Dear StreamSpace Community Member,
Thank you for being part of our community! We want to keep you abreast of what we’re up to across a variety of technical and business development fronts.
Thank you for being part of our community! We want to keep you abreast of what we’re up to across a variety of technical and business development fronts.
Films vs Books: A Never-Ending Debate
The debate about whether a book or film based on the book is superior has likely been ongoing for at least 80 years and possibly over 100 years, ever since the first film based on a book, “Frankenstein,” was brought to life by Edison Studios in 1910. Contests between book and film lovers tend to be fairly balanced; a recent poll from Debate.org is currently listed as 56% favoring books, and 44% favoring film, but films have been a larger segment of the entertainment industry for decades. The current worldwide film, TV, and video industry is worth about $325 billion per year, while the worldwide book publishing industry generates about $120 billion annually.
Book lovers tend to be passionate about their preferred medium. They love the tactile texture of paper in its binding, the mobility of a book, the ability to stop anywhere, go back or forward a section or a page, but the greatest power of a book is to transport the reader into another world. Whether fiction or nonfiction, a well-written book evokes a new and different environment, with characters that spring partly from the author, but largely from the reader’s imagination. Film lovers appreciate being immersed into a new environment that stimulates their visual and auditory senses. Theaters are best, with their large screens and huge speakers, but you can use your imagination by concentrating on a small television or tablet, too.
When is the book best? Most of the time, stories that draw events out across a long period of time or distance work best in print. A book shows the outline of its characters, and an author can take as much time as necessary to develop those characters. As the book progresses, we can feel the development of the main characters, but we also feel the discovery of finding and growing with a new friend or someone with power or someone to fear. A film shows situations, but a book really develops characters. As good as the Oscar-winning film is, only the book reader really senses the full agony and growth of the Joad family in “The Grapes of Wrath.”
When is a film best? Visual media drop the viewer into the action with an immediacy that text cannot match. A powerful score penetrates your mind and elevates the emotions portrayed on screen. Events that happen quickly (especially, action or horror films) are best captured on video, so you feel the tension and adrenaline as if you were a secondary character on the scene. The sensuality of “Babette’s Feast,” while described superbly in Isak Dinesen’s book, does not compare with the visual celebration of Gabriel Axel’s film. Dinesen’s focus is on the tension between the puritanism and fear of the host sisters vs the grace and sumptuousness of the meal prepared by their grateful servant.
Fantasy genres, including science fiction and “otherworldly” stories, fall on both sides. The “Hitchhiker’s Guide to the Galaxy” series of books by Douglas Adams is irreverent and humorous, a wacky sendup of science fiction stories. The protagonist, Arthur Dent, grows across the books by virtue of experiencing picaresque adventures, but (like other picaresque novels, such as those by Robert Heinlein), it is the reader’s imagination that brings the environments into reality.
In contrast, William Goldman’s “The Princess Bride” reads like a rough draft of the film script, setting up the visual and verbal humor that only the movie could bring to full color. The book refers to Inigo’s sword-fighting techniques by dropping the names of several famous fencing teachers, but only when we see Inigo talk through the swordfight dropping all of the names and techniques does the viewer grab the humor of the scene. And Miracle Max’s accent and phrasing when praising a mutton, lettuce, and tomato sandwich is just too precious.
The truth is that books and films do not really compete with each other; they are symbiotic. Almost every major film is an adaptation of a successful or insightful book of some form. In 2017, many blockbuster films have been based on comic book series, but these are books as well, just in a different form. And the list of top books for the year reads a lot like the list of top films a year or two later, especially in the Young Adult category.
The earliest motion pictures were a series of short 50-second films created by the French brothers, Auguste and Louis Lumiere. In 1895, they demonstrated their invention — a hybrid portable recording camera, film processing unit, and projector called the Cinemagraphe — to a paying audience. A year later, the Edison Manufacturing Company showed an improved Vitascope projector, the first commercially successful projector in the United States.
