The “next Pixar” will rise from a group of talented artists and creators with backing from a tight-knit and engaged community.

The role of fans, contributors, and investors will merge to form stronger content/fan connections that extends way beyond consumption.

It will also enable more people to create and engage with, and earn from, entertainment content in new ways.

This is the story of the web3 native media company.

Over the past 20 years in Hollywood, the name of the game has been building and monetizing strong intellectual property (IP): Marvel Cinematic Universe, Star Wars, Batman, Hunger Games, and many more. This entertainment pipeline is one with powerful gatekeepers and a lot of concentrated power, primarily the powers of distribution and capital.

With the emergence of novel technologies and principles of web3 and the metaverse, it's all about to change. The next Pixar will probably look nothing like the current one. We're about to enter the next era of entertainment: the era of decentralized IP and web3 native media companies.

This is not hype or an idea of a far distant future. It's a wave that's starting to build now, and it will challenge and shake up existing value chains and business models and enable an exponential creative explosion.

Traditional entertainment companies are taking notice, too:

• Disney CEO Bob Chapek, recently referred to the metaverse as “the next storytelling frontier” and promptly created a new department for it at the company.
• Previous Disney CEO of 15+ years, Bob Iger, invested in and took a board seat at NFT company Genie.
• DC Comics are dropping their Batman NFT collection, the Bat Cowl Collection in a few days. Fans holding a bat cowl can access behind-the-scenes content, special IRL events in the future and more.

Other companies and organizations like Nike, NFL, Gucci, Accenture, and many more are hiring for web3/metaverse-related positions.

How the new media company emerges

Leveraging new technologies and principles, future entertainment companies will be initiatives built from the ground up with extensive community contributions and ownership.

• Starting as a core team with a clear artistic vision.
• They'll attract and nurture a community, raise funds for initial content production via NFT sales and simultaneously provide its community members with access and ownership.
• The story will evolve as artistic vision, and community contributions converge through novel collaboration models.
• Highly engaged community members will leverage their IP ownership to create spin-offs that extend the story universe and brings exposure back to the core product.
• The value created and captured gets distributed among contributors based on contribution levels.

Let's explore three broad themes that enable this transition:

• Decentralized IP for engagement and funding
• Community-driven storytelling for deeper fan connections
• Exploring new formats and mediums

Decentralized IP for engagement and funding

Traditional media companies have always been very adamant in governing IP rights, and rightly so: it’s the gold that all the revenue opportunities are spun around.

The web3 native media company turns this approach upside down. Fans own and control (parts of) the IP. One fan might own a superhero. The next fan, a villain.

It achieves two things:

Decentralized IP as a funding mechanism

A project raises funds by selling IP rights early on to community members. This secures funding to start initial development. It also immediately establishes a strong connection between fans and (future) content. People are inclined to root for success where they have ownership and economic upside.

Decentralized IP as an engagement flywheel

Community members take their owned IP, create derivative storylines, and extend the story universe. Think of it as a tree with a trunk and branches.

These derivative projects branch off from the trunk and attract more people, while also increasing exposure for the "trunk."

A few notable examples of derivative projects are the newly opened Bored & Hungry restaurant (based on Bored Ape Yacht Club), Jenkins the Valet (same), and the Pinballer Comic (MetaHero/Pixel Vault).

The challenge with decentralized IP ownership is that there are no guarantees that every derivative project will be a net positive for the core story universe.

Someone could, and probably will, create low-quality derivatives and potentially hurt the overall project.

It's the primary reason traditional media companies are so strict with their IP governing.

However, in such a scenario, the power of community comes into play again: An engaged community has incentives to self-govern and will expel bad actors.

Decentralized IP is a new approach. Many pros and cons of the model are probably yet to be discovered. It’s a challenge worth keeping in mind, but as I’ve mentioned before, I’m not a big fan of dismissing new ideas and approaches too early.

Community-driven storytelling for deeper fan connections

In the traditional movie or series-making process, the consumer gets involved towards the very end: consuming the content after its created.

With the web3 principle of community-first, a web3 media company can and will involve the fans at a much earlier stage: during the creation. Fans will participate in the creation of the story, and as a result build more love for the story earlier.

However, this can be a slippery slope. The power of great storytelling lies in the articulation of an artistic vision. Not in crowdsourcing an entire story that tries to integrate the vision (or lack thereof) of tens, hundreds or thousands of minds .

"Too many cooks spoil the broth" and all that.

There are ways of balancing artistic vision with community contributions and engagement. A table stakes way could be via access: Giving the community a chance to "stay in the loop" as the creation progress. Behind-the-scenes content, Q&A sessions with creators, and similar.

A different and very enticing model is the one explored by Shibuya – a decentralized film distribution platform. I call it community-driven story within a controlled story framework.

The idea is that a creator craft an overarching story in line with their vision. Within that structure, they open the story up to follow directional branches. It’s similar to the interactive storytelling that Netflix has experimented with; except for this crucial difference:

Netflix writes and produces all the myriads of twists and turns within the story beforehand. It comes with high production costs and isn’t based on consumer decisions.

Here’s how Shibuya executes a controlled story framework with their first production, an interactive short film series called White Rabbit:

Every episode in the series ends in a directional choice for the storyline. The community decides which direction to take. Community members purchase a Producer Pass NFT and use it to vote for their preferred direction.

Whichever alternative receives the most votes is the one that the team integrate in the next episode. As the story evolves, it evolves by the hand of the community, but within the artistic vision of the creators.

Shibuya also includes a carrot for community members to incentivize them to engage – ownership. For every Producer Pass utilized for voting, the owner receives WRAB tokens. What are the tokens good for? When the series concludes, a digital vault controlled by WRAB token holders owns the IP.

If the finished product is licensed to a streaming platform or screened at cinemas for instance, the community owners receives their fair share of the revenues.

Shibuya is also experimenting with other novel ideas like dynamic end-credits where contributors get assigned different titles from "Executive Producer" to "Associate Producer" depending on their contributions. How cool wouldn't it be if you brought your friends to the cinema in the future and your name was in the end credits?

Exploring new formats and mediums

The web3 media company explores new forms and mediums to distribute their content, and it evolves over time (but also very rapidly).

One example is Yuga Labs and their Bored Ape Yacht Club, arguably one of the most exciting web3 media companies. They started with profile picture NFT collections and have spread out to cover mobile gaming, short films (in production), and their new virtual world product “Otherside.” In less than 12 months.

I highly recommend you check out the trailer, to get an impression of the content quality.

Shibuya and Mila Kunis' web series Stoner Cats explore short-form, mobile-friendly content. Much in line with the content already consumed in troves by Generation Z audiences' via TikTok and YouTube.

Within the next few years, I will be surprised if we don't see new media property go from IP sales via NFT, through online series to a major streaming service or broad cinema circuit distribution.‍

Ending notes

To some, this might seem unfathomable, and to others, exciting. These projects, including Bored Ape Yacht Club, Crypto Punks, Jenkins the Valet, and Pixel Vault, are represented in Hollywood by top agencies and agents like Guy Oseary (clients include Madonna and U2), WME, and UTA.

The outcome of this is that more artists are enabled to craft and tell their stories, their fans create a deeper connection, and everybody gets a share of the economic upside. As a final note, I will leave you with this*: Most of the projects mentioned here are barely a year old. Things are moving fast, and it's headed straight for the established entertainment industry.

The future of entertainment is now.

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This post is written by DX CEO, Martin Berg. Follow him on Linkedin to stay on top of his updates and writing.