How blockchain could innovate digital media distribution

Blockchain technology can add serious innovation to the digital distribution of entertainment media like music, movies, tv series and video games. The internet has already changed the way we consume media. From buying and renting DVDs, we've moved to streaming video on Hulu, Netflix and Disney+, 124 million people worldwide have a subscription to Spotify, and digital distribution of video games has overtaken the physical market. It's safe to say that consumers have gotten used to paying for digital services. Soon we will embrace digital ownership.

The next major innovation in the field of online services will be build on blockchain technology. Consumers will be able to sell their music albums, movies, or video games. The blockchain stores each digital item as a unique token, and saves it in a personal account. As a result consumers can sell these assets, or non-fungible tokens, on a public market place.

It remains to be seen to what degree companies will apply this concept into their services. However, the fact is that music streaming services have difficulty to make profits, and in addition there's lots of criticism on the payout to artists worldwide.

Major streaming companies pay very little money to artists. A stream on Spotify pays artists approximately $0.00437, while Apple Music gives $0.00783. These are very small revenue numbers. Making 5 dollars from one consumer would require approximately 1000 songs to be played. It's not surprising that it's a challenge to make money for music streaming services.

At the same time Netflix is huge when it comes to video streaming, but their rotating offering is sometimes annoying to subscribers. In addition Hulu, Disney+ and HBO provide tough competition. Most consumers can't or aren't willing to pay for every streaming service on the market, and therefore they need to make choices.

Fan tokens on blockchain

Blockchain technology can push the revenue for streaming companies, as they could sell collectible tokens that gives users ownership over digital content. Obviously a tokenized music album needs to be limited in supply, but it create a perfect secondary revenue stream alongside the regular streams. In addition consumers won't be merely consumers, but they'd become collectors.

Owning a tokenized album could make them super fans who get early access to concert tickets, or sneak previews to new songs. Possibilities are endless, and the biggest fans can be identified through blockchain technology. Obviously games and movies can be treated in the same way. However, there's something that makes video games stand out from the rest of the media segment.

Why games are different

The video games industry is three times the size of global box office, but still there's a big need to underline this. The gaming market had 151.9 billion dollars of revenue in 2019, compared with 42.5 billion dollars for the global box office movie revenue. Obviously this doesn't include digital distribution and video streaming, but it once again highlights that video games aren't a mediocre player in the entertainment landscape.

Digital distribution is old in video games. Steam launched 2003. That's two years before YouTube, four years before Netflix offered video streaming, and five years before Spotify came into play. Of all consumers gamers are the ones that are most used to digital currencies, digital distribution and the consumption of digital goods.

At the moment online distribution platform like Steam, the Epic Game Store, and Good Old Games are still leading examples. But change is coming. A blockchain startup called Ultra is building a blockchain-powered video game distribution platform. It's running on its own UOS blockchain, and allows gamers to own in-game assets and actual games. As a result gamers can trade their in-game sword on an open marketplace. In addition they will be able to resell a game they own.

This opens up the possibility of a free and open market of users buying games, leveling up characters, acquiring game items and freely reselling them. This also good for developers. Because they will always get their cut. In addition game companies can for example issue special editions in limited quantities, or set a minimum price for games that are being resold. Several companies are already on-board to grow the Ultra blockchain, including gaming behemoth Ubisoft, and hardware giant AMD.

Blockchain will not kill streaming

Even though there are music streaming services, people are still buying albums on CD or vinyl. Even though Netflix is huge, there's still a market for blu-ray discs. The same can be said about video games, where physical sales are moving more towards collector items. Some publishers focus on limited edition physical copies of games, take Limited Run Games and Special Reserve Games for example. You might say that there will always be a place for more traditional business models, alongside newer technologies.

Streaming or digital distribution will not disappear with the arrival of blockchain. It's much better to see the use blockchain technology as an innovation within the existing market for digital distribution. It creates value over something that's normally just considered as mere data, a service to the consumer.

Blockchain will require companies to rethink their product strategies. Using consumer-owned digital assets in the entertainment industry only makes sense. It empowers consumers, and gives companies additional revenue streams. All this is build on business models these companies are already familiar with, but with the addition of blockchain technology:

• Blockchain gives consumers to possibility to sell acquired digital assets on public marketplaces.
• Tokenized digital assets generate more revenue than a video or music stream.
• Blockchain can an additional revenue stream for companies through secondary markets.
• Blockchain technology embraces existing revenue models like streaming and free-to-play, but changes them.
• Tokenized items are stored in personal wallets, and therefore blockchain can create a target group for future marketing.