Over the past 120 years, there have been any number of twists and turns that have affected the motion pictures industry, but here are six technologies that have in turn destroyed the industry as it was known and set it on a new path:
The 1910s and 1920s saw the first explosion of film, and the Silent Era had its own slate of star actors and filmmakers: Rudolf Valentino, Charles Chaplin, Douglas Fairbanks, Buster Keaton, Ernst Lubitsch, Cecil B. DeMille, Louise Brooks, Clara Bow, Max Linder. The introduction of “talkies,” films with synchronized audio, in the mid 1920s, especially The Jazz Singer, the first talkie feature film, in 1927, led to the first upheaval of the film industry. By 1929, silent films had ceased to be box office draws, by the early 1930s, talkies were a global phenomenon. Silent film stars who couldn’t shift to newer, less emotive acting methods, disappeared, and a new generation of studios and filmmkaers took over.
Prior to and during World War II, the cinema was a standard entertainment option for most of the industrialized world; about 60% of Americans saw a film at least once a week in the war years. After 1948, however, television sets shifted from technical curiosities to standard household appliances and regular weekly movie attendance declined to about 10% of the population by 1964. Across the 1950s, between 5–7 million sets were sold each year in the US, for a cumulative installed base of 67 million units at the end of the decade, or 1.3 sets per household in 1960. Television’s popularity growth across the 1950s led Hollywood studios to adopt a “coopetition” strategy, in which the studios shifted their focus to blockbuster productions, launched production of their own television series, and also began selling rights to rebroadcast rights to pre-1948 films. The first feature film broadcast on US television was The Wizard of Oz (1939), which aired on November 3, 1956. Once again, the established Hollywood studios with their closed shop systems of producers, directors, and actors disappeared, and a new Hollywood system with distributors at the financial center took over.
3. Videotape and Digital Video Discs
The first consumer videocassette recorders were Sony’s U-matic from 1971 and Philips’ N1500 launched the following year. The development of two standardized tape formats — Sony’s Betamax (1975) and JVC’s VHS format (1976) led to an explosion of supply and demand along with rapidly declining device prices across the 1980s. Initially, studios fought the technology as a method of piracy of its copyright content, but by the mid-1980s, studios discovered that consumers were willing to rent or buy movies, and home viewing became a source of revenue as large as the theatrical release phase in many countries. Cult films and other specialized content allowed studios to make money from projects that would have been flops under other circumstances. By the mid-1990s, studios shifted more and more resources to promote DVDs, which offered many technical advantages: they could be viewed repeatedly without wearing out, they were more durable, could not be erased, and DVDs could offer more viewing formats, plus extra features not possible with VHS. DVD sales peaked in 2004.
Home entertainment revenues dramatically changed the economics of the film industry. Theatrical release schedules became marketing events for resales of old titles, and the number of profitable films exploded with this new opportunity for direct-to-consumer sales and rentals.
4. Netflix and Streaming Video
Netflix was founded by Reed Hastings and Marc Randolph in 1997 with a DVD-by-mail rental concept that attacked Blockbuster and similar retail outlets with a flat-rate pricing plan that allowed subscribers to watch and return movies without incurring late fees, a key customer dissatisfier of the traditional DVD rental industry. In 2007, Netflix launched an online streaming video on demand (SVOD) service; after 2010, Netflix began to expand internationally, and Netflix now operates services in 190 countries. Shifting to a global SVOD platform moved Netflix from being an expert in logistics to being the leader in video content distribution networking. The latest strategy shift, from film and series merchandising to integrated production and distribution, began in 2013, and is just starting to drive competitor responses by Disney (acquiring Fox Searchlight) and Amazon.
“Netflix and creative destruction” produces over one million hits on a standard Google search. Beginning with a New York Times article in 2010 and a Harvard Business Review article the following year, Netflix became one of the most documented examples of Clayton Christensen’s theory of successful disruptive businesses. The Netflix Effect first destroyed the DVD rental business leaders, Blockbuster and Hollywood Video. Then the company turned its attention toward the studios themselves, producing and distributing its own content outside the Hollywood studio distributor system, beginning with a new format, binge-watching a season’s worth of content in one long weekend, to today’s plan to make and promote as many as 80 films in 2018 alone, with a budget of $7–8 billion.
In response to this destructive stack on DVD sales, the major Hollywood distribution companies have been consolidating. Ten studios account for 90% of all theater revenues and more than 70% of all film income. Almost all of the energy of the top studios is focused on billion-dollar blockbuster productions, most of which involve multiple sequels or other forms of off-shoots. Nine of the top 10 US grossing films are sequels or spinoffs; only one, It, based on the 1986 Stephen King novel, does not stem from a previous film.
