Every once in a while, an innovation emerges that causes an entire industry to shift. To force change in the way that industry operates. These innovations are usually the result of technological advances. Sometimes they may arrive as novel business or creative strategies or as new processes. Some innovations can be so impactful that companies across an entire sector must restructure and reorganize to embrace them. And those who fail to adapt to the changing tide, even the most prominent industry leaders, soon find themselves falling and ultimately left behind.

Innovation that forces the restructuring of an entire industry is known as architectural innovation. At this very moment, the media and entertainment industry is entering a period where the adoption of the next architectural innovation has begun. Blockchain technology is forever changing the relationship between studios, creators, and communities, as well as how audiences experience content and how content is distributed.

Web3 is entertainment’s next architectural innovation. Every industry experiences significant times of change due to architectural innovations, but the entertainment industry seems to be particularly fertile ground. Before we dive into what makes this so impactful and how Feature is not only adapting to the changing tide but shaping it with Feature³ - our blockchain-enabled streaming device - let’s examine a brief history of other architectural innovations that have shaken up the entertainment industry.

Architectural Innovations in Entertainment: A Brief History

Summer Blockbusters

We’re all familiar with the concept of the summer blockbuster. Every summer, a new wave of movies is released with the biggest stars, the biggest visual effects, the most bombastic marketing campaigns, and correspondingly the biggest budgets. As a result of this massive investment from Hollywood movie studios, these films typically enjoy the largest audience turnout. But it wasn’t until Jaws became the first movie to earn $100 million at the box office in the summer of 1975 that the blockbuster was born. When George Lucas’ Star Wars shattered records and grossed $775 million in the summer of 1977, it became abundantly clear to studios that the summertime was the time for movies. Henceforth, the studios restructured their budgets, development slates, marketing departments, and distribution functions to accommodate the new focus on summertime blockbusters. These were dramatic shifts in the way the film industry operated.

Home Entertainment

Home entertainment brought films out of the theaters and into our living rooms. While some had systems to support film reels like the theaters, it wasn’t until the 1980s that VHS technology made viewing movies at home accessible on a massive scale. Studios now had to allocate huge marketing spends and production dollars toward pushing home releases and selling tapes. This continued through the 1990s and early aughts. While DVDs and briefly Blu-Rays replaced VHS tapes, these advances didn’t cause studios to fundamentally change the way they operated.But the advent of home entertainment clearly did.

Franchise Frenzy

In 2003, after the massive and unexpected success of Pirates of the Caribbean, the senior leadership of Disney recognized the opportunity in franchise content. Disney began to reallocate resources toward developing franchises. Two years later, in 2005, when Bob Iger became the CEO of Disney, franchise development became the top strategic priority of The Walt Disney Company. The Disney Studio, ranked #4 at the time, went through profound changes, including three massive reorganizations to accommodate the new strategic direction. In support of this new direction, Disney acquired Pixar, Marvel, and Lucasfilm. It became clear to the entire industry that franchise content was required for ongoing success, yet no other studio embraced the innovation to the same degree as Disney. The result by 2015 — Disney was the #1 studio with no competitor even close.

The Streaming Wars

While Netflix pivoted from mail-order DVDs to streaming as early as 2012, the streaming era did not truly begin until 2017, when Disney and Amazon began to take the competition from Netflix more seriously. Soon, Warner Bros with HBO Max, Universal with Peacock, Paramount+, and countless others followed in an attempt to retain relevance in the entertainment landscape.

To embrace the streaming innovation, studios had to massively expand the amount of content they produced, reengineering the entire studio development and content distribution functions. Marketing leaders suddenly had to develop expertise in full-funnel marketing (particularly focused on audience retention today). Streaming also changed the way studios financed their business with cannibalization of theatrical box office and the home entertainment business. Finally, streaming also had second-order effects in terms of company culture by needing to acquire and integrate talent with the new types of skill sets the studios never required before. Streaming fundamentally changed everything, necessitating massive reorganization and restructuring to embrace this new entertainment standard.

Blockchain is an entertainment platform

Surveying the entertainment industry today, we are at the precipice of the next architectural innovation to sweep the industry. Web3 technology fundamentally changes how content will be developed, marketed, and distributed. In a few years, this will result in another wave of large-scale reorganizations throughout the entire sector. While blockchain offers utility in a range of diverse use cases, its influence will be nothing short of revolutionary. Let’s break it down.

