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Blockchain for the Entertainment Industry: 6 Possible Use Cases

  • 6 November 2018
  • Sam Mire

The television broadcasting industry in the United States alone saw revenues of over $157 billion in 2017. This is a massive uptick from even 2010’s revenue figure of approximately $110 billion. Streaming services, such as Netflix, continue to see an increased market share, with the most well-known company in streaming garnering an impressive $11.7 billion last year.

Meanwhile, the film industry, while it’s had to cope with challenges including the advent of streaming services lowering theater appeal, is holding its own. Global box office revenues are projected to grow from $38 billion in 2016 to $50 billion by 2020. Three 2018 films made historical marks, with Black Panther’s $1.344 billion box office take ranking ninth of all time, and Avengers: Infinity War coming in at fourth of all time with over $2 billion in box office revenue. Incredibles 2, also released in 2018, became the highest-grossing animated film of all time. In other words, the demise of theatrical releases has been greatly exaggerated. But that does not mean the industry can be complacent.

Those creatives who don’t have large superhero franchises to provide guaranteed revenues may find the blockchain to be an appealing way to obtain funding from niche audiences willing to crowdfund projects that reflect their tastes. Blockchain tech has also been proposed as a mode for fairer royalty payments and compensation, as well as a tool to combat piracy and perhaps even provide innovative ownership platforms to revive that segment of the film and TV industries.

Blockchain for the Entertainment Industry - Practical use cases


Crypto Crowdfunding for Movies and TV

Blockchain use cases in entertainment - Crypto Crowdfunding

The rise of the indie film is real, thanks to the likes of Netflix and Amazon. However, some breakthroughs in terms of available funding and greater creative control haven’t changed the most prevalent funding structures in Hollywood. While the number of indie filmmakers has grown in the past 10 years, it routinely costs upwards of $200 million to effectively market blockbusters. These budgets matter, especially considering that indie films, while they’re being made more than ever, typically generate a return of only 45 cents on the dollar.

Some recent blockbusters illustrate just how much cashola it takes to fund a top movie these days; Solo: A Star Wars Story cost $250 million to make, while Avengers: Infinity War came with a price tag of $320 million. Independent movies carry more reasonable price tags; the average independent film costs only $750,000 to make, according to a 2014 report. However, while such a modest budget may allow more creative control, it also tends to compromise quality. Conversely, with blockbuster-level funding often comes unwanted demands from studios.

Directors have discovered that crowdfunding on the blockchain using cryptocurrencies may be a viable alternative to the big studio and traditional crowdfunding models. Micropayments, the possibility of future returns, and viewer autonomy over projects they’d like to see produced are exciting possibilities for blockchain film and TV crowdfunding. 

Companies Trying to Solve This Problem

  • Braid – First film crowdfunded by cryptocurrency.
  • No Postage Necessary Film being released on QTUM blockchain through the Vevue app. 

Compensation Through Smart Contracts

Blockchain use cases in entertainment - Smart Contract Compensation

Contract disputes have been going on in Hollywood since its inception. Olivia de Havilland has been referred to as “the actress who took on the studio system and won” after the 27-year-old, subsisting on a series of $500 contracts, held out for more prominent roles while enduring unpaid suspensions in an era when studios virtually owned the rights to actors. Little has changed since de Havilland’s heyday in the ’30s and ’40s. In 2008, Robin Williams sued Frank and Beans Productions for $6 million in unpaid wages. In 1997, Sylvester Stallone was engaged in a back-and-forth $20 million for $50 million lawsuit battle with FM Productions over mutual accusations of breach of contract, with the sides eventually settling.

And James Gandolfini — Tony Soprano himself — sued HBO, accusing them of breaching their contract when he was not granted $1–2 million per episode. HBO promptly countersued for $100 million, but eventually gave Tony the money he was “asking” for, as is always the case. Point is, contracts haven’t exactly proven to be contractual over the years, and some see the blockchain as a potential solution to prevent at least some of these expensive contract disputes.

A more transparent, swindle-proof network of smart contracts that pay out upon pre-agreed terms on a certain date — say, once the film is released — or based on criteria such as ticket sales would help remove sleaze and post-fact backstabbing from the contract execution process. Simpler is almost always better, especially when it comes to financial agreements. Smart contracts can minimize the number of moving parts and variables within the entertainment industry, ensuring that all parties receive what they agree upon. 

Companies Trying to Solve This Problem

  • Vevue  Decentralized app for content creators to control use-terms and compensation.
  • Comcast Blockgraph  Using blockchain for entertainment solutions. 

Combating Piracy

Blockchain use cases in entertainment - Combating Piracy

Piracy is considered to be one of the greatest threats to the future of the motion picture and television industries, if not the single greatest. Piracy is expected to cost the industries a combined $51.6 billion by 2022. This projection is based on an accelerating rate of illegal streaming and downloading, which cost the industry $6.7 billion in 2010, but saw a seismic uptick to $31.8 billion in losses in 2016.

