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- Hollywood's Incremental and Exponential Opportunities in Web3
Hollywood's Incremental and Exponential Opportunities in Web3
Exploring how Hollywood can leverage web3, and how web3 might change Hollywood.
For the past year, many major consumer brands have launched web3 initiatives. And more follow every month.
Some of these initiatives have proven more successful than others. Some have seemed more thought through. And there is an apparent correlation between those two observations.
Regardless, it's all part of the current game;
The game of establishing new paradigms. It's not linear and structured; it's messy and chaotic. And it's part of the fun (and frustration, for some).
Many Hollywood studios have joined in on the fun, too. For entertainment IP and storytellers, the opportunities of web3 are tremendous. I think of them in two categories. The incremental and the exponential. Let's explore:
For most consumer brands, the motivation to explore web3 relates to several trends and technology unlocks. A few of those are:
Customer acquisition costs (CAC) are increasing. Fast. "CAC is the new rent" became a popular term during the boom years of e-commerce. However, ad space on platforms that aggregate eyeballs (social platforms, news, etc.) are not infinite. Demand is far surpassing supply. The cost of online ads is rising, and the return on investment is compressing. Overall, it's not sustainable, and every consumer brand has to find new horizons.
Sustainable and relevant ways to connect. Related to the above point, but also to the fact that the only "owned" digital connection consumers have to their customers is email. And email is slowly deteriorating into spam-ridden irrelevance. On-chain identity and customer connections (for instance, with NFTs) are a new and more capable connective tissue between brands and fans.
The importance of digital identity keeps increasing. Physical and digital identity is meshing. The digital part is taking up more time and mindshare. With this, our need and want to signal and express ourselves also increase. There will be a big generational gap here between those that learned about the internet and those that grew up connected to it via a smartphone. For brands, it represents opportunity. Brand equity from the physical world is transferrable to the digital, especially when blockchains can create scarcity, provenance, and true ownership of digital objects. Future consumers will probably pay for digital signaling objects as we pay for physical ones today.
These are important and highly valid reasons for brands to pursue web3 strategies. Some of these industries are particularly fast to jump in because they painstakingly underestimated the power of previous paradigm shifts (like e-commerce) and have experienced the cost of arriving (too) late to the party.
These reasons are valid for Hollywood studios to consider web3 initiatives, too. They are the incremental opportunities that web3 presents. Consumer behavior constantly shifts. The audiences of tomorrow won't spend time online or behave like today's audiences.
It's important to stay relevant and "play their game."
But there's another opportunity. A much bigger opportunity. One that has the potential to disrupt and displace the very structures of the entertainment industry.
It will present a massive upside for the players that get it right.
The exponential opportunities lie in leveraging web3 as a component to structurally change how we create, consume, and engage with stories.
Before moving forward, let's first take a quick step back:
Hollywood studios have approached web3 through the lens of marketing thus far. Web3 initiatives launch out of the marketing departments or through third parties via licensing agreements.
Sure, you can get yourself a Top Gun Maverick helmet NFT, but it doesn't do anything. And it's not connected to the movie and its story in a meaningful way.
The first step towards the exponential opportunity is to move beyond thinking of web3 only as a new toolset for marketing. Web3 initiatives inside a studio can't and shouldn't sit (only) in the marketing department. On the contrary, web3 is a building block for creating immersive and coherent stories across different formats (think web, VR, mobile, and movie theater).
Stories that invite the audience in. Let them put their engagement on display and receive rewards for it. Experiences that aren't equal for all, but that adapt.
Blockchain technology and tokens represent a foundation to orchestrate this across platforms and devices without specific platform dependency.
Storytelling and marketing blend. The lines between creation and consumption blur. And it can only be achieved when web3 is considered a key component of story development and not just as a marketing afterthought.
Think of it as boundless entertainment experiences. The audience engagement for entertainment IP can reach far and wide. It goes way beyond singular events like a visit to a movie theater. Today, there's little connection between all the touchpoints. In the future, there should be.
The first shift is to reframe web3 as mechanics for storytelling and engagement, not only for marketing and marginal revenue opportunities.
Web(3) is not (just) a Marketing Medium
Even without considering web3 technology, this siloed approach to story and marketing is evident in how many Hollywood studios think of the web in general. Websites are marketing channels.
The contrast is telling when comparing this worldview with that of emerging web3-native media companies. Creators that don't look at the web and see a billboard but a canvas. A surface to tell stories.
The days when a website had to be black text on a white background are long gone. The web is a canvas to craft visually stunning, immersive experiences. These experiences can then drive engagement and demand for something bigger, like a TV show to stream or a movie in theaters.
What it might look like
I define boundless entertainment experiences as customer journeys where fans can engage with bits and pieces of a story across different mediums—leading into a crescendo like experiencing "the big story on the big screen."
The Hollywood-created structure for engaging with IP is flat; consumption. Fan engagement isn't flat. It exists across a spectrum ranging from superficial (seeing the movie) and superfan (watching all trailers, speculating on Reddit, writing fan fiction, seeing the movie five times).
Boundless entertainment experiences should account for this spectrum. Adapt and offer different ways of engaging and being rewarded based on it.
Imagine, for instance, being able to enter and explore the virtual set of Gotham City. Unlocking a restricted zone, only because you hold a Bat Cowl NFT or a ticket to see the movie in a theater.
When you return later, your movie ticket acts as Proof of Attendance, and the set changes to adjust to the movie's plot line.
You can explore side stories to the main plot and get rewarded for your engagement there. A reward that might lead to getting early sneak peeks as the story develops for the next movie.
Studios can and should take this even further. Web3 can enhance and expand storytelling with contributions from communities of fans.
The passion for entertainment IP is deep. Cultural value was always intangible. Digital ownership and tokens can make it (more) tangible.
Take fan fiction, for instance. It's one of the purest signals of engagement and passion for content. A fan writing a ten-page complementary story to her favorite movie takes hours. She only does it because she cares about the movie. She cares deeply. And that should matter.
Tens of thousands of fan fiction online. Millions(?) of fan hours spent. It all amounts to massive fan engagement mostly left untouched by the original content creators.
Imagine instead a Hollywood studio that pulled these stories and the engagement they represent closer. Let the community take part in deciding some of the story canon.
The next Marvel movie can't and shouldn't be written by the community, for sure. But there are softer ways to blend consumption and creation and to add layers to the engagement structure.
Going forward, Hollywood should look to and take inspiration from some of the web3 native media companies. They're trailblazers. They're innovating with co-creation and community participation to drive engagement. And experimenting with IP ownership to create tangible connections between fans and content.
Hollywood studios should establish strong web3 storytelling teams that get to work close to the origin story development. And create story-driven marketing and community engagement mechanics.
Hollywood Studios as Entertainment VCs?
I also think Hollywood studios will act more like "entertainment venture capitalists" to keep up.
Global communities grow internet-native entertainment IP that combines tech and storytelling. It's a bottoms-up approach that will require traditional studios to think differently. They might have to place early bets, more like early-stage investors than content gatekeepers. We recently saw Amazon place one such bet into Superplastic, a digital-physical toy company. We'll see more of that over the next years.
I'll explore this concept in-depth in a later piece, so make sure to hit that subscribe button!