5. Augmented Reality
Creative filmmakers have described fantasies and utopian or dystopian futures since the earliest silent film days. Every decade has brought advances in set design and animation to allow a blend of live and virtual action, from King Kong in 1933 to the latest billion-dollar Star Wars film, The Last Jedi. Virtual Reality (VR) headsets were invented in 2000 as a personal way to augment reality, tricking the eyes and ears into believing that you are moving through a different and personal universe. Recent proliferation of smartphones capable of supporting virtual or augmented reality (VR/AR) experiences is enabling an explosion of new content formats that may dramatically change how consumers choose their entertainment experiences.
Currently, the industry is in its early stages, advancing rapidly in both hardware and foundational software. Video game developers have taken an early lead, modifying multiplayer games with an immersive experience. Augmented experiences for travel and immersive stories about exotic locations are starting to appear, and new standards for format will enable thousands of storytellers and filmmakers to expand into a new medium of immersive augmented reality experiences.
Bitcoin and Ethereum are foundational technologies that enable distributed apps to replace the cartels that characterize much of today’s media and entertainment industries. Blockchain platforms allow filmmakers to crowdfund their projects and keep control over their projects rather than cede the financial interest to Hollywood. Decentralized smart contracts allow intellectual property and content revenue streams to be shared with the owners. Online blockchain distribution changes the economy of deploying proprietary content networks, with peer-to-peer sharing of video content shards providing more security than traditional encrypted file formats.
Just as blockchain decentralization is transforming the world’s foreign exchange system and the online gaming industry, the same technologies are starting to transform many marketplaces, including the media and entertainment industries.
StreamSpace, www.stream.space, is one of the leaders using blockchain to disrupt the streaming video industry. StreamSpace is developing a blockchain content distribution network (CDN) and a blockchain-powered marketplace for independent filmmakers to connect with their fans and offer views of their film projects directly to consumers around the world. The project uses social media so filmmakers and fans can interact without intermediaries.
The winners of all of these technological innovations are the consumers, the fans of compelling content. From the earliest examples such as The Great Train Robbery to today, people have wanted to tell and be entertained by stories. All technological advances raise the standard for consumer entertainment, making it more powerful, more personal, and more popular. Who knows what the next decades will bring?
Photo source: WikiCommons, Director Cecil B. DeMille, page 60 of the July 1922 Photoplay.
Most strategic plans involve projecting events into the future, often between 3–5 years, or about half of a normal business economic cycle. A few firms in very capital-intensive or regulation-controlled industries might look ten or more years into the future, but these exercises are usually meant to fully account for the business life of a major capital investment or R&D program into a new drug.
Projections for future demand and pricing are almost always simple extrapolations from today’s environment. Often planners will look back a few years, calculate the rate of growth across the history and project that the rate of growth will be sustained into the future. This is momentum planning, and actually works well for short periods. Sales for August should look a lot like sales levels in July.
However, one of the key observations I’ve made over 30 years of building strategic plans is that long term planning has very little to do with near term momentum-based forecasts. Rather, there are two critical factors that should dominate your thoughts.
First, you need to understand the critical uncertainties that will have a huge impact on industry structure and the value chain — the possible events that will change all of the assumptions about supply, demand, prices, share patterns, and competitive behaviors. Peter Schwartz introduced the concept of scenario planning in his book The Art of the Long View (1991); this tool helps leaders explore their core assumptions about industry structure and behavior and describe a number of possible future environments under which the project or firm might operate. There are five major sources of seismic shifts that planners need to explore — social, technological, economic, environmental (or ecological), and political (including regulatory change). These five dimensions may be abbreviated as STEEP, making a useful mnemonic. Usually one or two uncontrollable possibilities will jump out as having a major impact on the desirability of the future opportunity; at that point, the team should look for early signals that might suggest that the future will look like one or another of these “high impact” scenarios.
The second dimension has to do with the will of the team — the decisions that the team leaders take to influence the outcome to happen in one particular way. If a particular political environment is extremely favorable, then what can we do to lobby the decision makers to enable that regulatory environment? If a certain resource is extremely limited, what can be done to either expand the availability of that resource or to maneuver our project so we can take the lion’s share of that resource? Again, a handful of critical decisions and changes can often make a huge difference in the likelihood of success for a particular strategy. Bend the odds to favor the project team.
The StreamSpace project is an entrepreneurial blockchain team with the vision of disrupting the Streaming Video on Demand (SVOD) film industry. Today’s environment favors the largest provider, Netflix, along with the four broadband ISPs that share about 70% of the US market — AT&T, Verizon, Comcast, and Charter Spectrum. The supply side of the film industry is dominated by ten studio/distributors, each with a slightly different target audience and appetite for medium vs large budget investments to promote and merchandize their film offerings. The studios are starting their own consolidation process, with Disney planning to absorb most of Fox’s content businesses over the next year or so. Disney, which already owns 60% of Hulu, plans to launch a competing SVOD platform again Netflix.
Against the expected collision between Disney and Netflix, StreamSpace believes we can work closely with independent filmmakers and bring compelling content to consumers who will be otherwise ignored — those who seek great stories over lavish blockbuster productions.
The StreamSpace scenario challenge involves two dimensions of critical uncertainty — what role the SEC and related regulators in other major countries will take regarding blockchain crowdfunding programs such as ICOs, and the elephant battleground environment that is looming between Disney, Netflix, Amazon, and Google.
Against that backdrop, we are pulling beyond our expected weight by building loyalty to the indie film community, championing regional filmmakers and festivals in our search for great stories. This is a “Moneyball” strategy for the film industry. We are not seeking billion-dollar returns; we are looking to help filmmakers build successful brands and passionate follower communities and grow from project to project profitably.
Come join our community and participate in our project!
Marco Iansiti and Karim R. Lahkani published an article in the Jan-Feb 2017 issue of Harvard Business Review called “The Truth About Blockchain,” offering their opinion on this emerging technology and the huge amount of hype that has surrounded it.
Their thesis is that new technologies find homes across a range of applications, from simple “Single Use” functions where the technology makes an existing process more efficient to complex “Transformation” functions that dramatically change industry structures.
Single Use applications are the most straightforward ways for new technologies to become adopted. Users, familiar with existing processes, see the new technology as an enhancement that provides a clear benefit at low or no cost. Often, they will turn to an existing supplier or internal department and expect that they will simply see a reduction in cost, greater efficiency, or higher performance or capacity that comes from adopting the new technology. Examples abound in many industries and consumer applications — acetaminophen cured the same headaches as aspirin with a similar dose and frequency but without stomach upset complications. Bitcoin futures trading launched on December 1, 2017 through two Chicago-based exchanges, CME Group and CBOE. As far as these two exchanges are concerned, bitcoin spot pricing, established by Gemini, is not much different from spot pricing for West Texas Intermediate crude oil or soybeans. Similarly, we are seeing a handful of luxury goods dealers accepting bitcoin alongside fiat currencies. There have been many publicized examples of people exchanging their rapidly appreciating bitcoins and Bitcoin Cash, worth about 20x the level of just one year ago, for condos, exotic cars, and art. Burger King in Russia created a cryptocurrency they call WhopperCoin, which acts as a promotion incentive in their fast food restaurants. Every ruble spent on a Whopper earns one WhopperCoin. After accumulating 1700 WhopperCoins, consumers can exchange their tokens for a free Whopper sandwich.
The second stage of adoption involves technical substitution. In this mode, the core process functions do not change, but new firms and offerings displace older ones. According to CoinATMRadar, 61 countries now support almost 2000 bitcoin ATMs, in which cryptocurrency holders can buy and sometimes sell bitcoins or other cryptocurrencies. The US leads this industry, with 64% of the installed base of these devices. Bitcoin gift cards (essentially hardware wallets) are available from Amazon and other web retailers. There are dozens of blockchain-based gambling sites such as True Flip that have emerged in the past 18 months. Some geographies like Malta are friendly to gambling sites, and blockchain gambling adds anonymity as well as performance transparency to this large, established industry.
The third stage in the adoption of blockchain technologies involve new local services, often previously not available except to or through a few parties. Bitcoin has become a useful tool for low cost cross-border money transfer. Until a year ago, almost all person-to-person foreign exchange payments went through a handful of high cost services such as Western Union or Moneygram. Bitcoin transfers take place in the time it takes to send and receive an email, and the currency conversion fees are approximately half of the level charged by the major incumbents. IBM recently introduced its AI-based Watson IoT and Hyperledger initiatives to connect business partners to share and analyze IoT sensor data. The IBM Blockchain smart contract acts as an independent third party to certify the authenticity of the content. Interbank clearing and settlement is an unsexy back office function that costs the investment banking community billions of dollars to run and audit. Depository Trust and Clearing Corporation (DTCC) is working with IBM, R3, and Axoni to shift post-trade clearing of single-name credit default swaps to a blockchain system.
These three stages are sustaining innovations with increasing impact on industry costs, but do not necessarily disrupt the overall industry value chain. The fourth stage, however, involves a total overhaul of the core industry structure with blockchain systems tearing apart the normal centralized command and control structures. In this final stage, smart contracts replace the expected role of a trusted master owner for the marketplace; buyers and sellers agree independently on terms for their own transactions, and they publish their decisions and certify that each has held up their end of the bargain. There are hundreds of blockchain projects aimed at one or another specialized marketplace, from sensors (IOTA) to energy (SolarCoin, WePower), healthcare records (Patientory, MedRec), identity management and security (ABT, CUBE), and media content rights management (StreamSpace, SingularDTV, Mycelia/UjoMusic, Revelator).
These disruptors are most successful when they target unserved or underserved segments of users that do not place a high value on the conventional services provided by the centralized incumbents and their preferred value chain partners. Netflix is busy becoming a major content developer studio, partnering with the dominant broadband service providers, AT&T, Verizon, Comcast, and Charter Spectrum to ensure superior viewing experiences through its CDN. Google’s YouTube TV is looking to become a cable replacement service, offering live TV streaming to smartphones and smart televisions. Alternative service providers will succeed when they bring unique content that appeals to people who want something different — independent media content, foreign news and entertainment, specialized educational content or online classes, and interactive virtual/augmented reality services, among others.
If a man has good corn or wood, or boards, or pigs, to sell, or can make better chairs or knives, crucibles or church organs, than anybody else, you will find a broad hard-beaten road to his house, though it be in the woods.
— Ralph Waldo Emerson, Wikipedia
A few years after Emerson’s death in 1882, he was mis-quoted with the now-famous line, “Build a better mousetrap, and the world will beat a path to your door.” Thus began a never-ending quest for new and improved products, including over 4000 variants on a mousetrap.
But what makes one of these new products take a significant share, growing in popularity over all of the other innovations? What makes a new product concept transformational instead of merely offering an incremental improvement? How does a new idea disrupt and shift an entire industry? For the past 10 years, business strategists have been preaching the vision of designing and managing “platforms,” which change the industry value chain, often by upsetting traditional industry rules to serve new mass markets.
As noted in a Harvard Business Review article on this topic, the success of a platform strategy is based on three factors:
Consider some examples of how successful platforms achieved this status. Apple’s iOS and Google’s Android platforms each made it very simple and relatively inexpensive for app creators to launch their services, especially compared to other mobile environments, such as Symbian and Microsoft Windows Mobile. Apple and Android have different strengths, but both have succeeded by offering app developers the ability to create and distribute content or services easily and to build relationships with their end users. Both of these parallel platforms have transformed the software industry, as developers increasingly make everything X-as-a-Service.
The platforms in today’s media entertainment ecosystem represent the four main monetization stages that content passes through to reach its audiences:
A different dimension of platform emphasizes the industry’s current focus on blockbuster series with myriads of films and TV shows that feature “bankable” names: DC and Marvel superheroes, Disney/Pixar’s Cars, Nemo, and Toy Story collections, Star Wars, etc. It seems that it is impossible to escape programming dominated by sequels and spin-offs, and it feels like half or more of Hollywood’s budget is going into huge, “safe” productions instead of toward edgier, creative fare.
This business architecture serves the studios quite well, since global revenues continue to climb for the major production and distribution shops. However, it is easy to see chinks in the armor of the major players in today’s industry.
The number of US domestic movie theater tickets sold each year peaked in 2002, at 1,577 million, and has mostly hovered around 1.3–1.4 billion tickets sold per year over the past 20 years. Total industry revenues have continued to climb, but this is due to inflation, increasing average ticket prices, and new viewing formats like 3D.
Both broadcast and cable viewership have declined over the past 10 years as more people “cut the cord” and seek entertainment from online sources instead of the major cable and satellite providers. Americans between 50–64 have changed TV viewing habits the least, and older Americans have seen modest growth in the number of hours of TV content consumed, +7.7% over the past 6+ years, but all demographics of younger Americans, from teens aged 12–17 through adults aged 35–49, have seen significant reductions in the number of hours of TV content viewed over this time period. The DVR, currently in 50% of American households, is the architectural control point for cable service providers. But the one-size-fits-all business model maintained by the cable and satellite provider industry is proving too expensive and too limited at the same time.
DVD sales peaked in the US in 2004 (and in 2007 for the UK market), and the revenue from DVD sales has shrunk by 30% from that peak 13 years ago. Netflix’s DVD subscription base has been falling and now only numbers 3.76 million households (2Q17), down 73% from 2011, and Redbox has been struggling with declining revenues since its peak in 2013. However, DVDs are vastly more profitable for the studios than any other format for viewership, and the huge installed base of DVD players, still in 88% of all households, means that this format will not disappear anytime soon.
What has been growing is the digital streaming segment. Netflix now has nearly 100 million subscribers, evenly balanced between US and non-US markets. While the number of films or series available for streaming is only 5,500 in the US (and lower in other country markets), Netflix has been building its library of self-funded projects such as House of Cards, Orange is the New Black, and Beasts of No Nation. Its scale places it easily in the top 10 studios and larger than all of the major cable providers combined. Amazon Prime Video has more movies than Netflix, about 18,000, but only about 27–30 million US subscribers. Amazon has also been building its catalog of exclusive content, such as Room, Bosch, and I Love Dick. Hulu, which is co-owned by four major TV content distributors, Comcast, Fox, Disney, and Time Warner, is smaller yet with 13 million US subscribers in 2016.
All three stream service providers claim to be platforms for streaming video. Hulu now offers live TV channels over the Internet along with next-day searchable content. Amazon and Netflix have integrated movies and series into their recommendation engines by genre and track consumer rating preference scores to try to lock in “eyeballs” for their offerings. Along with smaller platforms like iTunes and Google’s YouTube TV, the streaming ecosystem appears to be a weakly differentiated group of competing systems, with competition for unique and exclusive content.
The end consumers are increasingly frustrated by this ecosystem complexity. Either they have to maintain multiple subscriptions to capture all of their desired content — Netflix for House of Cards, HBO Now for Game of Thrones, Hulu for The Handmaid’s Tale, Amazon for Manchester by the Sea, etc. — and spend a lot of time sorting through hundreds of mediocre titles to find the works they want to watch before the content goes off the shelf, or they have to limit their choices to one or two preferred services and miss out on the content their friends are discussing. Either way, the tech-savvy streaming film consumer is frustrated by today’s ecosystem that serves the tech giants, but not the consumer market.
StreamSpace is different. StreamSpace is a platform for independent filmmakers to create and promote their projects to fans in search of nontraditional films. Rather than subscribing to a service that costs $8 to $20 per month that locks the viewer in to a limited set of film choices, StreamSpace is enabling an open platform for thousands of filmmakers to engage with their fans and create and share their works of art, with the filmmaker in control over pricing, viewing schedules, and geographies as they choose. Viewers pay for the films they want to watch, and community social media channels help them discover new, exciting content. The distributed blockchain storage model means that there is no central behemoth dictating terms, and the security of the blockchain immutable ledger puts the filmmaker in full control to upload the film, observe the transaction history, and decide when or if to remove the film content at will.
Come join our community as we bring a new model for film distribution to a market that is frustrated by mediocrity and expensive contract commitments.
This week, we had the opportunity to sit down with Robert Binning and James Baggett, founders of StreamSpace LLC, a young company using blockchain technology to create a novel video streaming service for independent filmmakers.
A: We have been passionate about blockchain for about 4 years, since we first tried to do something different with our gaming laptops and discovered an opportunity to mine bitcoins. We wanted to solve real a world problem, not just try to reinvent finance away from the traditional banking system. We spent over a year exploring different potential applications and settled on one that is strongly associated with Austin, Texas, the Live Music Capital of the World and home of SXSW — blockchain distribution of entertainment media content.
A: The music industry is incredibly fragmented with dozens of genres and many sub-genres underneath each one, and while there are dominant studios and distributors that rule the roost in both industries, independent musicians can and do make a living as independents — performing, self-producing and publishing, and promoting their brands and products through social media and content channels that can host hundreds of thousands of songs or sell venue tickets. But the movie industry is different. Thousands of movies are launched each year, but only a few get promoted and watched outside of film festivals. It seems that the only movies you can reliably find are superhero adventure series films and projects from a handful of bankable directors and producers like Quentin Tarantino, Woody Allen, or the Coen Brothers. The independent filmmaker is stranded with no opportunity to capitalize on his creative vision.
A: Filmmakers often go deep into debt to complete their projects, so any financial assistance is always greatly appreciated, and crowdfunding is one technique that has been proven viable for small-to-midscale projects, under $1 million. But most of all, independent filmmakers need to connect with an audience that is looking for unique stories and entertainment. And the top studios seldom have the appetite for more than a handful of small projects. We feel there is a huge untapped opportunity to connect thousands of filmmakers with millions of film lovers that can’t get to the film festivals every year or don’t want to wait a year for the next festival.
A: The three great advantages are content anti-piracy security through a decentralized storage system, a transparent payment system made possible by the blockchain ledger, and the business process advantage of being able to set and control pricing, rather than just getting a fraction based on film popularity.
A: Like any startup, the greatest challenge is attracting the right talent capable of juggling all of the tasks that need to be completed and working as a cohesive team. We have our eye on our first business goal — being able to deliver a working platform with a business case that will attract filmmakers to sign on. Immediately after we have content to offer, we need to meet our second goal — being able to reach thousands and then tens of thousands of film lovers that are willing to work with us to find great entertainment, so we can fulfill our promise to our filmmaker partners.
A: Most of these large companies are pursuing a model of working hand-in-hand with the major studios to deliver the kind of content that people would have gone out to their local Blockbuster ten or twenty years ago — current or last year’s movie hits and top television series. Amazon and Netflix have taken an extra step and are funding unique movies and series just for their own services, in order to differentiate from each other and from the studio-linked streaming content aggregators. While all of these streaming giants pay lip service to indie films, they see this as a limited audience genre, like foreign films or documentaries, so independent films account for less than 2–5% of their limited catalogs. But there are more than 10,000 movies released every year, so there is a huge amount of entertainment media that they are missing.
A: Amazon grew from nothing to the world’s largest bookseller by recognizing that people wanted more than just the NY Times bestseller list. They wanted access to a million-title catalog of published books. The movie industry today is at the same point that books were at in the 1990s, where people want more than just the latest Academy Award winners or billion-dollar blockbusters. Today’s filmmakers have so much to offer with powerful stories and bold, new styles. And technological innovation has made it possible for filmmakers to create and produce long form content at a tiny fraction of the price that it took 10 or 25 years ago. Today’s GoPro YouTube sensation is tomorrow’s visionary filmmaker.
A: The Boy Scouts accept everybody that applies to join the association, and no new Scout comes in with experience, just a positive attitude. The Boy Scouts give young men opportunities to develop themselves by putting them into roles of responsibility long before they have proven themselves, and the teenage leaders help the youth to develop into capable leaders and experts across a wide range of interests. We are consciously looking to grow leaders who will take StreamSpace from today’s small, hands-on team to tomorrow’s industry leader. The blockchain industry is very young — no one has more than five years experience. We want people to be unafraid to write the new rules for the industry and make something happen that has never been done before. That takes people with a can-do spirit, and we are doing everything we can to make sure that we all retain that positive attitude.
In 1928–9, the Belgian surrealist Rene Magritte created a masterpiece painting called “The Treachery of Images,” a painting of a simple carved wood pipe with a subtitle that translates as “This is not a pipe.”
Disruptive technologies nearly always make for great media stories. The people involved in driving the disruption see themselves as crusaders, fighting a righteous war against an entrenched monolith motivated by its own profit stream and captive customers. The people that write business stories love the idea of a small startup with the gumption to attack an established leader — David vs Goliath! And the established industry players often act as their own worst enemies, defending a status quo with obvious hubris. When the old order stumbles, the new one often develops the same bad habits, overly confident that they have the key to sustainable value creation and that their version of industry structure will survive long into the future.
