s are creating financing platforms in Hollywood for the new wave of creators.
9 min read
The opinions expressed by employees are personal.
This last decade altered the nuclear definition of Hollywood. Streaming services have challenged Hollywood's status quo for years. Netflix began broadcasting movies and TV shows in 2007 and has since grown to be a giant that only spent $ 12 billion in 2019 to entertain its more than 158 million subscribers worldwide. According to research firm Parks Associates, there are 271 online video services in the United States.
The Hollywood business is plagued with problems, and I'm not just talking about the #MeToo movement, which has drawn attention to a fundamental problem that needs to be resolved. I talk about business problems that affect producers, investors and the general public, whether they realized it or not. Movies and shows are stories, but they are also products. That's why fans – consumers – deserve to have a voice in the stories they decide to pay to see, so investors should have more information when it comes to financing a project.
Different groups of entrepreneurs, some with vast experience working in the industry, identified these problems and have been using technology to solve them. Filmio is a creative incubator, market validator and distribution launch platform for anyone who is frustrated with the current Hollywood model. Another disruptive agent is Slated, a crowdfunding platform that has created 1.42b introductions to investors for 1,420 movies. And LegionM that helps to find funds to produce presentations with the aim of raising new talent and offering what companies expect to be integrated audiences for successful new programming on platforms such as Netflix, Apple, among others.
The protagonists of the Hollywoodense market
The Hollywood business model is flawed on a lot of sides, so let's analyze three groups of people who play an important role in the industry and in the challenges it faces:
1. Content creators
The entertainment industry is unfairly exclusive and selective. If you want to make a project that reaches the masses, you usually need the help of a large studio that has many resources. Even if you wanted to create an independent project on a smaller scale, you would still need the resources to obtain capital and be able to distribute it to an audience. Unfortunately, Hollywood is famous for its lack of diversification and for closing the door to innovative stories for fear of not generating profits.
To solve these problems, the ecosystem of Slated, LegionM and Filmio exposes projects to investors and large studies that may be interested in the ideas of the filmmakers.
Another problem that content creators face is not knowing how the audience will react to their project. What would happen if the public pays the ticket to watch the movie, hates it, and then tells everyone not to waste their time watching it? The creators would save a lot of time and effort if the fans were involved from the start.
Filmio makes this possible. Bryan Hertz, president of the company, explained in a previous interview that countless moviegoers would like to see unique, diverse and original content, only that independent filmmakers fail to finance their projects to reach these audiences. Then Filmio created an interactive ecosystem that connects creators with fans and encourages involvement between them. Filmio offers networking opportunities between creators, investors and production studios so that filmmakers can finance their projects and turn them into high-level productions. Fans can give feedback to the premise of a story and donate to the project so that the creators know they are on track. This process gives a real possibility to the unique ideas of filmmakers whose content may not have drawn the attention it deserves in the current system.
Although consumers are one of the most important aspects in the industry, the current product to market model, fans are merely end users. Although it is the consumers who will end up spending their time and money in seeing these productions, they are ignored during the creation process and have no participation in the direction of the project, or if it will exceed their expectations or fall short. In general, large studios guess what people will see based on what has been popular in the past (historical extrapolation), creating more of the same and waiting for people to pay for it and dedicate their time. However, the industries that have made the most progress (such as videogames) adapt to the response of users in real time, and do not operate under the “this is what it is” model. “Consumers are bothered by imminent changes in the media landscape,” concluded consumer behavior researchers at Langston, a Colorado consultancy. “These negative feelings are generated by fear of fragmentation, erosion of perceived value and the cost of having several streaming accounts.”
The current model is not fair to consumers (without whom the industry would not exist), which is why Slated is committed to solving this problem through crowdfunding.
Slated and Filmio platforms allow consumers to validate the concepts they want to see realized. In this way, content creators have an audience since they manage to convince them of their ideas, and fans get excited with them organically as the production process progresses. For participating in the platform, fans receive loyalty awards called FAN Tokens that they can use to donate to their favorite projects as well as receive other benefits. At Filmio, when movies and shows are created, fans can trust that their perspective was taken into account, and once the product reaches the market, they know it was done genuinely considering their interests.
Investing in the entertainment industry is particularly risky because there is no guarantee that something will be successful. One of the main causes of this risk is that there is very little information to analyze. What information do investors have to guide their decisions? The one that leads them to move away from the original projects and channel their money towards more and more sequels because it is the only guarantee they have is that of the franchises that were already successful in the past. They also tend to favor large studios rather than independent creators.
The work of Filmio, Slated and LegionM will modify this outdated model by offering new producers and talents access to the resources they need to create content and movies that traditional Hollywood would not support. Each month, the filmmakers upload a list to Slated of new projects and hundreds of new opportunities for talent, financing and distribution. Slated also helps to find and highlight projects that they bet on. Investors can evaluate new projects and connect with those with more active investors, something that allows democratizing the traditional financing process and mitigating risks.
Thanks to blockchain, every time a fan and a creator interact on the Filmio platform, information is generated that investors can review. So the more critics fans have about a project, the more information investors will have about what audiences want to see and about the projects they are already involved in. In addition, LegionM exposes original projects to financing opportunities that they would not otherwise obtain, and investors are no longer limited to speculating on the success of a project thanks to the diversification and use of the J umpstart Our Business Startups Act (JOBS Act) to create the first entertainment company that belongs to the fans.
Offering solutions to first-hand problems
Financing is a way of being disruptive in the Hollywood model. And there are a lot of technology enthusiasts entering Hollywood, such as Quibi, a self-proclaimed unicorn but not yet released, focused on mobile content for millennials. Quibi was created by Jeffery Katzenberg, veteran media mogul, and tech Meg Whitman, already getting more than a billion dollars worth of financing.
The traditional landscape of the product-market entertainment model leaves fans out completely, leaving very little information for investors and becoming incredibly complicated for content creators to enter. Bringing new projects to light should be something inclusive, accessible, transparent and meaningful. Thanks to the new financing and technology platforms in Hollywood, everyone involved in a project can work together to ensure its value. Streaming redefined the media ecosystem in the last decade. The following will mark the beginning of a new list of disruptors that will try to give financial and commercial sense to this ever changing industry.