Web 3.0 And The Disruption Of Hollywood

This biggest is going to get a lot smaller over the next decade.

We are embarking upon a time when Web 3.0 affects most everything. Tokenization is one of the most disruptive forces we ever saw. People are underestimating the impact of what will take place. Because of this, most will be shocked when a standard is no longer.

Hollywood still controls the bulk of video content. This is already changing although it is nuanced. In this article we will take a look at what is taking place and the opportunities that are going to be presented.

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Change In Distribution

There is a lot written about the likes of Disney losing a fortune on their streaming services. To day, it is reported the company is $11 billion in the red on this service. That means it will have to record $11 billion in profits just to break even.

Unfortunately, it just keeps going further in the hole with each passing year.

This is the reality for most of the industry. Netflix took the industry by storm and, so far, is unrivaled. The media companies saw the money it was making and decided to get into the games themselves.

It is a move that has not worked out.

Of course, there was not much choice. Cord-Cutting became a legitimate movement over a decade ago. Since that time, the number of people who are paying the traditional monthly cable bill has dwindled. This has really hurt the traditional broadcasting companies such as Disney.

What happened was the Internet. This completely changed the distribution model. People were able to find content there as opposed to having to turn to broadcast television. The media companies helped this transition by licensing their content out to the likes of Netflix. While they got a few dollars for the effort, they also started to assist their demise.

The last decade is a downhill slide. Streaming has become more popular. The challenge is that it is nowhere near as profitable as traditional broadcasting. Most of these companies are losing a fortune on their services, at the same time their profits from the broadcast realm are declining.

This is a problem since it affects the entire chain, including Hollywood.

The change in distribution made it cheaper for the consumer, harming the profitability of the industry.

Content Creation More Expensive

Over the same time, content creation only got more expensive.

We did not see a similar decline in expenses due to the Internet. In fact, the production costs skyrocketed at the same time the distribution model was shifting.

Nowhere is this more evident than in feature films. We see the sums required to create them and quickly realize why it is only a handful of companies that can even embark upon this.

For example, the aforementioned Disney lost hundreds of millions on a number of films. This was their loss, not the cost of production.

Obviously, this is an unsustainable model.

There is hope for the future. Technology is starting to address this side of the equation. It is also causing an uproar within the industry.

The writers on presently on strike due to the fact they are trying to get a new deal. One of their concerns is the impact of artificial intelligence. The writers want to be compensated when AI generated content is utilized.

We can surmise that paying people when software does something cheaper is not going to happen. But scripts are not the only area that is going to be affected.

All aspects of video production is advancing along. Here is where the idea of a movie employing 4,500 people to make is going to be obsolete. A decade from now, it will be a fraction of the people as AI tools are utilized.

It is likely the expense tied to feature film creation is temporary. We could see if follow a curve similar to distribution.

Technology's Impact

The reality is technology is entering this space in a major way. It will be embraced by the major studios, allowing them to significantly reduce costs. On this surface, this looks like the Holy Grail for the industry (well not the employees).

If the major players are strengthened by this, how is Hollywood going to be disrupted.

Technology offers the opportunity to everywhere. Here is the challenge. While the movie studios will see a savings in the creation of films, it opens the door for other players. In coming years, the number of people who can create these products are going to increase.

At present, the tools are rather primitive. In many ways, they suck. This is natural for technology. The first couple generations are not up to the standard we eventually see.

That said, it is advancing. Whenever we see something about generative AI, we can consider how it will affect Hollywood. Each step forward means it is moving closer to the time where it will do more of what a team of people do.

It applies to set design, editing, avatars, script writing, and marketing. All of this employs a ton of people, driving up the present costs.

What seems like a crazy idea today will not be so in 5-10 years simply because the tools will be available for everyone.

YouTube And TikTok

TikTok changed the video world. This was the first platform to introduce something called the "short". It is the exact opposite of a feature length film.

Shorts depend upon the limited attention span of individuals. Our need for instant information plays right into this. People put together 60-90 second videos which garner millions of views.

This was quickly adopted by YouTube and other video platforms. All of social media is moving in this direction, being able to at least embed the content.

Here is where quality enters. Certainly, a short made on a smartphone doesn't compete with the quality of a $200 million Hollywood production. However, if we look deeper into what is value, we see the quality provided.

Shorts main benefit is the limited time required. This is what people obviously seek. Also, they can access it from any device, on a whim. A full length film usually requires doing to a theater. Finally, the short has the cost of the viewer of zero.

