Since the end of the 19th century, the whole of humanity has been fascinated by the newly born world of cinematography. The first viewers were shocked by the possibility of the moving sliders to produce an immersive and uncomparable experience — the story of “The Arrival of a Train” (1896) shocking reaction in theatres worldwide became legendary. Each decade brought new advancements in this field, and with each new technology invented, a huge milestone was marked during the long way of the movie industry development.
The first movie that used sound production to their advantage created a massive revolution — the market has changed in a blink of an eye. The introduction of color in movies made the things look as fascinating as never before, setting a new trend. However, computer graphics, first debuted in the popular 1980s sci-fi film “TRON”, pushed significant advances over time: from the laughable cartoonish and cheesy efforts to the latest CGI technologies (like 2019’s “Alita: Battle Angel”)- tech became so powerful and complex one can hardly tell the difference between picture and the real world nowadays.
Now, we are upon a 3D/VR-era, making already impressive visual effects look more impressive and engaging. The real revolution taking place right now is not related to the movie creation, but the way content is distributed globally. Unlike the end of the 20th century, no one is surprised that today you can watch movies at any convenient time of your choosing and in any way: on the phone, tablet, computer, OTT and any device.
Blockchain and Crypto pioneers are making headways in this industry.. Fact is, even back in 2017 movie makers used DLTs and cryptocurrency for movie production. Later in 2018, crypto adoption has proven a bit easier overseas and Thailand’s largest theater chain, Major Cineplex, announced in 2018 that they will begin accepting cryptocurrency for movie ticket and concession payments. World adoption is growing slowly, but steadily.
Movie market analysis
According to the latest Statista data, the global film industry shows healthy projections for the coming years, as the global box office revenue is forecast to increase to nearly 50 billion U.S. dollars in 2020. The U.S. is the third-largest film market in the world in terms of tickets sold per year, only behind China and India. According to a recent survey, 13 percent of Americans go to the movies about once a month, 7 percent go see movies in the movie theater several times a month, whereas 31 percent go less than once a year. This is a considerable share taking into account 52 percent of American adults who prefer watching movies at home.
Film entertainment is big business in the United States alone. It is expected that the film entertainment business will generate 35.3 billion U.S. dollars in revenue by the end of 2019.
In 2018, 871 movies were released in North America. Until now, the most successful movie franchise in the region was the Marvel Cinematic Universe, which generated over four billion U.S. dollars of box office revenue in North America alone. Movies like “Iron Man”, “Marvel’s The Avengers”, “Spider-Man”, “The Incredible Hulk” are a few examples of franchise films. “Star Wars: The Force Awakens” is the highest-grossing 3D movie in North America, with lifetime gross of around 937 million U.S. dollars.
Meanwhile, streaming media giants like Netflix are taking over the market by virtue of their influential position. Due to a recent Deloitte study, nearly half of all pay-TV subscribers report dissatisfaction with their service, and 70 percent feel they get too little value for their money. Not only are consumers across all age groups streaming more content than ever before — they are doing it on smartphones and tablets. US consumers now pay about $2 billion monthly for subscription-video services.
3) Opportunities — Why blockchain can be useful?
At times we can see that the independent movie sector sometimes gets lost in big Hollywood-created trends. It may be a good opportunity to empower this sector via blockchain and other DLT mechanisms. How can we empower the independent sector to have direct access to viewers and activity around viewers. This is especially true with the fragmentation of device distribution and viewing.
This is not the case with blockchain-movie platforms — it offers financially much better conditions, and with the help of the DLTs, full transparency of all transactions taking place on the platform. You just need to pay for the token — this is no more difficult than taking a dollar out of your pocket.
So how can be the process influenced and changed with the help of blockchain technology?
Main market issues nowadays:
- Rising web-movies competition with traditional cinema
Conventional cinema faces heavy competition from the internet series already. This is because people now love to watch movies within the confines of their homes instead of going to the theaters. The high-level cinematography used in series provides a theatrical experience even on the small screen.
- Competition between movie theaters and television
UHD TVs have a resolution of 4K which is high when compared to the resolution of 2K in movie theatres. Though TVs have a high frame rate and dynamic range capability than theaters, people visit premium theaters such as IMAX for enhanced picture and sound quality. The future of theaters depends on how well they adapt to technological change. Moreover, Internet-streaming business platforms make huge investments in the production of series and feature films, thereby posing a huge threat to filmmakers. For now, Deloitte’s same survey suggests that US consumers mostly (55%) interested in streaming content nowadays and pay about $2 billion monthly for subscription-video services.
- Hardships in producing the original content
Nowadays, people look for original content. Only those that are unique, reach the global audience. People from different fields and diverse positions of power must get involved in filmmaking. This way, new content will be generated thereby kindling the interest of the audiences.
4) Solution: the blockchain-based options
In this part we are about to outline the problems and solutions which require blockchain use:
- Next-gen distribution networks model
Problem: Classic-way distributor and exhibitor networks have expanded by partnering with international partners who control local distribution. This creates a monopoly, fraud, and opportunities for money laundering.
