NAB
Remember Web3? Or Blockchain? Or the Metaverse? If think that was just a fad and a phase, even a scam, then think again. The next generation of the internet is being built on this technologies and Hollywood can either ride the wave or drown.
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“At one point, the M&E complex and the technology complex were roughly equivalent in market power and negotiating strengths,” says Seth Shapiro, a two-time Emmy Award winner and an advisor at the intersection of media, technology and fintech.
“Maybe even, at the beginning, entertainment even had a stronger lead. But from a market cap perspective Big Tech has completely eclipsed the studios. I think among the M&E community there’s a sense of ‘how did that happen and what can we do about it from happening again?’
“The idea of this session is to talk about some of the ways that the NAB audience can leverage new technology to level the playing field and even gain a higher share of the spoils from whatever comes next.”
Shapiro is set to moderate “The Next Business Model For Hollywood” at NAB Show, asking Media & Entertainment to think again about Web3, blockchain and the metaverse. Hollywood is in the middle of a sea change, he argues, driven by these newer modalities with the continuous evolution of audience behaviors and the economics of a post-strike Hollywood. Featuring executives from AMD, Niantic, Theta Labs and XSET, the panel will take place on Tuesday, April 16 at 1:30 PM in Room W225.
The first generation of the internet, which began in the 2000s, was greeted with widespread skepticism by studios (among other industries) that people would ever want to — be able to — transact online. Clearly, e-commerce was a gamechanger which should have given M&E a better chance to reset the business model with the arrival of Web 2.0. But it did not.
“During this period technology companies like Google and Facebook supplied short-term cash to media companies for IP and then they applied that IP to help grow their audience,” Shapiro says. “As a consequence their market cap and their audience multiples logarithmically. While studios gained short-term capital they were in fact helping grow the long-term enterprise value of Big Tech companies.”
You would think that M&E would be twice bitten, twice shy as it heads into the next era of Web3. And yet…
“A lot of people view Web3 as just a garbage term,” Shapiro says. “They’ve all heard ‘metaverse’ and ‘blockchain’ and NFT so many times and they’re just inured to it. They think it’s just more hype. Well, some of it is hype and some of it is scam, but the absolute truth is that that was exactly the same at the beginning of Web1 and Web2.
“There were just as many scammers trying to rip off investors or consumers in Web1 and Web2 as with Web3 but the core technologies at the foundation of Web3 are inevitable. Future generations are clearly going to spend more time in in the metaverse, in virtual worlds and gaming environments,” he continues.
“The fact is people are already living more of their lives online. The digitization of currency and direct transactions between consumers and whoever they want to buy from whether it’s an influencer, creator or a studio is happening. Disintermediation is real and it’s coming for entertainment.”
Taylor Swift shopped her Eras Tour concert film to the studios, but the studio machine would only agree to release it in 2025. Wanting the film to be available as soon as possible for fans, Swift bypassed the studios and took the film straight to theaters.
Another classic example is the deal George Lucas struck with Fox for Star Wars in 1977. While the studio landed the film rights, the far greater piece of business was in the merchandise.
“Fox didn’t realize where the real value was but that’s what’s really interesting. So let’s talk about and look at the ways we need to change and think about IP to more effectively capture where the real upside is going to be. It is changing now and the models are changing fast.”
Then there’s AI. While generative AI, digital ownership, and the creator economy change the face of media and update the flow of revenue, how do writers, producers, and technologists set themselves up for the next wave?
“Together with blockchain infrastructure and virtual worlds AI will interlock to create the next great series of economic opportunities for tech companies and for media companies if they grasp what they need to do,” says Shapiro.
“The source of the IP will wind up in a much more direct relationship with the buyer of the product. That’s where studios have a huge opportunity. IP creators have a huge opportunity or risk being left behind,” he predicts.
It’s not as if M&E didn’t see it coming. The major record labels buried their head in the sand when new digital streaming technology enabled artists to connect directly with music fans.
“The triumvirate of blockchain, metaverse and AI is going to take other people out of the M&E equation the same way,” Shapiro says.
“The major record labels were essentially in the trucking and manufacturing business. Their real leverage was the fact that they could print your records and get them into the store. That’s all gone. Those pieces of the business no longer exists but in the process of that they’ll be new opportunities.”
That’s the optimistic note. In Shapiro’s view the root cause of many of the most successful businesses and business models of our time, including big tech, is IP.
“More often than not the traditional media business was involved in some sense in creating quality IP. But Big Tech has so far been adept at taking that IP and amplifying it in such a way that they acquire millions of users. Studios might get the license fee, which is what they asked for, but they didn’t get any of the upside in terms of all value generated from that transaction,” he says.
“Those who have the best ability to market and monetize IP will win. That means Hollywood, producers and M&E executives should make a real effort to learn the new tools and learn the new ecosystems that are coming so that they can more effectively monetize their content.
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