The allure of blockchain was its potential to be a catch-all solution, but as innovators take a more practical approach to introducing the technology to the real world, its true opportunity may lie in addressing highly specialized, unique points of friction. In finance, that could mean introducing smart contracting capabilities in global trade, or the ability to facilitate cross-border payments via crypto-to-fiat currency exchanges.
Some blockchain pioneers have also begun to explore how the technology might be able to address financial challenges for particular industries. In the entertainment space, one blockchain company wants to address a range of financial pain points for the "Hollywood economy," including financing and B2B payments.
MovieCoin aims to deploy blockchain, smart contract and cryptocurrency technologies in a wide range of use cases, all geared toward the global movies and entertainment market — one that Grand View Research recently estimated to be worth nearly $1.15 trillion by 2025.
Considering the scope of the industry, researchers said the market is eager to explore new technologies in all aspects, from marketing to 3D movies. Outside investors want a piece of this pie, too, and entertainment industry financing is one of the biggest pieces to MovieCoin's vision.
The firm's CEO, Christopher Woodrow, recently told PYMNTS about how the company plans to use proprietary tokens to address some barriers to entry for investors interested in becoming active in the entertainment market, as well as the role that cryptocurrency can play in Hollywood's broader financial supply chain — including B2B payments.
When it comes to investing, the movie business is unique in that financiers can often be left out, even when their pockets are wide open, Woodrow explained.
"Major studios typically finance their productions through the treasuries of their owners, or through 'slate financing' arrangements with a handful of well-connected partners," he said. "As a result, most investors have no opportunity to participate in studio-released products other than by buying shares in a studio's parent company."
However, those parent companies can often be so large that the success of one individual film rarely has a significant effect on the company's overall finances and, therefore, on an investor's returns.
It creates one of several barriers to entry (and profits) for investors that Woodrow said can be lowered with cryptocurrency. For MovieCoin, it comes in the form of the MovieCoin Smart Fund (MSF) Token, used for investors to buy into the MovieCoin Smart Fund, which will invest in multiple film projects per year.
Broadening the scope of its entertainment industry-targeting crypto initiative even further, MovieCoin is also launching a separate cryptocurrency, the Moviecoin Token, which it hopes will be adopted for a range of use cases. This includes simple transactions, like allowing consumers to use the Moviecoin Token to purchase movie tickets at a theater. However, Woodrow has other plans for the cryptocurrency to target more unique points of friction facing the entertainment space today, particularly in B2B payments.
What cryptocurrencies and smart contracts provide is transparency to payments, which is critical for this market, he explained, describing the Moviecoin Token as a "cash substitute that brings transparency to revenue distribution and tracking."
"This holistic view of product performance — including revenue shares, licensing ownership and intellectual property rights — prevents third parties from holding onto capital owed to investors and stakeholders for longer than necessary, giving industry participants a more consistent and reliable source of income," he said, noting that parties like agents or royalty collection services can often delay payments to the appropriate parties.
Issues like "over-exaggeration of expenses and failure to disclose licensing terms" are also key to limiting transparency of the industry's financial supply chain.
There is a long list of industry stakeholders in that chain, including talent agencies, production companies, entertainment industry law firms and more. The use of smart contracts and tokens can automate processes and provide greater visibility when funds are moving between these parties to support processes like collections, payments and investment tracking. The technology can also accelerate the financial supply chain, enabling near real-time remittance of payments to investors, talent, actors guilds and other stakeholders.
As MovieCoin prepares to launch a token sale, the firm recently announced a partnership with Paytomat, a cryptocurrency payment gateway. The collaboration means companies using Paytomat solutions will be able to accept Moviecoin Tokens.
Investments in the firm's tokens will be critical to gaining traction in a notoriously cutthroat industry. Considering the entertainment market's complexities, including the number of players involved and the challenges of moving money between them all, there seems to be no shortage of financial friction points for FinTech firms to address. Being able to solve them with cryptocurrency is no guarantee. However, according to Woodrow, the company has faith that its plans show the potential of cryptocurrency in the real world as a way to facilitate the movement of money securely, transparently and quickly — while maintaining regulatory compliance.