By Lisa Sun, Founder & President of Mogul Productions
The movie industry is usually one that’s credited with innovation and development. The industry is barely a century old, yet film production and distribution techniques have changed dramatically over the years. From the advent of sound in the 1920s to the Golden Age of Hollywood – today’s dizzying CGI effects displayed on 8k screens with 3D Surround Sound are a world away.
But there’s one area that hasn’t changed much, at least over recent decades. Unless you can get your big movie idea commissioned by one of the big studios, it’s incredibly difficult to bring an indie film to market. Perhaps unsurprisingly, raising the necessary financing is one of the biggest challenges. And it remains relatively unaffected by the kind of technological advancements that have characterized the industry as a whole.
Limited Financing Options for Indies
Indie filmmakers generally only have a handful of financing options available to them. Grants may be available, but competition is fierce, and criteria for qualification are strict. In addition, there are various forms of debt financing, which can present a high risk for the filmmaker if the movie doesn’t perform as anticipated. For the same reason, private investors generally consider filmmaking too high risk.
Crowdfunding is one of the newest methods available, thanks to the advent of the internet and the availability of platforms such as Kickstarter. However, in its current format, the ability of filmmakers to raise funding using crowdfunding is somewhat limited by the reach of the platforms and the ability to offer meaningful incentives to fans as investors. Often, there is rarely any professional guarantee that the film will actually get made on-time and on-budget. But crowdfunding for movies takes on an entirely different dimension when blockchain and digital assets enter the equation.
NFTs – Creating Digital Scarcity
NFTs have taken the world by storm this year. Digital artists such as Beeple, who sold an NFT collection for $69 million in March, have found new ways to generate value from their creations. The intriguing part of this story is not simply that a piece of digital art sold for such a sum. It’s that it can fetch that sum because its scarcity is assured by blockchain. Without the NFT securing the art, it’s just another digital file that anyone can replicate or manipulate.
For the indie filmmaker, this is a game-changer. Many Kickstarter movies offer digital rewards, such as artwork or posters or access to behind-the-scenes footage. However, this kind of digital merchandise doesn’t provide the kind of scarcity that makes it valuable. Sure, the owner might get an MP4 clip that they can watch on their devices whenever they like. But unless they can sell or trade it, it’s not representative of their investment – it’s merely a souvenir.
Issuing these merchandise assets as NFTs, and having a secure, reliable, and liquid secondary market for such assets, like those that exist in physical movie merchandise, is set to provide a lucrative source of revenue to moviemakers everywhere, while allowing fans to own a liquid piece of intellectual property that’s related to the film. This allows for a deeper and more symbiotic relationship between producer and fan.
Giving Fans a Voice
Even before a movie enters into fundraising, filmmakers can gauge audience sentiments using token-based voting systems. Movies such as Deadpool and Sonic the Hedgehog only ever made it into production thanks to fan pressure. Even then, fans were able to influence certain decisions. For example, Ryan Reynolds was able to secure the leading man role thanks to his efforts in winning over fans with his engagement activities, even though the studio had expressed a desire to cast someone else.
Here at Mogul we are using blockchain technology to offer the opportunity to put this kind of control in the hands of movie fans. A system allowing fans to buy tokens that will give them a right to vote on which movies get made will provide a layer of unassailable social proof to support further investment. It gives the producer of the film an upper hand when negotiating for distribution deals.
Broader Opportunities in Decentralized Finance
Beyond the stamp of approval from fans, some of the innovations in decentralized finance and DAO funding also provide a blueprint for the future of bringing fans further into movie financing. Projects exist that operate as decentralized grant funds for developers wanting to build blockchain applications or services for the good of the ecosystem. These projects, like Mogul, use a system called “quadratic voting,” which allows users to pledge funds directly. These are then matched by the system and weighted according to the number of users that made a pledge.
There’s no reason that similar funds couldn’t operate for movies, allowing fans to get even more invested in their favorite movies.
Each of these use cases has the power to deliver more than pure financials to indie filmmakers. Allowing fans to determine which movies get made, funded, and offering them the opportunity to own valuable digital merchandise will create a lifelong army of loyal supporters. Blockchain and cryptocurrencies offer new opportunities to connect filmmakers and fans directly in a way that simply isn’t possible otherwise. In the same way as audio technology ushered in the last Golden Age of Hollywood, maybe crypto will usher in the next.
About the author: Lisa Sun is the Founder & President of Mogul Productions, a decentralized film financing (DeFiFi) and NFT platform that connects creators, movie fans, and film financiers in one space to ensure the best films get made by giving everyone a voice. By leveraging blockchain technology, NFTs and a tokenized system, Mogul incentivizes participation and rewards engagement. Using the Mogul in-app payment and utility token (STARS), users can vote on, greenlight, and participate in key decision-making aspects of production.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.