The budget for the upcoming Atari movie, set around $40-$50 million, is being financed entirely through tokenization on the Blockchain. What happens could pave the way for a brand new way to fund films.
“I’m passionate about blockchain and want to demonstrate with [Atari] that this is a viable way for filmmakers to do this,” said Atari producer J.D. Seraphine, Vision Tree Media, on the TIFF 2018 panel below. “One of the great frustrations of being a filmmaker is that you constantly feel like there are obstacles in front of you that keep you from just creating your vision. My hope is that there are new models and systems that will be built so filmmakers will be able to focus on expressing the creative vision.” Can tokenizing your film can remove the middleman from financing? Wel, yes, as long as you don’t spend too much on the new middleman who will help you understand tokenizing!
Luckily, a panel of experienced industry figures sat down at the 2018 Toronto International Film Festival to break down what tokenizing is and how your film could use it to attract investors, save huge amounts of time and money, remove the middleman, and build an audience for your film at the same time. Better yet, the big successful production company making Atari is giving us a live test case study we can all learn from! Watch the whole conversation and check out our takeaways below.
A breakdown of what the Atari movie is doing
The producers of the upcoming Atari movie aren't just tokenizing their film to raise the budget; they are also attempting to set a standard for other films to follow. Here is how Seraphine explained it:
"The production budget is about $40 million dollars. About $10 million of that is soft money, so we're obviously still going to monetize that in a very traditional way. We're doing a blended structure, so we're actually raising up to 50 million dollars through the token sale. And the reason we're doing that is we wanted to co-finance the P&A so that for token holders, we could create a 50 percent adjusted gross receipts corridor. That way token holders aren't waiting at the bottom of the waterfall to get paid. They're getting paid from dollar 1, adjusted gross, right at the top of the waterfall. Based on my experience with film finance, I wanted to do that so that one of the first big films that uses this approach was on some level successful for people who are buying these tokens and investing. That's basically the the general structure. It's very simple. It's very straightforward and very transparent."
Understanding what tokens are and how Atari is using them
The Atari film is offering different kinds of tokens for their film: tokens that are for investors to own a share in the film (security token), and tokens for people who just want to get a ticket to see the movie (utility token). Essentially, they are both getting investors and pre-selling, and like crowdfunding, building an audience for the film from the beginning.
What is a token, again? In the realm of blocks and chains that act as a transparent ledger of digital transactions, a token is an asset that has been converted to a digital value as panelist Manuel Badel of Badel Media explained it, offering a few handy slides to illustrate.
What do you need, as a filmmaker, to experiment with tokenization on your next film?
First of all, watch and see what happens with Atari. Their outcome in this experiment will mean a lot. Secondly, the panelists suggest just to familiarize yourself with what's happening and don't rush out to hire people to do that for you. From Zack Skeith of Three Lefts:
"It really depends if you want to take it yourself and go and build your own underlying blockchain...but access to the Cloud, the Internet and some cloud computing and just being able to at least have every person in your network having access to Internet at the very core is all that's really needed you don't need to go and hire massive blockchain developers to do it right off the bat a because there's a shortage of them and they're quite expensive and there's a lot of companies out there that are working in this space that have enterprise based and it's basically just a large supply chain really of what the film system is and so working and understanding the supply chain and accessing that is really all you need at this point."
Sound interesting? It could be revolutionary if it works. Keep an eye on what happens with Atari to see what that could mean for you in the future.
Here are some other NFS stories on Blockchain and filmmaker if you'd like to read up on it further: