Blockchain and Film: Promises and Mirages of the New Digital Klondike

Crédit: Cannes NEXT/Marie Thibonnier

Cannes NEXT, the technological innovation pavilion at the heart of Cannes’ Film Market, sought to accompany the emergence of crypto financial initiatives by inaugurating a Blockchain Corner that gathered some half dozen European and Asian exhibitors and showcased a series of conferences dedicated to the education, the apologia and already also the criticism of this trend, generating as much enthusiasm as skepticism among observers and film professionals.

Opportunities to be Sized

Through half a dozen panels, all of the speakers agreed that more transparency was needed with respect to payments, royalties, intellectual property and contractual obligations associated with the blockchain, particularly in the film industry. The blockchain is known for its opacity, delays and complex procedures when it comes to returns on investment. In an industry where more than a third of all revenue is generated from technological platforms, this breakthrough is more than welcomed.

“Film is an industry in which risk is everywhere. Producers often complain—and rightfully so—not only of transparency and asset control constraints, but also of the window for recuperating financial commitments,” considers SingularDTV’s Daniel Hyman. “Everyone is looking for more secure ways of administering the funds and restoring trust in the investment and distribution process. The Internet’s true renaissance requires the decentralization of the operations on which the blockchain rests.”

Another asset is without question the financial and procedural economy made possible by crypto transactions which eliminate often expensive intermediaries that weigh down the legal and banking procedures that cinema operators, distributors and sales agents are required to follow.

“The blockchain is not only something that involves virtual financing and the automated redistribution of royalties (e.g., FilmChain, LiveTree Adept). It’s also an environment that enables creators to distribute and monetize their content more economically (e.g., Littlstar) and suppliers to rent cameras, filming equipment, services, accounting, Web video application (e.g., VideoCoin.io), distribution licence acquisition (e.g., Cinemarket), complex visual effect decentralized realization and encrypted legal application solutions,” reminds Hyman. “We are truly in the process of building a whole new economy.”

BVOD, a New Hope for Monetizing the Illegal Sharing of Content

One of the virtues that is most often raised, to the astonishment of many, is that crypto video on demand (BVOD) would end up transforming hackers into legal subdistributors, namely where films would not be distributed given traditional distributors’ lack of interest, through distinct and dynamic ‘BVOD rights.’

“We need to rethink how we see hacking in terms of access to content,” believes Blockhaus’s Arie Levy-Cohen. “In certain countries, the illegal resale of content represents one of few sources of revenue. In this case, why wouldn’t hackers turn to the blockchain to provide rightsholders with access to the films? And why wouldn’t rightsholders encourage promoters in exchange for a share of the revenue? After all, hackers are business people.”

The Norwegian start-up White Rabbit is saying the same thing and claims that half of all Americans occasionally watch content illegally and that this proportion reaches 67% in Europe. “It’s lack of access rather than gratuity that pushes people to consume content illegally,” according to its CEO, Alan R. Mulligan. “On the one part, the majority of creators do not earn much from their works and they have no data on their audience. On the other part, choices are lacking. If they [the creators] cannot control the distribution of their films everywhere on the planet, the blockchain at least enables them to modulate rates and exercise control over payments through hackers and intelligent contracts on territories that are not serviced by traditional distributors.”

Prestigious Launches and Acquisitions

With respect to crypto currencies, platforms and start-ups stole the stoplight during the days preceding the opening of Cannes NEXT and the Film Market.

In terms of financing, Canadian firm MovieCoin, founded by the producers of the Oscar-winning Birdman and Black Mass films, recently positioned itself as an interesting alternative for investors seeking to participate directly in the financing of Hollywood films and TV series in full transparency with regards to how their investment is used and the return it generates. Their first suite of solutions intended for producers, investors, lawyers and professional guilds will be launched as early as this fall.

For its part, Slate Entertainment Group (SEG) doubled down by announcing strategic partnerships with XYZ Films, a major producer and sales agent, as well as the oldest Sitges film festival to deploy the Slatix ticketing platrform and Binge VOD platform, each using the blockchain and calling for greater transparency and equity between consumers and rightsholders. SEG has just acquired, for its Binge platform, Macon Blairen’s The Shitheads comedy in addition to implementing the film’s distribution strategy in movie theatres.

Competition already promises to be fierce, whereas the Swedish BVOD platform Cinezen, which gives rightsholders direct access to its transactional data, has reached partnership agreements all over the planet, including with Celluloid Dreams (France), Thunderbird (United Kingdom), Filmexport Group (Italy), Mirovision (South Korea), SDP (Japan) and four indie studios in the US.

SingularDTV also seems to stand out from the competition since it acquired the distribution rights to Alex Winter’s documentary on crypto currencies titled Trust Machine, the The Happy Worker science fiction film produced by David Lynch and the science fiction thriller Perfect presented as a premiere at the SXSW and with respect to which executive producer Steven Soderbergh declared that “SingularDTV’s approach to distribution is as audacious as the film itself. I feel like I’m at the forefront of the future of cinema.”

One Crypto Currency Per Project

Less than a year ago, several producers/investors began working on film projects that are financed in whole or in part by personalized crypto currencies.

It’s the case of Dream Channel, the Australian film and TV series project created by Jonny Peters (of which each image is worth one DreamCoin based on the technology developed by Ethereum, which purchased a full-page ad in the Cannes edition of Screen International), as well as the romantic comedy titled No Postage Necessary, digital copy of which can be paid using the Qtum crypto currency.

For their part, Britain’s David Lofts and Nick Ayton hope to finance their 21 Million–Children of Satoshi TV series project in totality using the 21M virtual coin, the value of which stands at about US$2.50 since the end of the initial coin offering (ICO) and the revenue of which is split between investors (50%) and actors and artisans (30%) in perpetuity (This project was the subject of a recent article on CMF Trends).

Thus, an ICO also referred to as crypto funding or crowd selling—can be considered as a form of decentralized crowdfunding that promises to gain traction with indie creators. Certain projects are borderline between both types of financing. That is the case of, among others, Mitzi Peirone’s Braid feature film, selected at Tribeca, which only raised $95,000 of the $1.7 million set for the ICO.

“However, don’t mistake one for the other,” warns David Lofts. “Crypto currencies cannot be used for crowdfunding purposes. The project has to respect the logic of the blockchain. The community is not easily fooled and will not let itself get caught up in the game.”

A Few Reservations…

This enthusiasm for the blockchain is comparable to that observed for video on demand and virtual reality and will also leave room for certain reservations, and even some scepticism, on behalf of some of the Blockchain Corner panelists at Cannes, including Maria Tanjala (Big Couch). She claims that massive adoption remains a challenge, as does a certain persistent regulatory vagueness surrounding crypto currencies.

In Germany, FilmTech Office’s Erwin Schmidt, who deplores the almost unanimous disparagement of intermediaries and decision makers by the blockchain community, despite the curative role the latter play, put the general euphoria into perspective by making a simple observation and invited everyone to take one step sideways while looking ahead. “We are still in an experimentation phase which itself is part of a larger second digitization wave within the industry,” he pointed out. “Some of the current challenges could very well be overcome without resorting to [the] blockchain.”

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