Tokenization and Artificial Intelligence: Merging in Hollywood and Streaming Industry

The global tokenization market size reached around $1.24 trillion in 2025, a notable rise from $865.54 billion in 2024, with expectations for multi-trillion-dollar expansion by the decade’s end. This growth was largely motivated by regulatory clarity in pivotal regions. This is Part Three, which assesses significant tokenization and AI technology advancements in Hollywood during 2025. Part One: 2025 marked the advent of tokenization. Part Two addresses energy demands to facilitate the rise of AI-driven tokenization, requiring orbital cloud data centers. Part Four of a four-part series explores how tokenized edge cloud streaming and AI are redefining sports and predictive market betting, an evolving immersive experience.

Tokenized edge cloud streaming and AI are reshaping Hollywood

The U.S. media and entertainment sector holds the title of the largest globally. Historically, major Hollywood studios enjoyed a first-mover advantage in industrializing and distributing films and television programming with wide international resonance. In both U.S. and international markets, the top film studios — referred to as the Big Five — Universal Pictures (parented by Comcast), Paramount Pictures, Warner Bros., Walt Disney Studios, and Sony Pictures — collectively command about 80 to 85% of U.S. box office revenue through their diversified media conglomerates and various film and television production and distribution subsidiaries.

In 2025, Hollywood witnessed a notable power shift driven by major consolidation in the entertainment and media sector, underscored by a bidding competition for Warner Bros. Discovery, one of the Big Five Studios, by a leading streaming company. Netflix reached a definitive agreement to acquire Warner Bros. Discovery, as announced on December 5, 2025, for roughly $82.7 billion, pending regulatory and shareholder approval, against a hostile counteroffer of $108 billion from Paramount, another Big Five Studio, along with Jared Kushner’s private equity firm, Affinity Partners. A class action lawsuit^.

Actor Matt Damon remarked that streaming adversely affects cinema, primarily by eliminating backend revenue (residuals) previously earned from home video sales (DVDs, etc.). Streaming complicates the financial viability of mid-budget, non-franchise adult dramas due to its lack of profit participation or bonus structures relative to traditional box office and home video sales, leading to diminished compensation for successful projects. As an illustration, Matt cites his film Air, which was streamed globally by Amazon Prime and merely recouped its $90 million budget at the box office.

Recently, streaming powerhouses like Netflix, Amazon Prime, Hulu, Apple TV, and Warner Bros allocated significantly more resources to international productions over domestic efforts. Numerous countries such as France, Italy, Mexico, Colombia, Canada, Japan, the UK, Australia, New Zealand, Ireland, Hungary, Germany, Spain, Portugal, and the Czech Republic benefit from Hollywood’s offshoring of filming, propelled by generous financial incentives, diverse locations, and a resilient local film industry infrastructure. Actor Matt Damon’s lifelong friend and business partner Ben Affleck, who directed and starred in the film Air, filmed extensively in the Los Angeles area and noted that California’s absence of tax credits makes it cheaper to transport crews to locations like Ireland or Hungary than to shoot locally in California.

Former U.S. President Donald Trump, who campaigned using quotes from the film Air, is concerned about Hollywood’s television and film production and distribution being ‘stolen’ by foreign nations.

This prompted him to suggest a 100% tariff on films produced outside the U.S. first in May and again in September, framing it as a national security concern to restore film and TV production domestically, citing overseas tax incentives luring away U.S. jobs and studios. Trump also recently signaled his intention to involve himself in the regulatory review of potential deals concerning Warner Bros. Discovery, indicating that the agreement may be subject to antitrust examination.

Advancements in streaming technology pioneered by American companies like Netflix, Hulu (parented by Walt Disney), and Warner Bros. Discovery (Max), along with major tech firms such as Amazon (Prime Video), Apple (Apple TV+), and Google (YouTube), have profoundly altered film and TV distribution by disrupting traditional paradigms and transforming content consumption. The consolidation of power among a handful of significant U.S. media and tech corporations has raised substantial concerns regarding information control, diminished diversity of voices, potential biases in content, and anti-competitive behavior. These entities control an extensive share of streaming platforms, AI-generated content, and the foundational edge cloud streaming technology infrastructures that are revolutionizing Hollywood through changes in content creation (AI for scripts, visuals), production efficiency (AI automation, edge cloud), distribution enhancement (rapid delivery via edge cloud), audience personalization (AI algorithms), and business model restructuring (blockchain for royalties, ownership, earn-to-watch model), leading to democratized tools, new revenue streams, and profound industry changes that ignite age-old debates over creativity versus automation and lawsuits concerning AI’s infringement on copyrighted TV and film content.