Sometimes, however, the industry dynamics are so complex that it is nearly impossible to figure out who are the good guys and who are the evil monopolists. In the 1930s through the mid-1950s, the Hollywood studio system ruled the global film industry, until television upended their business model. A new generation of film distributors emerged in the 1970s, using a tiered distribution model, theater to television to tape. Theaters changed to multimedia experience centers that still seem to make more money from popcorn than cushions, television evolved to include premium and basic cable networks, tape was replaced by DVD and Blu-Ray discs, and a new digital streaming distribution system emerged, eroding much of the profit stream associated with DVDs.
This new generation of Streaming Video on Demand (SVOD) providers are among the largest, most valuable companies in the world: Alphabet / Google, Amazon, Netflix, Facebook. Of these, Facebook has the least mature business model for digital content monetization, but all of these internet powerhouses recognize that they are competing to capture and lock in consumers for all classes of entertainment, and all of them are striving to offer “must-see” content that keeps consumers checking their home pages over and over again for the latest updates.
What they have in common are highly centralized control points driven by their proprietary recommendation engines. And those engines are all geared to keeping viewers locked onto their screens as much as possible. What this means is that the recommendation engines play it safe — they showcase the most popular, common films, because all of the SVOD providers have recognized that their shareholders want to see viewer growth that only comes with mainstream, mass market material.
StreamSpace has a radically different approach: We are about meaningful, creative ideas, not lowest common denominator dross. We are assembling a platform where independent filmmakers can share their unique visions and stories with consumers that seek out the unusual instead of the most common. We are assembling a library of radical ideas and passionate storytelling. And we are gathering a community of film lovers that want to keep pushing the art form in new directions.
The sense of community is the most powerful aspect of StreamSpace’s offering — filmmakers share their stories, and with digital technologies behind them, these stories can be tested and tweaked with feedback from each other and from their online audiences. The avid film aficionado will have an opportunity to explore content that the large internet companies bury well beneath the front page of their recommendation engines, and our feedback systems will help guide future selections based on the power of the work, not just the corporate promotion budgets.
What does this mean for filmmakers? It means that we are opening up a new way to reach the target audience, one which places the audience members in a dialogue with the filmmakers. For indie film devotees, it means that we are enabling a simple way to discover the kind of content they really want, giving them a way to engage with filmmakers directly instead of through unauthorized “fan sites.”
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When a tree falls in the forest and no one is around, does it still make a sound?
If a filmmaker creates a work of art and no one sees it, is it still a work of art?
The performing arts are different from other forms of art, in that they are experiential — what makes them works of art are the feelings they leave with the viewers, whether those feelings involve peacefulness, anger, fear, relief, or awe. There is always something that the filmmaker is trying to convey to the audience. Otherwise, why spend thousands of dollars (or hundreds of thousands), when you could just sit down at your computer and type a short message on Facebook or Twitter?
Unfortunately, more than half of all film projects are never viewed by anyone other than the team that made the movie. For this, we can blame the studio distribution industry structure, whereby only a few hundred films each year go through the staged release process from theater to TV broadcast to DVD and digital release. Thousands of films are posted on the major digital content distribution portals, often for a year or some other limited period of time, but without any way to make it into someone’s recommendation algorithm, they do not attract significant numbers of viewers. And thousands more don’t even make it that far.
StreamSpace is designing a new platform for filmmakers to self-publish their work, with a creative social media set of channels so the filmmaker can promote his work broadly. Unlike Netflix or Amazon, filmmakers control their own destiny, and StreamSpace acts as a networking facilitator to attract viewers and other filmmakers with similar styles and followers.
StreamSpace does not set the price for viewing or “owning” a license for perpetual viewing of the content; the filmmaker sets his own price list. And unlike the major centralized digital content publishers who have minimum thresholds for payout and commission levels of up to 30%, StreamSpace has no minimum threshold and charges less than 10% commission on each transaction through its marketplace.
StreamSpace plans to launch its Initial Coin Offering (ICO) in late August of 2017, with a target launch date of 1Q18 for its commercial platform service. Filmmakers will see all of the following elements in this novel platform:
As a filmmaker, you know that the most important part of making a movie is making an impact of the daily lives of your audience. StreamSpace helps you reach your potential audience and build the social buzz to turn your film project into a success.