Will Web3 Revolutionise the Film Industry?

Who will miss the boat on the Web3 Revolution?

If you read this question cynically, read on. Web3, together with technology that is distinctly applicable to entertainment content production, is already at work. It’s as much a movement as it is a commercial opportunity. The real question: are you missing the boat?

Indie cinema is one of the most confusing terms in the film industry today. Strictly speaking, independent cinema refers to low-budget films that aren’t financially backed by the major studios. However, in today’s Hollywood, the lines are blurred. Indie films can range from US$500K to US$20 million, with well-known actors and directors attached.

Up-and-coming filmmakers can find it extremely difficult to secure financing and distribution in this highly competitive landscape. This is partly because multiple layers of intermediaries obfuscate the relationship between filmmakers and their audiences. In this landscape, a new model that allows filmmakers to communicate with their audience directly would no doubt be disruptive.

One of the leading innovations that can revolutionise the film industry is blockchain technology and the Web3 movement. Blockchain technology has the power to decentralise Hollywood, where a few companies have historically controlled market share. During 2020/21 (the last “Crypto Bull Run”), Web3 emerged with the rise of NFTs and other social-based cryptocurrencies. NFTs were introduced to people in the form of JPEGs and collectibles. Major studios even jumped on this trend, creating NFTs and Web3 experiences to market their franchise film releases. Warner Brothers are still pursuing this strategy, recently releasing their “1978 ‘Superman’ NFT Movie Bundles”. While it indicates the adoption of  Web3, it also shows how studios have yet to use this ground breaking technology for more than marketing their franchise films.

This technology can disrupt the financing and distribution model, creating a more synergistic relationship between creators and consumers. Let’s explore how Web3 can empower filmmakers and audiences.

Financing

Using Web3 as a financing model can be better understood through the lens of a crowdfunding campaign. Currently, many micro-budget independent filmmakers raise their budgets through GoFundMe or Speed&Spark. These platforms allow their family, friends, and supporters to donate to the filmmakers.

However, imagine a scenario where a filmmaker issues NFTs for an upcoming project instead of creating a crowdfunding campaign. NFTs can be programmed to allow the buyer to participate in the profit share when the film is sold. When buyers purchase said NFT, they effectively buy a stake (or shares) in the project. The Web3 model gives the audience creative and financial input, allowing them to participate in the content creation process. Audiences can own a piece of their favourite content creator’s film by giving them a chance to invest rather than donate. It also gives filmmakers unprecedented freedom and creative control. They can focus on their craft without worrying about a studio executive’s notes. Moreover, it allows filmmakers to listen and connect with their audience on a much deeper level. Audiences can also voice their opinion and have a say in the development of the film or television series.

Earlier this month, The Quiet Maid, a feature film funded by the sale of NFT, announced a global sales deal and a premiere at the Tallinn Black Nights Film Festival. The first-time director, Miguel Faus, sold NFTs and raised a $750,000 production budget. Once the film is sold, the NFT’s holders will be entitled to a percentage of the film’s profits via a Decentralized autonomous organization (DAO). The Quiet Maid was also backed by Decentralized Pictures, a foundation that helps filmmakers secure financing by leveraging Web3. 

The immutable ledger underpinning the blockchain would force all parties to provide accurate and transparent accounting. If an audience is financially invested in a film, they have a real incentive to promote it to their local network. This would subsequently result in greater financial success for all parties involved. With the payment rails already established, it also opens the door for easier sales of digital merchandise and collectibles, which translates into more revenue for the filmmakers. 

However, there are some caveats to consider. Web3, being a relatively new technology, poses many questions, one of which revolves around adoption. Currently, Web3 is powered by cryptocurrencies. Therefore, one must be familiar with operating cryptocurrency to invest in a creator. Many average consumers view cryptocurrencies as a store of value rather than as a medium of exchange. So, to truly disrupt film financing and distribution, the adoption of this technology must rise. And it can! But it’s hard to say how quickly this will happen. 

Distribution

Creating a film is only the first half of the battle. The real challenge has to do with securing distribution. Most filmmakers struggle with this because the current model massively favours distributors. For big-budget Hollywood films, distributors will receive a percentage of the film’s sales in exchange for financing the marketing campaign. However, at the lower levels, distributors take a similar percentage of the film’s sales while putting up much less for the marketing campaign. The film is often released only digitally with no hopes of a theatrical release. This is not enough to create a real impact, and general audiences rarely get to watch independent films. Filmmakers will also have to sign away the rights to their movies for the foreseeable future. So they are left with few options: choose a mediocre distribution deal or release the film independently through a film aggregator such as Bitmax or Filmhub. 

However, the introduction of Web3 and, specifically, smart contracts can revolutionize film distribution in many different ways. 

One of the ways filmmakers can release content is through a Web3 studio or distribution company such as Bingeable or myco. These platforms are built on Web3, so they offer the ability to build a community around the release. These companies also bring much-needed transparency to the accounting operations that follow a film’s release. With all the financial transactions inscribed on the blockchain, filmmakers can easily track copyright and royalty payments. This is a far more efficient and mutually beneficial system than what exists today. 

Filmmakers can also continue to release their films independently by leveraging the Web3 ecosystem. As most of the technology and software is open source, it has never been easier for creators to hire a small team of software developers who can build the necessary infrastructure. Creators can launch their own website and a line of digital tokens representing digital tickets or DVDs. These tokens can be programmed to unlock access to the content as it’s released. Within this model, filmmakers can also get creative with the release itself. Shots, scenes, or moments in the film can be programmed as NFTs and sold individually, requiring a community of buyers to assemble the whole movie. NFTs could come to represent collector items that unlock different pieces of a franchise, creating a shared universe when put together. All in all, leveraging Web3 allows creators to push the boundaries of how we create and consume cinema. 

If filmmakers choose this path, the road is much longer and more challenging. However, investing in themselves and connecting with the audience might prove more financially and creatively rewarding in the long run. With how difficult independent filmmaking is in the current landscape, why not take the risk? Distribution is a studio’s bread and butter, and a few companies hold a significant market share. So, there is a lot of money to be made if creators disrupt the studio distribution model and eat into their market share. 

Parting Thoughts

The traditional film financing and distribution model favours established franchise films with studio distribution. Indie films and filmmakers represent far too great of a risk for major production companies to take on. However, by connecting directly with the audience, filmmakers can distribute the risk amongst those who want to support them. These financing and distribution models reward both audiences and filmmakers while cutting out the industry middlemen. While these ideas seem appealing, there is significant risk involved. However, industry insiders are already backing Web3 ventures with several already gaining significant traction with millions of content consumers already engaged. Will film and television audiences push adoption? The answer seems to be a qualified, “yes”. While the mainstream focuses on the status quo ante, Web3 pioneers and the investors backing them are gaining momentum. Will it work? Who will be the leaders? Can they challenge traditional Hollywood?

While we all ask these exciting questions, Web3 technology grows and rumours of another Crypto Bull Run rears its head around the corner. The big question is: who will miss the boat?

1 Comment

  1. More articles like this please.

    We have reviewed a number of Web3 decks recently and none have been persuasive. The investment case is lacking. We see the potential, and the opportunities, just not the business plans that convince us. Not yet, anyway.

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