The first digital transformation of entertainment was about access. Online platforms like Netflix and Spotify dethroned traditional media moguls. Moreover, it empowered users who no longer needed to buy extensive CD sets to listen to their favourite artists, or have a DVD player to watch a movie. These platforms were so accessible and affordable that piracy nearly lost its meaning.
The current revolution isn’t about how users consume content, but who owns it, funds it, and how this value is shared. This new wave rides on blockchain and decentralised platforms. Users no longer consume content passively in digital walled gardens like Netflix; they are entering the world of user-owned ecosystems. Here’s how the entertainment economy is evolving into an experience economy.
The Problem of Platform-Centric Formats
Within a few years, streaming platforms have built robust empires around them. Last year, the global streaming market was nearly USD 130 billion, and it’s still growing. However, it’s no longer skyrocketing. Its pace has slowed significantly, and terms like “streamflation” and “subscription fatigue” have begun to plague the industry. Indeed, streaming platforms went from heroes in capes to elephants in the entertainment industry’s room.
If it’s easier for creators to reach them compared to traditional media channels, they’re still not free. Their content must meet algorithmic demands to become relevant, and distributors still keep most of the profit. Users may have greater choice, but they remain passive elements in the equation, merely selecting recommended content and hitting play.
Unsurprisingly, creators aren’t happy. Royalty payment structures are anything but transparent, and their timeframes can be pretty sluggish. Predictive algorithms (used by platforms to recommend content to users) have created filter bubbles, meaning that a movie or documentary is always one bad tag away from oblivion. Often, the result is a homogenized user experience.
The Rise of Blockchain-Based Entertainment
Recently, blockchain technology has started hitting this architecture like a wrecking ball. Blockchain structures allow for the creation of decentralised platforms; in other words, platforms with no owners. They cut through the noisy barrier of streaming giants, social media companies, banks, and other undesirable intermediaries.
Blockchain transactions are peer-to-peer, anonymous, and nearly instant. Besides, they are much cheaper than traditional banking transactions, but it’s the “peer-to-peer” part that matters the most here. Thanks to closer contact between creators and their audiences, fans can invest directly in their favourite creators, enabling on-demand content creation, bypassing the requirements of traditional platforms.
Blockchain has become the cornerstone of a new format of digital entertainment. It goes for movies, music, a bitcoin casino, and a wide range of creative content. Users went from passive consumers to owners (or co-owners) of their favourite content. Creators can turn their art into non-fungible tokens (NFTs) and even enable fractional ownership of high-value projects.
Real-World Transformations
Blockchain technology is reshaping several industries, and entertainment isn’t an exception. The move towards user-centric economies is already afoot, creating ripples that are easy to see in the real world. Everything can be turned into an NFT these days, from cakes to real estate, including all imaginable kinds of artwork.
In the music industry, it means that fans can own partially (or even entirely) new songs and albums from their favourite composers. Better still, they can get a share of the streaming revenue and exclusive benefits. Instead of opaque royalty distribution schemes, revenue sharing is automatically controlled by smart contracts, instantly executing payments to shareholders.
The gaming industry isn’t immune to blockchain’s charms either. Now, players can verifiably own exclusive in-game assets like skins, special characters, weapons, and whatnot. It’s the rise of the “play-to-own” model, where players get to keep their in-game assets even if the game shuts down or is discontinued. Additionally, it means a new revenue stream for gaming developers who can sell not only games but also everything in them.
The film and television industry is also joining the new trend through DAOs (Decentralised Autonomous Organisations). DAOs allow film and television creators to crowdfund new projects by creating capital pools among token holders. It’s also an excellent opportunity for fans, who can now have a say on the final project. By partnering up with their audiences, creators democratise the creative process, making the final product much more relatable and engaging for fans.
Strategic Implications for Businesses
The shift from centralised to decentralised platforms isn’t bad news for C-suite leaders, but it means they’ll have to adapt. After all, core business tenets have changed, such as customer loyalty, value creation, and profit distribution. The situation calls for greater user empowerment in decision-making processes, making it more transparent and collaborative. Streaming platforms are still hugely important, but they no longer monopolise the scene.
The first step is to tap into new revenue models that go well beyond ads and subscriptions. Thanks to blockchain and cryptocurrencies, micro-transactions have become not only commercially viable but also quite profitable. For instance, a streaming platform can charge small fees per use. It means that users no longer need to commit to monthly (or even annual) subscriptions and can spare a trifle to watch this movie or listen to that album.
Besides, such a business structure fosters unprecedented customer loyalty. Tokenization enables users to own their favorite content and participate in its governance. In other words, users left the position of passive targets to become active agents in the industry. Needless to say, it can have a tremendous impact on brand awareness and community building.
Regarding potential operational hurdles, the introduction of smart contracts ushers in an age of radical efficiency. Smart contracts automate the execution of multi-party agreements, based on predefined terms embedded in their code. Enter the concept of “trustless execution,” in which the parties don’t need to “trust” each other, for a fair outcome is guaranteed.
Indeed, smart contracts brought about a significant change in the royalty distribution for digital assets. Movies and albums involve numerous collaborators, who have a stake in the revenue they generate. Traditionally, revenue distribution is a slow and complex process, where transparency is much less frequent than it should be. Smart contracts have solved the issue brilliantly, eradicating payment delays, human error, and the resulting legal disputes.
Navigating the Frontier
The promise of new, more equitable revenue distribution models faces significant technical challenges. Most user interfaces are still far from intuitive, making them less accessible. Additionally, persisting scalability problems still hinder mass adoption. The looming uncertainty regarding regulatory issues scares away more conservative investors.
The blockchain ecosystem lacks interoperability. So, the interfaces that allow such exchange are usually siloed in their native blockchain. Cross-chain solutions are under development, though they still involve security risks. Last but not least, cryptocurrencies are still subject to wild market volatility, keeping many crypto-skeptics out of this market.
The User’s Stage
Decentralized entertainment platforms yell the curtain call for the “passive content consumer” era. Blockchain technology allows for a fundamental power shift in this industry, empowering users like never before. Finally, the interests of creators, corporations, and audiences can tune in on the same frequency.
The path ahead isn’t free from challenges, but it’s pretty straightforward: adapt to the new paradigm of shared governance and ownership. The organizations that thrive in this new environment will be those that leave behind the role of gatekeepers to become active co-architects of the process.
