Hollywood has reached a tipping point. Audiences are weary of endless franchise sequels and reboots. YouTube has surpassed Disney as the world’s premier distributor. Additionally, generative AI tools like Sora 2 can soon transform anyone into a filmmaker. Yet one constant remains: the financing of films. This is the reason we see a decline in original films.
Decline of original screenplays at the US box office (1984-2023)
Source: The Numbers and Box Office Mojo
For years, filmmakers have had just two avenues to secure funding: appealing to affluent “patrons of the arts” or relinquishing intellectual property (IP) through limiting studio agreements. These exclusive circles still dictate who might be the next David Lynch or which film will become the next Napoleon Dynamite, while everyday fans — those who passionately support these films — remain excluded. (Fewer than 1% of Americans qualify under SEC “accreditation” standards to invest in most private ventures, including film.)
That narrative is finally shifting, driven by tokenization. The vision of “decentralization in film” has finally arrived, this time done quietly and legally. A few years back, “Web3 Film” had a noble vision but inadequate resources: individuals were fragmenting films into NFT frames, promoting convoluted tokenomics while evading securities regulations. None of it succeeded. Initiatives such as Stoner Cats, Ashton Kutcher’s NFT cartoon, turned into cautionary examples after the SEC intervened, penalizing them for offering unregistered securities to unaccredited investors.
The crucial difference today is compliance. Utilizing licensed platforms functioning under SEC exemptions like Reg CF, production companies can onboard thousands of unaccredited investors (even in the U.S.) to support genuine film projects and partake in the potential benefits. Security tokens, backed by blockchain technology, facilitate transparent and cost-efficient distribution of dividends — and eventually, enable trading of investors’ shares on secondary markets.
This strategy is already proving effective. Tens of thousands of investors have pledged over $30 million towards high-quality productions from some of Hollywood’s most reputable figures. This year, Robert Rodriguez (Sin City, Spy Kids) raised $2 million from 2,000 fans to fund new action films — with each investor allowed to pitch a film as part of the lineup. Pressman Film, known for American Psycho, Wall Street, and The Crow, raised $2 million for a suite of bold, original films and is beginning to return capital within six months. Meanwhile, Eli Roth (Hostel, Inglorious Basterds) established a fan-funded horror studio that maxed out its $5 million Reg CF campaign in July, frustrated by studios dismissing his ideas as too graphic, despite the fact that the highest-grossing film of 2024 was the unrated slasher, Terrifier 3.
Tokenized fan investment is paving the way for new avenues of funding and creativity. Filmmakers can now seek funding from their audiences instead of locking themselves into studio contracts, allowing them to maintain greater control over their IP and embrace creative risks without interference from executives or algorithms. For fans, tokenization provides an entry to an investment landscape previously closed off: film as an alternative asset class. Ultimately, these projects often outperform not just in creativity but also financially, as audiences with a stake in the project amplify buzz and box-office success.
The timing is optimal. As IPOs slow down and private markets expand, tokenization is tapping into billions in household capital and unlocking previously restricted opportunities in private credit, venture capital, and now, film. The GENIUS Act has introduced much-awaited regulatory clarity for digital assets, while major players like BlackRock and Visa embed blockchain infrastructure into the broader economy. Tokenization has quietly transitioned from a crypto gamble to essential financial infrastructure, and entertainment is emerging as one of its most relatable (and vital) applications.
There might be no more effective Trojan horse for mainstream acceptance of tokenization than cultural real-world assets (RWAs). Few sectors are as ripe for change as film, and none are as universally relatable, considering nearly all of us end our day binging on Netflix (while grumbling about the content). However, if audiences can invest in the films they wish to see, whether from established names or emerging talent, we won’t just witness new financing models; we’ll experience better films.
