Nick Holdsworth
Journalist, writer, author, filmmaker and film and TV industry expert – Central and Eastern Europe and Russia.

Swedish start up Cinezen Blockchained Entertainment paves the way for the first-ever worldwide agreements for a video on demand service that uses blockchain technology to secure and simplify payments based on cryptocurrencies.

Swedish start up Cinezen Blockchained Entertainment, which is using the secure blockchain-based revenue collection system for content providers of VOD (video on demand) services, claims the complex mathematical algorithms employed in blockchain technology make for an incorruptible system.

Blockchain video on demand or ‘BVOD’ differs from traditional VOD services in that it bypasses the need for royalty reporting and invoicing, as every content provider is part of a blockchain network with immediate access to secure transaction data. The agreements were signed at the Berlin Film Festival’s European Film Market, and the companies that have signed up for its BVOD service include LA-based FlexyMovies, Denmark’s LevelK and Moscow’s Antipode Sales. Other deals are due to be inked soon judging by the considerable interest at the EFM, Cinezen says.

Blockchain: A secure computerised system of storing linked data that is protected by cryptography, effectively protecting private data from being accessed by third parties. A blockchain typically stores information on transactions and accounts. It provides efficient and effective security by creating an encrypted hash (an encoded alphanumeric string) of the previous block in each block of the chain, a timestamp showing when the block was encoded and recording the data of the next transaction in the chain. Simply put, it is a super-secure method of protecting information in a chain of transactions. A blockchain also ensures that an accountancy record of the transactions is secure and verifiable. As an ‘open, distributed ledger’ it can be referred to at any time by the parties participating in a transaction, allowing them to check and verify the information held in the chain of transactions. For example, a company operating a cash-back scheme for purchases can keep track of individual payments and the cash-back owed securely, via countless individual records held on a range of computers around the world. The multiple copies make it virtually impossible to create false accounts, thus protecting users against fraud.

Short for ‘blockchain video on demand’ – this is a term that simply describes the secure computerised manner in which payments and receipts for video on demand transactions can be recorded using blockchains. Video on demand services operate by offering an inexpensive download of a video (such as a film or television series) to users via their personal computer or Internet capable device. In such a service, users pay an individual fee to view the video material and that transaction is recorded via the blockchain system. The blockchain system then allows for the efficient division of this fee between rights holders of the video, the providers of the BVOD platform and other concerned parties by providing a secure and time-stamped record of the transactions.”

Blockchain technology – which many people associate with cryptocurrencies such as Bitcoin – is used in Cinezen’s system to tackle one of the biggest inherent problems of the film industry – a lack of trust and transparency. Cinezen employs a so-called «trustless» model which dispenses with the need for trust as all the data inside blockchain is transparent and verifiable and every transaction is stored on a public ledger.

These are digital currencies that are created independently of central banks using similarly secure encryption techniques to that of a blockchain – where the generation of a fixed number of currency units is regulated and then tracked using secure computer technology. Because the number of units of currency are finite and secure from outside manipulation, the value in reference to other currencies – such as US dollars or Norwegian krone – may fluctuate widely, as has been seen recently in the steep appreciation of the value of the world’s best known cryptocurrency Bitcoin, which rose last year from a few hundred dollars to peak at more than $10,000 per Bitcoin.”

The system bypasses traditional royalty reporting and invoicing, saving both time and money, and ensures content providers receive what they are due via incorruptible transaction data.

Sam Klebanov, a Gothenburg-based, Russian-born distributor and producer, as well as co-founder and CEO of Cinezen Blockchained Entertainment, says that revenue payments in the new system will be made in tradable cryptocurrency via a decentralized system from end user directly to the rights holder. A test version due to launch in March will be based on Ethereum, one of the most popular cryptocurrencies after Bitcoin, that is currently worth around USD $970.

BVOD: Short for ‘blockchain video on demand’ – this is a term that simply describes the secure computerised manner in which payments and receipts for video on demand transactions can be recorded using blockchains. Video on demand services operate by offering an inexpensive download of a video (such as a film or television series) to users via their personal computer or Internet capable device. In such a service, users pay an individual fee to view the video material and that transaction is recorded via the blockchain system. The blockchain system then allows for the efficient division of this fee between rights holders of the video, the providers of the BVOD platform and other concerned parties by providing a secure and time-stamped record of the transactions.

A full market version to be launched by the end of the year will use a site-specific tradable coin with a set limit on the number of coins in circulation.

Prices fixed in dollars

Klebanov, who says an Alpha-version of the trading platform will be launched before Cannes to enable public testing, addresses concerns over the volatility of the value of cryptocurr

Sam Klebanov, a Gothenburg-based, Russian-born distributor and producer, as well as co-founder and CEO of Cinezen Blockchained Entertainment.

encies by pointing out that VOD licensing prices will be fixed in dollars before conversion to cryptocoin.

«The value of Ethereum or the token [cryptocoin] we eventually set for the system may go up or down – but the prices will be fixed in dollars.»

For those worried about cryptocurrency fluctuations, Klebanov notes that Ethereum conversion costs are insignificant. Users of the BVOD service can simply convert cryptocoins to dollars whenever they wish.

«We want to create an environment, an eco-system, where every film can become globally available to a worldwide audience; right now it is only available via local distributors.»

«It’s especially good for documentaries – local distributors are often afraid to invest money in them, not knowing if they will get their money back. We tell the rights holders, ‘try as hard as possible to get distributors, but availability must remain open.’ Distributors are important because they offer MGs [minimum guarantees], but it is also important to build a system that is ‘trustless,’ because everything is transparent and verifiable.»

100 titles cleared for licensing

Cryptocurrencies: These are digital currencies that are created independently of central banks using similarly secure encryption techniques to that of a blockchain – where the generation of a fixed number of currency units is regulated and then tracked using secure computer technology. Because the number of units of currency are finite and secure from outside manipulation, the value in reference to other currencies – such as US dollars or Norwegian krone – may fluctuate widely, as has been seen recently in the steep appreciation of the value of the world’s best known cryptocurrency Bitcoin, which rose last year from a few hundred dollars to peak at more than $10,000 per Bitcoin.

Cinezen’s new system will offer users ‘storefronts’ that will give rights owners full control of the content they list and sell. The system will strike revenue sharing deals with licensees that allow for a fair split of earnings between all concerned parties and enable money to be spent on improving and running the site.

«We want our store owners to create an environment where people can come, see what’s new, what they recommend – it brings back a human touch and soul to distribution so people can follow those whom they respect,» Klebanov said, adding that «for example, Modern Times Review could curate its own documentary selection via its own branded store. Every store will have the freedom to curate and present films as they wish.»

More than 100 titles have already been cleared for licensing via the Cinezen platform, based on agreements drafted by LA-based lawyer Harris Tulchin just before the Berlinale opened this year.

 


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