A Decentralized Future for Fans and Hollywood – Cointelegraph Magazine

by · August 3, 2022

The traditional film industry is one of the most centralized and traditional of them all. Just a handful of movie studios and streaming conglomerates control the lion’s share of the global movie market.

But non-fungible tokens (NFTs) and a growing cryptocentric community of enthusiastic filmmakers may just disrupt the industry.

Some independent projects provide a glimpse into Web3 filmmaking, while others provide a window into distribution. Decentralized streaming also demonstrates what community-based film development and exhibition could look like in the not-so-distant future. Thanks to the popularity of NFTs, the Film3 ecosystem is evolving beyond its embryonic stage. Although the trend is very fresh and a lot of kinks need to be worked out, keep an eye on this emerging crypto sector as it continues to take off.

Start the tape

During panel discussions at the Cannes Film Festival in May, director Miguel Faus talked about how he uses NFTs embossed from his short film Calladita to finance a million-dollar feature of the same name. In 2019, Faus produced his short film with fiat using traditional crowdfunding. Today he sells tiered NFT packages to subsidize the feature film. “The intended budget is $950,000. So far we have raised $650,000 through NFT sales. The goal is for all funding to come from NFT, says Faus to Magazine.

Filmmaker Mark O’Connor, also a panelist at Cannes, introduced his first Web3 distribution model at the film festival: the Stalker Movie Pack, an NFT version of the DVD movie pack from the 1990s.

In 2012, O’Connor produced and directed the psychological thriller Stalker. The feature film then won the Underground Cinema film festival and was released on DVD in Ireland in 2014. Still, O’Connor wanted the film to be completely independent and chose not to release it internationally. Eight years and a thriving NFT ecosystem later, O’Connor fully controls the intellectual property and believes this traditionally crowdfunded film “will be the future of how movies are distributed.”

Do filmmakers really need decentralized filmmaking?

According to O’Connor, it is about controlling the intellectual property. Web2 filmmakers often find themselves in circumstances where they lose control of their IP. Losing control of the rights to a film also means losing access to the potential profits.

O’Connor believes that there is a “waterfall system” in the industry. “When you release a film the traditional way, the theater will take 70% and then, of what’s left, the distributor will take 15%. Then you have to pay sales agent fees and various fees, says O’Connor. At the end of the day, a filmmaker with a successful project can often end up with no share of the profits.

Faus tells Magazine that filmmakers often create the IP and do all the heavy lifting, only to become contract workers temporarily attached to their own projects. “Writers and directors like myself start with an idea, develop a whole project, write a script, do the whole thing, make the film, direct it, but end up doing all this as contract work for a company or a producer or a financier who is the actual owner of the film, and sometimes that system is not good.”

Faus believes that Web3 filmmakers can harness the power of their communities to finance films in a decentralized way. When a like-minded community stands behind the project and chooses to support it, it gives the green light for the film. There are no studio managers and no gatekeepers with deep pockets, adds Faus:

“Filmmakers, together with the community, can decide how the power to own the IP, and the ownership of the film, will be used both financially and strategically.”

Where can I watch a Web3 movie?

Filmmakers who prefer full control over their IPs require a decentralized space to stream their projects, an independent technical solution that does not profit from the films. According to CEO Mihai Crasneanu, Beem provides exactly that. “You own your own IP. You have the keys to it, so you don’t have to rely on us,” Crasneanu tells Magazine.

Currently, there are only a handful of online, Web3 streaming and distribution models. According to Crasneanu, Beem was established in 2018, and it is not a platform or a destination. It’s essentially an end-to-end toolset that allows creators, distributors or any content company to become their own platform. “So that’s why I wouldn’t call us a platform because we don’t aim to be a destination on our own.” Although Beem still works with Web2 technologies, filmmakers and other creators can use the tools to stream their Web3 content in full HD. Creators can upload their movies and do live events and screenings. Beem was a co-sponsor and live streamed many of the Web3 panels in Cannes.

Creators on platforms like Beem can use the tools to build their online communities and can generate revenue by charging fans to watch movies, in fiat or crypto, and can token-gate access for community members who have specific NFTs in their wallets. Beem’s customer is not the audience, it is the content creators, the filmmakers. Unlike the “waterfall system” where the filmmaker is at the bottom of the food chain and only gets paid after everyone else, in the Web3 space, a filmmaker and their community should control all revenue streams.

The artist and production incur one set of fees for distribution and exhibition. Beem takes 15% of paid streams and videos as well as paid live events. It takes 3% of any tips, merchandise sales and NFT sales and/or resale. Filmmakers receive branded slots and emails, dedicated domain and custom URLs, access to a management console and analytics. For a monthly fee, creators can purchase technical support, a custom mobile app, digital rights management, geoblocking (restricting viewers from geographic areas) and watermarking.

