More so than nearly any other major global industry, the movie business has tended to shy away from using blockchain and cryptocurrency like the technology was asking for participation fees or executive producer credit. The industry is one of the least transparent and most reliant on middlemen in the entire entertainment sector.
But now the next-gen financial technology company, MovieCoin, is developing a comprehensive blockchain technology solution consisting of its MovieCoin Platform and a new digital utility token called Movicoin that can be utilized by consumers for a variety of uses relating to consuming film and other content.
The CEO of MovieCoin, Christopher Woodrow, is hardly a newcomer to the movie business. He has produced such films as Black Mass, Hacksaw Ridge and the 2015 Best Picture winner, Birdman. The company has already entered the entertainment space with its recent partnership with TV-TWO, a television and film content discovery platform that is adapting the Ethereum blockchain for tokenized video consumption.
Woodrow and MovieCoin see a white space in the movie industry in that, contrary to today’s financing model that features virtually zero transparency and involvement on the part of investors, there is a need to offer investors, lenders, guilds, and talent an end-to-end view of each film’s revenue and expenses. The company’s lead investor is one of the top Fintech companies in the world, BANKEX.
Hollywood is legendary for its creative accounting techniques, specifically as it relates to overhead costs. Films that have grossed over $500 million worldwide have somehow finished in the red, as Harry Potter and the Order of the Phoenix did in 2007 despite grossing $939 million worldwide.
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In creating a comprehensive blockchain-based system for managing the life cycle of a film the company will attempt to bring true transparency to an industry that desperately needs it. “We think blockchain technology will help bring greater transparency for investors in the business and participants in a production. Right now there’s so much that’s murky when you invest in a movie,” states Woodrow.
Venture Capitalist Nisa Amoils explains, "The key for MovieCoin’s success will not just be in facilitating a participation platform for investors but in providing a transparent platform for everyone associated with a film to see each dollar coming in and going out, bringing transparency to infamous Hollywood accounting.”
The benefits of the platform don’t stop at accounting. Most studio films are financed by their own corporate treasuries or through slate financing deals and individual investors are unable to invest in a studio production other than buying shares in the parent company’s stock.
Therefore, most investors looking to be a part of a feature film’s financing turn to smaller, more independent films. Granted, these films tend to be riskier but at least they provide an avenue for an investor to be a part of Hollywood film financing.
One of the major advantages of the security fund is its liquidity. Woodrow explains, “The MovieCoin Smart Fund will be game changing in Hollywood because it’s liquid—after the first year investors will be able to buy and sell tokens and it will be fully tradeable on an exchange.” Currently there is no outlet to invest in a slate of movies on a liquid basis.
But simply providing an opportunity for investment and having that investment reap rewards are two entirely different things. The Hollywood financing arena is not for the faint of heart and the landscape is littered with investment entities looking to be the next big players in town.
In addition, the company’s Moviecoin cryptocurrency tokens will substitute for cash payment and provide an additional layer of transparency while again eliminating industry middlemen. They will be used for both B2B and B2C. MovieCoin’s hope is that participants in the Hollywood ecosystem will transact on the system and streamline their services. In addition, moviegoers can use these tokens to purchase tickets or concessions, eliminating the cost of credit card fees.
This past Tuesday the company announced Movie.io, a portal designed to create more engaging experiences for film fans by providing an economical and dedicated venue that democratizes fans, directors, actors and crew members' abilities to engage, share, learn and play. In addition, the company announced plans to purchase upwards of one million tickets globally over the next three years which will provide fans from all over the world with significant discounts and access to Hollywood films.
Will the company’s plan truly upend Hollywood’s investment landscape? One of the major battles MovieCoin will have will be in attempting to transform an industry historically reluctant to change, especially from outside entities. The major studios will be averse to any newcomer that tries to pry the accounting process out of their hands. Also, attempting to engage those in the film industry in conversations about blockchain and cryptocurrency often elicits a glazed look as if you just asked the bank teller about macro hedging.
Crypto adoption has proven a bit easier overseas and Thailand's largest theater chain, Major Cineplex, announced Tuesday that they will begin accepting cryptocurrency for movie ticket and concession payments
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. Woodrow proudly states, “Blockchain technology is going to change the world. It may not be a year or two from now but it will happen.”
At that point, gone will be the days of a studio’s accounting office dusting off their Harry Potter magic wands and turning a $939 million movie into a financial flop.
Box office grosses courtesy of Box Office Mojo and comScore