How can blockchain help the film industry? Insights by Manuel Badel
INTERVIEWER: PAUL RIETH | BERLINALE 2019
The whole industry seems to talk about the blockchain at the moment. Please tell me something about the current state and how the film industry is actually adapting these technological possibilities of the blockchain.
Manuel Badel: We are still at the very beginning of blockchain technology and how it could be applied to an industry in general, not only in the film industry. The technology is still in it’s infancy and in a way it’s still very experimental. Now it is important to understand what blockchain is, so people in general understand what are the possibilities in terms of trustability, distribution, financing and monetization. Because the questions that most I get most from people I talk with: Okay, that’s interesting but what are concrete applications? Why would a distributed ledger technology – a DLT, a distributed approach for database that summarizes some key aspects of the blockchain – would be really better than existing systems? And, of course, how do we start?
Looking at the possibilities, how can the blockchain help the movie industry in terms of financing and distribution, in terms of developing a closer relationship between film makers and their audience.
Manuel Badel: I had the great opportunity last year to work on a research that was supported by Telefilm Canada and the Canada Media Fund, two essential organizations for supporting the film, TV and digital media industries in Canada. This research is an introduction to blockchain and how it could impact the industry. What are the opportunities and also what are the key challenges for the adoption of this technology in the film, TV, gaming industries. And to summarize the opportunities, we can talk about two main families of applications of blockchain in the industry.
1) One is about information systems and how you can protect an intellectual property (IP), how you can better manage rights as part of the digital rights management. Besides that: how you can use the Blockchain to improve collaboration between partners, especially when you co-develop or you co-produce a film or if you work on a transmedia project where you have different people that are involved, on ad hoc basis, in the production. So how blockchain could facilitate relations and project management of a production. And the important thing is how blockchain can improve reporting. Because this is very important when you are supported by investors when you have to report sales and revenues. So blockchain could facilitate report royalty payments and recoupment of investments.
2) The other aspect of blockchain applications are the new possibilities in terms of business models, for instance crowdfunding: In a way blockchain could improve crowdfunding through tokenization. Tokens are digital assets or values representing assets, or part of these assets. In some cases they could be used for investing in projects, and be comparable to company shares, or to support the concretization of this project and then give benefits to their holders. Sharess or benefits that would be authenticated on the blockchain and hence be valuable and tradable. Therefore tokens are very important for the financing but also part of an integrated strategy where tokens can also be used to create a community of interest around the movie. Something especially interesting for documentaries. So you can improve monetization of a project and it’s content which can have important impacts also in terms of distribution. Not especially the tokens themselves but the fact that blockchain can offer you direct access to and communication with your audiences. That of course doesn’t mean that blockchain solves the challenge of promotion and the marketing aspects of movies and that distributors are going to disappear, because they still play such an important role in the industry. But blockchain could have a very interesting impact in giving back more control of intellectual property (IP) to the creators and the way they want to market it.
“…blockchain could have a very interesting impact in giving back more control of intellectual property (IP) to the creators and the way they want to market it.”
One very interesting and important point is the disruption of old business models and the way the industry is run: How is the reaction of the “old world”, the distributors, the funders, the producers? How do they react to your ideas and the new opportunities of the digital world?
Manuel Badel: Yeah, you know, there is skepticism of course and optimism on the other side. The skepticism of people and organizations are more on the distribution side, probably because they see this kind of new technology as a threat. So the big question is the understanding of this technology and until now people don’t clearly understand what could be the benefits for them. So even the old world, as we call it, can benefit from blockchain technologies in terms of reporting, transparency and access to data and the way that they can clearly know how the audiences react to different promotion, marketing and distribution strategies. So of course the reaction can be skeptical but this shows one of the key challenges which is to educate the industry and to make them understand how it can be used for them.
In a bigger sense it’s not only the question of blockchain technology, but also the question of artificial intelligence. We all talk about artificial intelligence, but on the question how it can be actually be used there is still a lack of education. And I think that institutions and major stakeholders in the industry such as important broadcasters or funding agencies in different countries should have a leading role in this. They should help in triggering new projects and contribute to education.