Direct to Community

Blockchain technology and NFTs have dramatically lowered or even eliminated the boundaries between creators and their communities. In the past, creators needed to be backed by a studio to finance, produce and distribute their IP on a massive scale. Creators rely on agents to present their ideas to studio executives and other gatekeepers who ultimately decide if their ideas have enough merit to warrant the big budget expenditures necessary to bring their IP to market.

With the advent of blockchain technology, creators are beginning to circumvent antiquated processes and traditional gatekeepers. Creators may sell their IP directly to consumers as NFTs, eliminating processes that long prevented many from telling their stories to the world and enabling a new generation of creators to build thriving communities of fans and supporters.

Creator-Focused Distribution

Creators realize they no longer need big studios to thrive, as some are electing to sell their content directly to their communities and doing so successfully. As a result, the entertainment industry will be forced to change the way in which they structure distribution deals. Until now, traditional streaming services have had significant leverage over creators, taking sizable profits on all transactions and limiting the amount of funds going back into the hands of those who created the IP. Creators are waking up to the value of Web3 and recognizing that they have more power than ever before.

Companies like Feature are balancing this equation and tipping the scale in favor of creators. With Feature³, we’re focused on developing partnerships with creators that honor their craft, ensure more equitable compensation, provide fully transparent data analytics, and help them build special, more immersive content experiences.

Creator Community Relationships

With the gatekeepers removed and creators directly connected to their communities, this dynamic ushers in a new, greater level of accountability and communication. Actors like Will Smith supercharged their careers by being accessible and communicative with their fans. Both Tom Cruise and Dwayne Johnson have been known to sit in the back of theaters to gauge the way fans are experiencing their performances. But even the most socially engaged creators have enjoyed a buffer from direct feedback due to the function of traditional Web2 social platforms. Web3 offers a new benchmark for interactivity, as well as scrutiny. Web3 social platforms like Discord allow them to communicate directly with their fans, placing them in the center of the conversation.

While the traditional entertainment model typically keeps critics at arms-length, tossing proverbial rotten tomatoes, Web3 will force creators to address feedback head-on. This represents a significant change and one that will result in the rise of partnerships between creators and Web3 experts to effectively traverse this new landscape.

The Future of Entertainment

We’re just scratching the surface of how blockchain technology will irrevocably change the entertainment industry. As we’ve seen in the past, those able to adapt will survive and thrive in this new reality, and those hesitant to change will be left behind or forced to make very costly acquisitions in order to keep up. At Feature, we are not only embracing this change but actively developing technology and experiences to speed up the process.

Feature recognizes the importance of community in the new future of entertainment. That is why we’ve built a unique user interface for Feature³ that centralizes conversations with friends, community members, and creators to one screen. Audiences can chat while and after they watch their favorite content. Imagine working together with friends to solve a mystery to unlock the next episode of a show. We’re providing a platform for shared interactive content that emphasizes social engagement.

With Feature³, we’re rewriting the rules to create fairer distribution models for creators and combine the best of media, gaming, and community. Web3 is an architectural innovation. And Feature is leading the change.

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Visit feature.io to learn more about Feature³.

About Jon Rogers

Jon Rogers is a brand leader with 20+ years of experience in entertainment, sports, and CPG. Rogers was the founding executive and the global head of live-action Franchise Development for Walt Disney Studios, He collaborated with teams across all divisions of The Walt Disney Company to identify and develop new business opportunities supporting Disney’s feature film franchises. Before Disney, Jon was a member of the Star Wars brand marketing team at Lucasfilm, where he managed theatrical campaigns, brand partnerships, and retail marketing. Earlier in his career, Jon Rogers was a brand strategist with Science + Fiction and a business strategy consultant with Booz Allen Hamilton.

References

Daniels, N. (2022, July 6). The History Of The Summer Blockbuster. Hollywood.com. Retrieved August 11, 2022, from https://www.hollywood.com/hollygood/summer-blockbuster-history-61015963

Harford, T. (2018, September 5). Why big companies squander good ideas. Financial Times. Retrieved August 11, 2022, from https://www.ft.com/content/3c1ab748-b09b-11e8-8d14-6f049d06439c

Henderson, R. M., Clark, K. B., & Henderson, R. (n.d.). Architectural Innovation: The Reconfiguration of Existing Product Technologies and The Failure of Established Firms - Article - Faculty & Research. Harvard Business School. Retrieved August 11, 2022, from https://www.hbs.edu/faculty/Pages/item.aspx?num=36748