The FBI warning that flashes on DVD and theater screens has served to scare many straight in the U.S., but in some nations, pirating films and television shows is a casual affair. In the Ukraine, 44% of respondents stated that they were “interested” in pirating movies currently being shown in theaters. Circa 2004, piracy rates in China were as high as 90%, while rates in Russia were nearly 80%, and third-place pirater Thailand saw 79% of its viewers do so through illegal means. These cultures don’t simply dissipate — a more enticing alternative must be put in place to deter such behavior. The stick approach has not proven to work, so why not dangle a carrot?

Innovative services such as MoviePass have shown that better value propositions will get more butts in the movie theater seats, even if the nature of the revenue model for theaters remains unclear. Blockchain technology holds the potential as a foundation for platforms that could allow viewers to receive discounts based on interactions with the platform. By providing more intel and watching more films and shows, users could eventually be rewarded with tokens or discounts that would allow them to access premium films and shows for a reduced price or for free. The idea is all about reducing the incentive to view a pirated work by providing alternative, legal methods to access those same movies and shows.

Companies Trying to Solve This Problem

  • White RabbitUsing blockchain to facilitate payment and reduce piracy in film. 
  • Custos – Using the Bitcoin blockchain to secure digital files from piracy. 

Crypto-Linked Streaming Services

Blockchain use cases in entertainment - Crypto-Linked Streaming Services

Amazon Prime Video illustrates the downside of film and television’s digital revolution. Based on industry estimates, the $3.2 billion that Amazon is thought to have spent on video content in 2016, compared with revenue intake of $2.52 billion for its non-retail services including Prime Video, would have meant Amazon taking a loss of at least $700 million on their video service. Though Amazon is one of the few players that can sustain such losses, they certainly don’t want to.

Despite consumer spending on home entertainment averaging $18 billion per annum since 2011 and 67% of U.S. households utilizing in-home video streaming services, profits remain hard to come by. There are simply too many middlemen in the current network, from third-party playback and cloud storage infrastructure providers to built-in payment merchants and beyond. This is why the industry is exploring blockchain as a means to store playback, storage, and even transaction capabilities (using cryptocurrencies) on a single technological platform that doesn’t require an additional cut from ultimate revenues.

Companies Trying to Solve This Problem

  • Ara Decentralized content hosting with crypto payments to creators.
  • Livepeer–  Live P2P streaming network. 

Global Streaming Platforms

Blockchain use cases in entertainment - Global Streaming Platforms

Content offerings and restrictions on streaming services, such as Netflix, are not global. For example, due to copyright and other reasons, viewers in Austria can only access just over 30% of the titles that exist in the American Netflix library. For those in Thailand, that number is less than 5%. Hulu, the most popular TV-centric streaming service, has yet to make its services accessible outside of the United States.

Over 60% of young adults aged 18–29 cite streaming services as their primary way for watching television, and Netflix now boasts over 118 million worldwide subscribers. But more uniformity of content across borders is ideal, especially for those hoping to maintain consistency when they travel. A blockchain-based, encrypted platform has emerged to allow this consistency, and has done so in a way that maintains copyright protections. Although these platforms may not ever rival a Netflix or Hulu, if they prove viable in terms of appealing content, they will at least provide an alternative for those in other countries or those visiting international destinations. 

Companies Trying to Solve This Problem

  • MovieCoin –  Distribution for content funded by the MovieCoin token.
  • RNDR – Distributed GPU rendering, an early paradigm for how decentralized computing could be applied to film sharing.

More Expansive Digital Rental and Ownership Models

Blockchain use cases in entertainment - Digital Rental and Ownership Models

The consumer class has shown that they are less and less willing to pay $5 to $15 to watch a movie one time in the comfort of their home. The $12 billion in revenue from sales and rentals of movies and TV shows in 2016 was a 7% downturn from the previous year, a continuing trend that shows that consumers see less value in paying for a newly released movie. Keep in mind that 2014 saw a 42% surge in digital movie sales over the previous year, but those gains seem to have been maxed out. While consumer spending on digital purchases increased 7.9% in Q3 2017, subscription streaming experienced 21.6% growth, totaling $5.5 billion during that same quarter.

People see less and less value in spending more to rent or own digital movies and TV shows, and the system needs overhaul. Blockchain-based platforms have introduced intriguing features, such decentralized playback, that would allow a consumer to access rented or purchased movies or shows via the blockchain across the gamut of viewing platforms. Storing the file on the blockchain lends a level of permanence to digital purchases that a single platform — say iTunes or DirecTV — cannot recreate. Also, the concept of rewarding consumers who drive purchases by referrals or viewers who are particularly active reviewers with tokens is possible thanks to the blockchain’s cryptocurrency integration — yet another reason why a blockchain-provided facelift of digital rentals and purchases is so promising.

Companies Trying to Solve This Problem

  • Cinezen – Leveraging the blockchain to power decentralized on-demand rental.
About Sam Mire

Data journalist and market research analyst focused on emerging technology, trends, and ideas.

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