The other aspect we need to talk about regarding innovation are new skills that people have to acquire or new skills that they have to develop. And I think that filmmakers especially creators and even producers, nowadays in this digital age, need to continue to develop more and more entrepreneurs skills and minding, and they have to develop a lot of knowledge, a lot of skills in order to be able to market themselves and to develop their own branding. And filmmakers and producers are today also entrepreneurs that now have a lot of possibilities and opportunities in terms of distribution, but still have to better understand how this all works.
We discussed a lot about the role of the audience. Platforms like Netflix know their audience so well that they produce original content for the needs of the audience. At the same time you can reach your audience with new platforms and digital marketing channels on a direct level.
We never had these opportunities before, so what does that give the film industry, rather in terms of opportunities less than as a threat as you said?
I would say that in terms of audiences when we talk about Netflix and other similar platforms most of the time producers, film makers, creators criticize that there is a lack of stats, and therefore they don’t know what their audience is and how their content is viewed and purchased. So the difficulty is to get information from these platforms, which is very important for creators and producers.
But there are new VOD-platforms being developed, that are based on blockchain technologies and among their promises they announce that creators, filmmakers, producers will have better access to their audiences: first they will be able to better customize their own visibility, their own distribution strategy and the promise is to clearly know how their audience reacts and how they can create a direct connection with them and in a way benefit not only in terms of revenue but also, in terms of visibility in terms of connection, in terms of creating content that can be appreciated by their audiences. So, we hope, as promised by the blockchain, that these possibilities will become concrete and that filmmakers and creators in general will benefit from blockchain because they will be more directly connected with their audience and get feedback directly from them.
If we look into the future for a second, how do you think film industry is going to change within the next 5, 10 or 20 years?
Manuel Badel: Well you know, I think it will be longer than 5 years. I just quoted an article from the Harvard Business Review and this article was comparing the adoption of blockchain with the TCP/IP protocol, which is the essential protocol for the Internet. So the TCP/IP protocol was developed in the very beginning of the 70’s and it took more than 20 years before it got adopted by the industry because it was disturbing, disrupting in a way the industry, particularly existing players in technology and communication infrastructures. I think that it is the same for blockchain, like the authors of the HBR article (“The Truth about Blockchain”), and that it will take time, considering the different phases of adoption of a new technology in an industry.
Well you know, I think it will be longer than 5 years. I just quoted an article from the Harvard Business Review and this article was comparing the adoption of blockchain with the TCP/IP protocol, which is the essential protocol for the Internet. So the TCP/IP protocol was developed in the very beginning of the 70’s and it took more than 20 years before it got adopted by the industry because it was disturbing, disrupting in a way the industry, particularly existing players in technology and communication infrastructures. I think that it is the same for blockchain, like the authors of the HBR article (“The Truth about Blockchain”), and that it will take time, considering the different phases of adoption of a new technology in an industry.
To be more specific, I think that within the next 5 years solutions that will focus on efficiency on rights management or recoupment of investments will be more attractive, because they are very tangible in a way and you can see a direct benefit. But maybe it will take more time for new business models because risks are higher, ROI uncertain and difficult to evaluate, and because it’s not only the industry that has to understand the way it works but also audiences that will need to be more familiar with tokens for instance. In that sense the gaming industry is very interesting to look at because they are developing platforms where gamers are earning tokens and then they can exchange these tokens with other things, with other benefits. So at the beginning the gaming industry should be a leader, I think, in the way blockchain could be adopted by other industries like film and TV.
Thank you very much!
Manuel Badel is a senior consultant and speaker, specialized in digital media financing, production, distribution and business models. He is a CIO Certified Blockchain Professional, focused on innovation and business applications of blockchain technologies in film, TV, digital media and gaming sectors. Manuel Badel contributed to initiate Blockchain TFO, the first prototyped solution of its kind in the Canadian broadcasting industry (2016-17); designed, organized and presented the first blockchain conference and workshop in a major film festival (Berlinale / EFM-Horizon 2018); is the author of the first research on blockchain and media industries in Canada (2019).
Research Report: Blockchain-2019-EN.pdf