG throne with successful online multiplayer games like World of Warcraft and The Elder Scrolls. Film-based games have sort of, well, disappeared.
So, how can Hollywood re-discover an online fan base? NFTs. Thanks to the collectible nature of non-fungible tokens, the entertainment industry can begin rebuilding a devoted online community of fans. Many film studios and production companies have already started capitalizing on NFTs to grow their fan bases. Lionsgate, for instance, recently signed a deal with the digital marketplace Draftkings to begin selling franchise-based NFTs for films like John Wick and The Hunger Games. Jenefer Brown, Lionsgate’s VP, described the deal as a “tremendous opportunity for mixed-reality world-building experiences” that can deepen “user engagement and interaction” while “fostering a community for hundreds of millions of global consumers.” The key implication of Brown’s statement is that these NFTs will be coveted assets as more and more metaverses begin to be developed. They might operate as playable characters within the metaverse, access badges to online events, status symbols, and more. Additionally, Fox Entertainment also recently entered the NFT space for all the reasons Brown described by launching a Web3-based studio called Blockchain Creative Labs where they’ve created and sold NFTs for WWE, Krapopolis, and other films and programs. To put it simply, NFTs can be the new Toontown.
DAOs will reimagine the way films and TV shows tell stories.
The experience of being a fan of film franchises these days is pretty excruciating. The stories never go the way you want. Plotlines remain unsolved. Favorite actors drop out because of failed compensation agreements. Money gets moved from one project to another, pushing some productions to the backburner. Being a devoted fan can be, well, heartbreaking. But in recent years, as DAOs (decentralized autonomous organizations) have become more prevalent, fans are actually beginning to have a say in the development of their favorite films and TV shows through decentralized governance and fundraising, from production to plot development.
Web3-based startups like Decentralized Pictures have put forth more inclusive models of producing through the implementation of DAOs. These online communities provide members with governance to vote on project funding, creative development, and more. In a recent article by GQ, the magazine detailed Bored Ape Yacht Club’s burgeoning presence in the traditional entertainment industry, arguing that Hollywood’s interest in the Ape collection revolves around their communal, decentralized modes of storytelling. Each ape contains its own backstory developed by a community member rather than a writer’s room, a process that moves storytelling out from behind the gilded studio gates and into the hands of the public. Today, fans are dying for more involvement in their favorite franchises; Web3 gives them the access badge.
This article explores how Web3 will change the entertainment industry. Read more about the future of the Internet below.
