As the world of finance continues adapting to contemporary innovations, it almost cannot help but drag other industries along for the ride — willingly or otherwise. Movies is one sector currently undergoing a quiet revolt. This is partially due to the emergence of distributed technologies such as blockchain and it has led to a new concept: "Tokenization".
Tokenization is the process of replacing sensitive data with unique identification symbols that retain all the essential information about the data without compromising its security. Tokenization is often used to protect credit card data, bank account information and other sensitive data handled by a payment processor. In this context, Tokenization is the process of converting an asset into its digital counterpart and managing it on a blockchain platform. For instance, converting a real estate property into equivalent digital tokens. The tokens are known as security tokens, which represent the underlying asset and gain their inherent value from it. A concept that only existed on paper has been now conceived through blockchain technology. Today, the concept of tokenization is explored for a number of industries including real estate, art, financial assets, stocks, and now the movie industry as well.The movie industry has taken this innovative approach of tokenization to transform the sector by making it more inclusive, lowering access barriers, alternative models of asset ownership, and enabling the flow of liquidity.
The process of tokenizing a film’s equity or shares into tokenized asset and further managing it on a blockchain network comes with its own set of risks and benefits. While tokenizing movie assets would open up new opportunities, at the same time it faces subsequent challenges to its adoption.
The risks or potential challenges of tokenization in the movie and film industry includes:Commercial Success: The successful outcome of the commercial activities underlying the issuance of movie tokens depend on the success of the movie. Even if the production is featuring famous actors, experienced directors or celebrities, nobody can predict a blockbuster or market success – at the end the audience will decide.Regulations: Blockchain technology is an emerging industry that is also very new. While cryptocurrencies are a grey area in many nations across the world, governments have started to adopt blockchain for various reforms. Tokenizing a movie asset as a financial product has to be regulated and approved before it can be adopted on a mainstream level. Moreover, a uniform regulation needs to be adopted across boundaries so as to gain optimum benefits from tokenization.
Tokenization in movies subsequently opens up innovative methods and promotes widespread adoption of investments in the industry.Increased Liquidity: Tokenization enables creating security tokens similar to financial products or movie shares and further selling them on exchange platforms. This process allows an investor to gain instant liquidity from selling movie rights over a secure blockchain platform.Fractional Ownership: Tokenization facilitates fractional or partial ownership over film rights. Movie assets can be fractionally divided into multiple security tokens through the concept of smart contracts. Investors do not need high capital to make an investment in the industry. Instead, any individual can invest $100 and hold equivalent rights over movie assets.Easy Transfer without middlemen: Smart contracts facilitate the easy and secure transfer of ownership of the asset. The blockchain ledger keeps a record of each individual share and permanently stores it. Moreover, ownership for each asset can be traced back and represents a single source of truth.* Real-time Markets: Imagine selling movie rights similar to shares on the stock market powered by blockchain, tokenization facilitates an international market to buy or trade film tokens. Any investor can buy a movie token prior to its release, from the 24/7 market and sell it post its release. This would bring a new dimension to investments in the industry.
The process of tokenizing movie assets, production studios or licensing rights is complex and will have its share of challenges and obstacles. These may be in the form of high costs, scalability, legal complexity, and more.However, Tokenizing may bring a revolutionary change to the film and movie industry. For the first time, audiences can have more control over media content. Ownership of film rights can be fractionally divided and traded on secondary platforms. This would not only promote the inclusiveness of investors in the industry but would also minimize financial losses of individual investors. Moreover, the transformation of the movie and TV industry has brought new income sources and tokenization would maximize this potential. Tokenization of Movies is still in its early stages, but it could disrupt and reshape the entire entertainment industry.