The expansion of the NFT market: investing in the film industry is no longer just a dream

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Riaz Mehta, Founder and CEO of ritestream, speaks about how NFT technology creates new opportunities for investors to get involved in the growing film and TV industry.

The global film and video market is expected to reach $318.2 billion by 2025, with the high demand for video content continuing to grow exponentially amid the pandemic. In the next four years, an approximate 166.2 million users will be using streaming services. US media giants, such as Amazon, Walt Disney, and WarnerMedia, plan to spend at least $115bn on producing new TV shows and movies over the course of this year, in an attempt to play catch-up.

Within the film industry, big players drive the market when it comes to post and pre-production, as well as streaming. The usage share of Netflix makes up an approximate 30 percent of the Video Streaming segment, and the so-called “Big Five” (Disney, Paramount, Sony, Universal, and Warner Bros.) dominate 81 percent of the movie market in the U.S. and Canada. In this space, there isn’t much room for independent production companies to get the much-needed funding for their projects.

The challenge of the film market lies in full-filling the rising demand for original content. For 100 years, film and TV projects have been licensed over a four to five year period, with large upfront capital investment needed. Low-production cycles prompted by large and cautious investors are today the norm, but these are not working in the favour of streaming platforms, content creators and consumers. This issue cannot be overcome until the production of shows starts to move at a faster pace. The need for changing the broken licensing system under which the sector operates is now apparent. Micro-licensing, which is possible only through content as service platforms, would allow creators to fund their projects much quicker and speed up production.

NFTs have the potential to change the face of a whole industry and power up a micro-licensing ecosystem,  where independent creators grow and new investors can step in. NFTs are unique digital assets that are created and stored on a blockchain, where ownership is traceable, ultimately making these collectible digital items valuable. Last year, over $41 billion worth of Ethereum-based NFTs were registered, and the crypto art-driven market is expected to overtake traditional arts in 2022. Within this space, we have seen the rise of Fractionalized NFTs (F-NFTs), which are cryptographic tokens that allow multiple ownership in a non-fungible token. This has created an incredible opportunity for artists to fund their projects but has also widened the pool of investors within the market.

By introducing blockchains and NFTs into the film and TV production industry, new opportunities for investors will be on the rise. Leading streaming platforms and studios will no longer be the only players when it comes to funding a project, and independent investors will be able to get involved. Each piece of content created within a project is unique, so naturally, it can be encapsulated into an NFT. For example, investors can hold licensing rights for the script or the imagery from a film, alongside strong players in the industry such as Netflix. The ritestream launchpad will be leading this process. By leveraging NFT technology, investors can get involved in the production of films, proposed by established producers, as well as independent creators. This funding activity is powered by the native token RITE coin, through which initial NFTs are minted pre-production. Each investor will have a fractional ownership interest in the NFT, commensurate with the amount of tokens they have purchased. Investors will be introduced to different tiers of ownership, which could range between a $500 tier and a $100,000 tier. Different tiers will have different ownership rights. For example, larger tiers could receive an “Executive Producer” credit on the film.

This ecosystem allows for tokens to be traded on the ritestream marketplace during the production of the movies. Individual investors can purchase RITE coins alongside major institutions, with both parties getting a return on their investment much quicker than they would have traditionally. Investors will no longer have to wait years for this to happen.

When production is completed, projects are minted as final NFTs and distributed globally, and each fractional owner, as well as the creator, benefits from the revenue the show generates. The final project will be distributed through the ritestream app, where the audience can engage with the content. Projects that are in their final NFT form can be traded and sold post-production, creating more opportunities to generate revenue.  Also, depending on the popularity of the project and media attention, the value of these NFTs naturally grows. By leveraging this new technology, the power can be put back into the hands of independent producers, and we can create an ecosystem which benefits everyone who takes part in it.

The demand for NFTs is growing, with 4.1 million Americans buying or selling an NFT in the past year. Currently, there are 81 million wallet users on the Blockchain.com platform, where Bitcoin can be purchased. While the opportunity for growth and investment within this space exists, different industries are still expanding in this world and creating new opportunities for investors to step in. By leveraging NFT technology within the film production sector, more funding will be redirected towards the entertainment industry, and the demand for NFTs and new blockchains will be met.

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