What we see is the definition changing as people alter what they seek. Certainly many still watch the 2 hour movie. That said, YouTube and TikTok are garnering millions of hours of viewing, 60 seconds at a time.

The obvious problem is that, at this moment, the level of sophistication of these video is low. Again, this is in line with technology and how it progresses.

As the tools improve, the "independent" content creator will be able to produce better videos. We will see this move up the scale. Over the next half decade, the videos on the social media platforms will keep improving. Ultimately, they will become video ecosystems that rival the major production studios.

In fact, do not be surprised if we see "television" series coming out of this realm. We are going to have hit products that garner millions of followers that are done with mostly a computer and software.

Like most things, this process is going to start at the bottom and work its way up.

Attention Economy

All of this ultimately boils down to the attention economy. Everyone is vying for eyeballs.

This is true whether we are focusing upon Disney, Twitter, Facebook, Web 3.0, or gaming. Each is looking to get people's attention and have then spend time consuming what they are offering. This is nothing new of course. What is different is the number of options that people have.

It is only growing.

Hollywood had a monopoly on this for decades, at least in terms of the content creation. They were the only content creators, dominating the entertainment field. This is changing.

Once again, we see how technology is at the core of this. Today, the graphics in games are able to rival what is films. With each new generation, things are getting more realistic, at least in terms of the presentation.

Gaming offers another feature, it is interactive. This makes the consumer part of the storyline.

Anytime a monopoly gets broken up, especially due to technological advancements, it is game over. The market share is going to radically decline.

With broadcast television and traditional content creation, we can see how less is being viewed, especially among the youth. YouTube and TikTok do garner a lot of attention, pulling it away from broadcast. This is eventually going to have a major impact.

Hollywood is under siege. Right now it is holding strong at the upper end but that is going to change. A decade from now, we can predict it will be much smaller.

Web 3.0

The narrative completely gets upended when we consider Web 3.0. Tokenization is a game changer for many reasons.

Focusing upon the attention economy, it is easy to see how the value is shifting. Our eyeballs have enormous value and it is time people realize that.

The traditional model was for us to pay to spend our time consuming content. This came either through direct purchase such as a theater ticket or by being bombarded with advertising. Obviously, there was no financial benefit to the consumer.

We can see how tokenization can alter this. In the future, if you want to get one's eyeballs, payment will be required. Consumers will be rewarded for their time. This is the new model that will likely unfold. After all, that is where the value lies and tokenization allows for that to take place.

The early stages of this can be seen with communities. Someone who enjoys a particular subject could join a community. With a token, all share in the value generated by the totality of those involved. Thus, there is incentive to contribute in whatever manner the community requires.

Here we see how a traditional model such as employed by Hollywood studios is going to have difficulty in competing.

This is only one attack vector from Web 3.0. There is another that ties back to technology.

When talking about the idea of a $200 million film, only a few can play in this realm. The risk associated with a failure means one needs a strong balance sheet to withstand it.

As the content creation get less expensive, more will be able to enter the market. Of course, funding is still required.

Here is where tokenization enters.

The old model was to create a franchise and hope to find an audience. With the new one, we see the idea of setting up the community (audience), then catering to that.

Where this gets interesting is through funding. We know crowdfunding attained a great deal of success of the years. However, tokenization puts it on steroids.

Consider the idea of a feature film dropping to a few hundred thousand dollars. Then couple that with tokenization and the ability for a community to have fractional ownership stake through their accumulation of the token. Naturally, there is a built in audience helping to ensure the success of the project even before it kicks off.

All of this is taking on the traditional realm, most notably Hollywood.

Existing Franchises Become More Valuable

Is Hollywood cooked?

Actually no. There is light for them. While the competition is going to get fierce, where the industry stands out is with existing franchises. Those with winning properties that already have a large following can be leverage for massive gains.

These properties will be recycled in many different ways. The most obvious is to tokenize the franchise to use that as a marketing tool. It also could help to provide governance.

Instead of writers or producers deciding what people want, it is easier to simply let the audience tell you and then create it. This can be done through tokenization.

When I think of something like Star Trek, the possibilities there are endless. It has a global following, could be tokenized, and creating more properties tied to it. Assets suddenly have liquidity by being traded on open markets.

In a decade, Hollywood will not wield the influence it does. We are going to see the decline as attention is diverted elsewhere. The movie star will still be present although it will change. In the future, it might be an avatar or an AI generate "person".

We will not see the death of Hollywood but we can count on the decline.

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