• Apr 30, 2020
  • By Filmio Team

Filmio for Investors

What do you picture when you think of Hollywood? Beautiful stars, flashbulb-filled red carpets, fancy awards — and money. Lots and lots of money. Glamour and wealth have been part of Hollywood’s larger-than-life image as long as the studio system has existed.

But the reality behind the veneer is more complicated. Each movie Hollywood makes is a big, risky investment and Silicon Valley has shown investors there are much more efficiency-oriented and risk-averse ways to make money. That may sound like good news for artists who value creative expression over profit, but the reality is that deeply creative and artistic movie making requires money just like franchise-based cash grabs. Whether they’re making big-budget blockbusters or personal passion projects, creators need to show investors of all sizes that their investments will produce returns.

Winners win big, and losers lose big when it comes to movie investing, and predicting a film’s outcome with any accuracy is difficult. 2019’s Avengers: Endgame, for example, film history’s highest-grossing movie, also had one of its largest budgets at roughly $356 million. Actors, directors and franchises with proven track records can still fail: forty years of Star Wars franchise history generating over $9 billion in profits didn’t protect 2018’s Solo from flopping. And while “guaranteed” profit-makers can bomb spectacularly, dark horses can surge to financial success. 2009’s Paranormal Activity made almost $90 million in profits from a shoestring $450,000 budget, generating a whopping 19,900% return on investment.

Current Investing Obstacles

How can investors predict when a project will be financially successful? With astounding flops such as Dark Phoenix and Tolkien in the recent past, it’s safe to say that a surefire method has yet to be found within the current paradigm. Early audience data can provide some much-needed feedback. Gaming fans hated the “nightmare fuel” design of Sonic the Hedgehog revealed in an early trailer, so Paramount spent an extra $5 million and three more months of costly CGI animation on remaking the character. That frustrating and expensive decision to listen to fans ultimately created a profitable film.

Not every trailer generates a prolific fan response like Sonic, so studios often also use test screenings to garner fan feedback. In a best-case scenario, that feedback helps studios decide how to market their movie and whether any minor changes could make it more profitable. In a worst-case scenario, test screenings tell creators and funders that audiences might hate their film.

Sometimes reshoots help transform a poorly received early version of a film into a success, but initiating this grueling and expensive process is never an easy decision. 2017’s Justice League raised eyebrows with reshoots that cost a whopping $25 million and dragged on for over two months. And even the lengthiest and most expensive reshoots are no guarantee of success: Justice League still bombed at the box office. Even when movies go through reshoots and turn a profit, their returns on investment are significantly lowered by reshoot costs. The bottom line: that fan data increases exponentially the earlier it is obtained.

Data on Chain

For a long time, audience test screening was the only data-gathering tool studios had. However, it’s too simple of a tool for a very complex problem. The screening format asks audiences to react to a largely finished product rather than seeking their input early in the creative process. Studios tend to greenlight repetitive plot tropes and well-known franchises because they seem financially “safe.” And while that safety isn’t totally illusory, it means test audiences are asked to react to movies that replay familiar tropes more often than they’re asked for input on new ideas and fresh faces. It’s a bit like running an ice cream shop that only sells vanilla and strawberry and then tries to determine which flavor sells better. Ice cream buyers will provide the data on vanilla versus strawberry, but the shop isn’t asking them about chocolate chip, or hundreds of other innovative flavors that would boost the shop’s overall sales and get the public excited about ice cream.

Test screenings provide limited data on important demographics information and moviegoing habits. An audience member who frequents independent cinemas and loves ghost movies is more likely to help an indie horror movie succeed than a filmgoer who mostly sees romcoms in chain cinemas. Investors in that indie horror movie care much more about the first viewer’s opinions than the second — but test screenings tend to provide largely anonymized data that doesn’t differentiate between them.

Test screenings are a clumsy solution to a complicated question: How can investors understand the size and desires of a film’s target audience while maintaining a reasonable return on investment? Silicon Valley has floated some more elegant research tools. Artificial intelligence, for example, may help studios craft more profitable, albeit formulaic, films. But when it comes to supporting new, original projects that push the entertainment world forward instead of helping it tread water, does technology offer any answers? 

We think the answer to that question is yes, and the solution is blockchain.

Why Blockchain?

Blockchain transactions are immutable and secure because they’re stored on a decentralized network, rather than in a single data center, to maintain the network state. Blockchain can, therefore, support cost-effective, secure microtransactions that neither require the cost and delay of an administrative overseer nor face the threat of a single powerful party tampering with the ledger or a single point of failure.

On the Filmio platform, creators can create entries for projects at any development stage. Fans use blockchain-based FAN tokens to complete microtransactions in the platform’s internal economy, carrying out actions such as providing feedback for projects or funding important development steps. Blockchain makes these microtransactions economically feasible, empowering fans and creators to have a direct connection rather than leaving a few powerful studios to decide which projects get resources and attention.

But what does that mean for investors? All of the crucial data regarding projects on Filmio get stored immutably on a decentralized network. While test screenings struggle to differentiate between horror fans and romcom fans, Filmio gathers data on how every participant interacts with any project they come in contact with. 

This extremely detailed data timeline allows high-level analysis of fan trends and behavior. Investors can predict how fans of one project will react to developments in another or pinpoint crucial stages in project development that garner attention from different segments of the fan population. Filmmakers looking for support can provide detailed information on their fans’ demographics and movie habits for investors. Filmio can provide sophisticated recommendations to fans based on the behavior of similar Filmio users, encouraging continuous exploration of the platform and support for new projects. Filmio starts storing this data as soon as fans start interacting, so projects in any stage of development — whether they’re mostly finished or just an idea with a few followers — can divulge meaningful data to investors.

The implications of a platform like Filmio are radical for everyone involved in entertainment, whether they’re creators, investors or just people who enjoy watching movies. But Filmio’s high-resolution data is especially significant for funders. This research tool can help investors avoid flops and find genuine hits, relying on actual fan feedback rather than the crude magic eight ball they rely on today. As Filmio generates more and more data, it could even be used for high-level analyses over multiple projects to help investors understand emerging entertainment trends. Data is also significant, of course, for the fans and creators courting investors. Data that demonstrates a track record of fan interaction can help creators get funding even after the connection-based studio system shuts them out.

Want to get involved in Filmio? Now is the time for anyone who cares about the future of film, whether they’re a creator, a fan, a funder or a mix of any or all three, to get on board. 

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