Solution: The blockchain can serve as a scalable and decentralized solution, which manages the increasing complexity of digital distribution models and global networks. In this case, smart contracts can be used to enable automated revenue distribution when receiving and recording collections. Moreover, local exhibitors, independent producers, and audiences can use cryptocurrencies to pay for tickets and share collections before the show screenings are completed.
Example: For example, one of the most outstanding examples of the blockchain startups aimed to disrupt the existing movie industry market is the TaTaTu — which has become the world’s third-largest ICO project after EOS and Telegram back in 2018. Due to official data, it attracted $ 575 million of investment in the private placement of Ethereum-based TTU tokens. TaTaTu is considering the possibility of launching a tokenized service for streaming video content delivery by request of users, which should compete with the entertainment company Netflix.
- Copyright & Ownership on a new level
Problem: Fines and litigations act as a major barrier and threaten the very existence of small, independent distributors and producers. Next, original story ideas are often exploited through unacknowledged or incorrectly assigned rights.
Solution: To fight fraud effectively for the film industry, establishment and protection of copyright is a difficult and costly task — but the really important one.
The blockchain helps the creator of an idea or script register a copy of it on the blockchain for appropriate rights: an immutable record of an asset such as an idea, script, character, or story can be created on the blockchain. Smart contracts here help (digital, self-executing contracts which contain the terms of the agreement between a buyer and a seller) define the rules governing the assignment of rights to TV and airline versions, international releases, and merchandising licenses. Total profit!?
Example: Ultimately, Movie Coin wants to be the payment method of choice for content consumers.“Over time, our goal is to make Movie Coin tokens an accepted method of payment at entertainment venues and among content providers throughout the world,” — CEO Christopher Woodrow.
- The End of Digital piracy
Problem: The number of movies leaked online before the actual release has increased dramatically over the years. With internet rising, piracy had become a major burden which creates a significant impact on expenses for movie studios.
Solution: DLTs, if not becoming the ultimate solution for this long-time issue, may, however, be used to deter the process of content getting leaked illegally. The distributed ledger technology of blockchain creates an immutable record of transactions on any creative work, idea, or asset. Smart contracts and tokens (representation of a particular asset or utility) can be utilized for signaling content owners, search engines, and ISPs, screening and broadcasting, legitimate film uploads whenever a non-blockchain-enabled content is discovered online.
Example: There are already pioneers, which already succeeded in this market. For example — “No Postage Necessary” — a romantic indie comedy which came out in June 2018, was the first film released using blockchain technology. The movie release on the blockchain is a perfect sign that Hollywood is finally preparing for integration with the crypto industry.
5) Current market adoption
The question is, does blockchain platforms differ from popular platforms like Netflix, and what’s the catch?
First of all, everything that connects movie makers with consumers is completely transparent. Secondly — it’s not so easy to get away into Netflix with your creative and unbacked by major producers content.
Moreover, in late 2018, the famous Hollywood actor Tom Hanks helped to promote the token sale of another blockchain-based movie project. The whole idea was about the fundraising campaign for a new flick about the popular in the late XX century Atari gaming platform. The ICO campaign had been successful, which engaged other players into this race. Such high levels of investment are received due to institutional investors continue to hesitate with access to cryptographic markets, and new players join it.
Funds received from early investors, among which are the venture capital company BlockTower Capital and Prince Felix of Luxembourg and Lady Monica Bacardi, will be directed to shoot a biographical film about the creator of the Ferrari automobile.
6) Conclusion: forthcoming future
Building a house is impossible without a foundation. Creating a service and using it efficiently is only the tip of the iceberg. Turning decentralization into a profitable business can be much more difficult though. The movie distribution through the blockchain technology will definitely revolutionize the current approach to the content distribution as the first successful projects rise the market assurance regarding the blockchain technology.
Pretty much like Midas, in any industry blockchain gets its golden hands to — the things go better. No more intermediaries. No higher overpriced middlemen taxes. Thus, the conditions for the further market developments of the independent movie sector as well as the entry threshold to the market for the new players who do not have significant budgets will be opened. Projects that provide collaboration of the blockchain technology and movies together — are a significant part of the future.
As averse as Hollywood may be to change, there will be enough pressure from those in the industry fluent enough in blockchain technology that it will have to adapt. The company understands there may be an initial aversion to blockchain and cryptocurrency but the same was said for credit and debit cards once upon a time.
Blockchain paves way for movie lovers to be an integral part of the entertainment economy, helps to shape the creative process of the film industry. Fans in support of the creators will now be able to monetize their passion by playing a vital role in driving the process. Blockchain technology is now being increasingly used by filmmakers as a film distribution channel which has signaled a positive shift in the manner in which content is shared and viewed. This major transformation will certainly be a happy ending. As implementation of blockchain frees the film community of the risk restrictions, large budgets, and intense scrutiny, the game will, from now on, be about quality too, apart from just numbers and rankings.
The fate of the blockchain platforms for the movie business depends on the will of the authorities because the law does not regulate the distribution of film revenues among owners of tokens. New opportunities, new names, the democratization of the market and reduction of the influence of banking and state monopolies.