Blockchain has led to a new concept in the world of crowdfunding: the tokenization of everything! Include in that large group the world of films, movies, and TV. And why? Because tokenization adds liquidity to real-world assets. In theory, anything can be tokenized, and as each and every day passes, we are seeing industry after industry dive deep into this option.
The latest has Hollywood actor, director, and producer Wesley Snipes attempting to tokenize his latest movie project by the tokenization of a $25 million dollar movie fund called the “Daywalker Movie Fund” (DMF) which will invest solely in Snipes and his production studio, Maandi House Studios. With the process of tokenization, he is allowing investors globally to hold a stake in his productions through a wholly compliant Security Token Offering (STO) and thereby leveling the playing field between retail investors and traditional Hollywood financiers.
STO’s represent value via a programmable digital token along with “smart contract” technology. Unlike “initial coin offerings”, security token offerings have a strong foundation of regulatory due diligence – including all required “Know Your Customer” (KYC) and “Anti-Money Laundering” (AML) safeguards – and symbolize more tangible assets, such as shares in a company or fractional ownership of real estate.
We’ve already seen other companies taking advantage of tokenization of film. In July, 2019, tZERO announced the tokenization of “Atari: Fistful of Quarters” based on Nolan Bushnell, the founder of Atari. Their “Bushnell” STO will incorporate a “pro-rata portion of worldwide adjusted gross receipts from the film”. We are clearly seeing a growing demand for tokenized funding in the movie industry, especially now that the entire film industry is hemorrhaging for ways to provide liquidity to investors, as well as the fact that financial risk within the film industry is particularly prevalent.
The independent film market seems rife for embracing tokenization and the benefits it provides. Netflix and streaming services have taken a huge share of the traditional film indie market for less financial risk and far lower distribution costs. Producers can either self-fund their projects, crowdfund them, or get charitable contributions – and crowdfunding is becoming the clear winner. But since liquidity is always an issue for investors, tokenization is becoming the king of the crowdfunding hill.
Blockchain technology takes the concept of tokenization to a new level as it automates front-end and back-end functions with programmable “smart contracts” that execute on rules and events without any human intervention, making the process safe, secure, and immutable. Both filmmaker and investors stand to gain, as investors can invest in a whole slate of films instead of just one with instant liquidity should they ever desire to sell their stake at any point in time.
But remember, tokenization is not a guarantee of success. If the movie flops, so do investor profits. But regardless of risk, the Blockchain Trust Group and many others are taking note that tokenization is becoming widely adopted as a vehicle for investment. By tokenizing the film industry, the entire fan culture of Hollywood will change and investors will ultimately decide what movies will be produced. It seems like the entire film industry will be one of the many sectors that is set to be disrupted with this new and exciting form of crowdfunding!
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