O’Connor plans to stream Stalker on Vabble. According to Vabble’s Twitter account, the platform hasn’t launched yet and is hosting giveaways and contests leading up to its beta release later this summer. On its website, Vabble brands itself as a “multi-channel streaming entertainment platform for viewers, investors and studios” and plans a full platform launch within the next two years.

What’s in it for the fans?

YouTube, Twitter, TikTok and Instagram chat feeds are nothing new to live streaming events, but the ability to discuss your favorite movie in real time during the premiere is unique. O’Connor believes that watching a film on Web3 is a shared experience.

“You can create a film club. There can be questions and answers with the directors, and you can comment during the film. So there are all these different features that have come along with Web3 and with crypto. I feel there is a huge shift in the industry.”

O’Connor plans to host streaming events when Vabble launches. Until then, fans can purchase the Stalker Movie Pack on Rarible. In the coming weeks, community members will begin receiving NFT drops with special features. The first release will include a movie poster with subsequent releases every few weeks. The film pack includes unreleased posters, a “making of” documentary and non-generative PFP characters called The Stalkers. All NFTs are individually tradable and O’Connor intends to offer free NFTs and premium access drops in the coming years.

To Calladita token holders, interactions between the community and the filmmaker will happen on Beem before the film premieres. “We take them on the whole behind-the-scenes tour,” Faus said. For other projects, Crasneanu told Magazine that for casting interviews, location scouting and costume design, community members could theoretically participate in all elements of pre-production, production and post.

Calladita also offers its NFT holders tools and benefits. A Tier-1 buyer buys NFT for 0.18 ETH and receives their name in the credits, a private link to watch the movie, access to a private Discord server, and management rights to the movie’s DAO. For 6 ETH, Tier-4 NFT holders receive all the previous benefits plus an NFT mint pass for an on-set photo, a physical piece of movie memorabilia, and an avatar in the movie’s credits.

Is the industry ready for Film3?

Business Wire reported that “the global film and video market is well consolidated, with a small number of major players operating in the market.” Major companies such as Disney, Comcast, AT&T (Warner Media), Sony Pictures Digital and ViacomCBS control just over 35% of the total market. According to the Motion Picture Association’s 2021 theme Reporteight of the 10 most watched streaming movies were seen on Disney+, while two were seen on Netflix.

It is fair to say that the film industry is entrenched and centralized.

While it’s hard to imagine Hollywood’s gatekeepers willingly giving up full control over a filmmaker’s IP, Web3 elements are starting to pepper the industry. Actress and producer Reese Witherspoon’s company, Hello Sunshine, recently inked a deal with NFT powerhouse World of Women to make feature films and TV series.

Co-CEO of Vuele, Cameron Chell tells Magazine that the rights to Anthony Hopkins’ new thriller Zero contact was purchased by the NFT collectibles platform. According to James Hickey, team lead at Moviecoin, the Web3 streaming platform was partially funded Prizefighter: The Life of Jem Belcher starring Russell Crowe. Decentralized Pictures, a Web3 publisher of Francis Ford Coppola’s American Zoetrope, actively discovers new talent and finances new projects. The platform’s co-founders include Leo Matchett, a Technology and Engineering Emmy Awards winner, American Zoetropes vice president Michael Musante and Coppola’s son Roman.

Also according to a Forbes from 2020 reportbasic Web3 technologies, such as “digital IDs, underpinned by blockchain-encrypted biometrically verified technology, will be the norm for the major entertainment providers. It is argued that mega-streamers such as Netflix, which lose over $12 billion per year due to password sharing, could benefit financially from digital IDs.

Also, April 5, Reuters reported that WarnerMedia’s recently deceased CEO Jason Kilar believes the future of the industry is tied to the blockchain. In a note to the news outlet, Kilar said, “The future of Hollywood is in Blockchain.” In a follow-up interview, Kilar told Reuters, “I think it is [NFTs] is going to be a potential wave coming to Hollywood, the same way the DVD wave came to Hollywood in the ’90s.”

If Film3 eventually catches on and captures the full attention of all the streaming and studio giants, will they push back against today’s blockchain pioneers? Will they release full control over artist IP and embrace a decentralized future? It’s hard to say, but the Web3 community is undoubtedly hopeful. Crasneanu came to Cannes with limited expectations:

“I expected a very low level of interest from the traditional filmmakers present at Cannes, and mostly indifference or criticism at best.”

But according to Crasneanu, people were more curious, open-minded and open to experimentation. Crasneau tells Magazine that traditional industry members were “eager to discover, to find out what can be done in Web3 with filmmaking, in all stages of film development, production and distribution.”

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