Hollywood is the world's oldest national film industry, worth billions of dollars, and faces new challenges as filmmakers strive to control their data, intellectual property, and financial revenues.
Meanwhile, movie audiences who once went to theaters have started watching films at home.
The challenges faced by the film industry have led to declining revenues, with data controlled by large companies rather than content creators.
Fortunately, blockchain technology can address many of these issues. For instance, films can now be tokenized as non-fungible tokens (NFTs), and data can be recorded on a tamper-proof, transparent network.
Creator-led on-chain platforms aim to change Hollywood
While these use cases are still in their early stages, it is noteworthy that Golden Globe winners and multiple Emmy nominees like Ron Perlman recently launched a creator-led film and television financing and content development platform.
This on-chain platform is called 'Watrfall,' allowing film and television projects to obtain financing, approvals, and monetization in a transparent and participatory manner.
According to Perlman, in today's Hollywood system, creators often lose ownership and control over their projects. He told Cryptonews that back-end deals have traditionally been a way for creatives to share in a project's success, but these deals have disappeared in the streaming era.
"Watrfall addresses this by ensuring creators retain creative control and providing them with more direct funding," Perlman said.
Perlman further explained that Watrfall allows fans to become investors while providing unprecedented opportunities to vote for the content they want to see. Additionally, IP ownership opportunities allow fans to benefit from the content developed on the platform.
Creators retain ownership, and fans remain engaged
Watrfall's CTO Meyenehi Iduwe elaborated on this, telling Cryptonews that the platform allows creators to retain ownership and creative control over all film transactions. He added that all transactions and revenue distributions are recorded on the blockchain, creating a fair and transparent environment.
"Creators can also receive unprecedented funding through fan investments on the platform, fostering closer interaction between fans and creators. Everyone from fans to actors and crew can obtain tokenized equity, ensuring that every participant can share in the profits," Iduwe said.
While this may sound complex, Iduwe explained that Watrfall uses a three-layer data system built on the Polygon blockchain, designed to balance transparency and security. "This includes all key information about who funded which project, how much was raised, community voting, and how royalties are paid."
The decentralization and tamper-proof nature of Polygon also means that anyone can verify information, which Iduwe states is crucial for addressing the old 'Hollywood accounting' issues.
Regarding creative film assets, Iduwe mentioned that elements such as scripts, shots, film trailers, and contracts are stored on the Walrus Protocol, a decentralized storage system built on Sui.
"These documents are not located on a single company's server, but are encrypted, distributed, and permanent, so community-funded work cannot be lost or censored," he said.
While this information remains on-chain, personal user data such as emails, Know Your Customer information, and metadata still resides on encrypted Watrfall servers.
"By splitting data into these three layers—on-chain storage for trust, decentralized storage for permanence, and private servers for sensitive information—the Watrfall ecosystem is one that creators and audiences can genuinely rely on and trust," Iduwe pointed out.
Currently, Watrfall is able to host entire television shows on-chain, with Walrus and Sui providing the scalability needed for large-scale streaming.
The Role of Cryptocurrency in Hollywood
While blockchain is the main driving force behind Watrfall, plans are underway to launch a native utility token built on Polygon.
According to Iduwe, the token is designed to provide incentives for fans and content consumers, including the ability to vote and approve content. Future plans involve integrating a decentralized streaming layer where tokens can be used for subscriptions and additional rewards.
Zach Ingrasci, director and co-founder of the film studio Optimist, told Cryptonews that using cryptocurrency can indeed help shift the power dynamic back to content creators.
For example, Ingrasci explained that NFTs and Decentralized Autonomous Organizations (DAOs) allow filmmakers' communities to directly support projects. Additionally, issuing films on-chain can eliminate traditional distributors, enabling filmmakers to retain more profits while maintaining creative control.
"We saw this in our own film (Vitalik: An Ethereum Story). In July 2021, we launched crowdfunding on the Mirror platform. The project raised 1,035.96 ETH directly from the community within 72 hours," Ingrasci said.
Supporters of the film can also access a private Discord server, which contains behind-the-scenes updates and early movie access.
Additionally, cryptocurrency played a significant role in the release of Vitalik: An Ethereum Story. Ingrasci and his co-founder Chris Temple used decentralized protocols Zora and Base to release the film's trailer.
"The trailer alone raised 95,000 mints, generating revenue that is typically impossible with traditional distribution," Ingrasci shared.
Helping mainstream movie audiences understand blockchain
However, despite the innovative nature of these concepts, bringing them into the mainstream remains challenging.
"We recognize that movie audiences may find blockchain and cryptocurrency intimidating," Iduwe commented.
To address this issue, he mentioned that Watrfall is applying a 'user-friendly Web2 first experience,' which includes fiat payments, dashboards, and optional crypto wallets.
"The platform is designed to allow users with little knowledge of Web3 technology to still interact with the platform and participate in voting and investment opportunities," Iduwe explained.
Perlman added that while Watrfall's design is not a typical Hollywood studio, it will employ a production office and utilize physical resources to complement the development of traditional studio projects.
While this may prove successful, Ingrasci points out that the tools for applying blockchain in the film industry are still in their infancy.
"For filmmakers who are not yet immersed in the crypto space, they may feel overwhelmed and find it difficult to approach," he said. "But as streaming platforms continue to consolidate under a few tech giants, it is more important than ever for filmmakers to seek out and cultivate their own grassroots audiences."