President Donald Trump executed an order that prevents states from enforcing their own artificial intelligence regulations, seeking to establish a “single national framework” for AI.

Edge cloud streaming

The digital revolution, expedited by the COVID-19 pandemic, has led to a comprehensive transformation in Hollywood, marked by the prevalence of streaming-first distribution, data-centric production, substantial investments in original content, and delivery of mobile-oriented, on-demand viewing experiences, alongside a marked decline in conventional cinema attendance.

Amazon Web Services, Google Cloud, and Microsoft Azure are expanding their considerable cloud infrastructure to the edge, providing services like AWS Local Zones, Google Cloud’s Anthos, and Azure IoT Edge. These platforms empower customers to deploy and manage applications closer to end-users, leveraging the scalability and features of central cloud systems while reaping benefits from lower latency and localized processing. Edge cloud streaming can be blockchain-integrated, as these technologies synergize for secure, efficient, and peer-to-peer content delivery, establishing decentralized content delivery networks or marketplaces.

The transition to edge cloud architecture in streaming is facilitating the robust application of diverse monetization frameworks, including subscription (SVOD), ad-supported (AVOD), and transactional (TVOD) models. By harnessing edge computing, media organizations can offer high-caliber, low-latency streaming experiences while optimizing data processing closer to users, which bolsters ad targeting efficiency and enhances content delivery across revenue models.

You can view a documentary about Melania Trump on Amazon Prime Video, powered by AWS Cloud’s edge cloud technology known as Melania, providing an intimate glimpse into her life as First Lady-elect.

Did you know you could earn tokens by watching TV, films, and advertisements instead of paying for them?

Tokenized watch-to-earn streaming

The “watch-to-earn” streaming paradigm in edge cloud streaming utilizes blockchain technology to incentivize user engagement. Although this area is still emerging and somewhat niche, it presents a compelling alternative to conventional subscription or ad-supported monetization models by converting viewing time into a form of cryptocurrency or digital asset that users can accumulate and possibly redeem or trade.

The top two watch-to-earn platforms include Basic Attention Token (BAT) and the Theta Network, which represent distinct blockchain initiatives, each seeking to disrupt online advertising and video streaming, respectively. The BAT is integrated within the Brave browser to facilitate digital advertising and content monetization. Brave Rewards enable users to directly tip creators using BAT across various platforms, including YouTube, Twitch, and Reddit. The Theta Network, which streams NASA TV programming, permits users to earn TFUEL (Theta Fuel) by watching videos and sharing resources by contributing bandwidth and computing power, such as relaying video streams and operating Edge Nodes, to enhance streaming quality and lessen costs for streaming platforms.

Additional watch-to-earn platforms encompass Rewarded.tv, Verasity (VRA), Edge Video, Script Network, DLive, Vuele, MovieBloc, Flixxo, Odysee (LBC), Permission.io (ASK), PlayNano (XNO), BitTube (TUBE), Cointiply, XCAD Network (XCAD), BitRealms Entertainment, Demand Film, Gaia Film, Film.io, Eluvio, Rad, Vabble, and Myco.io.

AI connects creators and viewers with streaming

According to a Deloitte report, the integration of AI and machine learning is increasingly prevalent in the media and entertainment sector, especially in content creation and distribution. The leading streaming companies, Netflix and Amazon Prime, have successfully adopted AI within their services, with Netflix’s recommendation system influencing approximately 80% of the content watched on the platform. The third-leading streaming service, Disney, is set to invest $1 billion in OpenAI, allowing the ChatGPT developer to utilize its characters and properties in a limited scope as part of a three-year licensing deal.

Platforms like Filmhub and Cineverse (formerly Cinedigm) are employing AI to link creators with streaming platforms and brand opportunities through specialized content monetization tools. Cineverse utilizes AI applications such as cineSearch for content exploration and Matchpoint for automated content management, and collaborates with the Theta Network to capitalize on its decentralized infrastructure for cost-effective video delivery and a token-based incentive mechanism for content creators and viewers. For instance, viewers can earn TFUEL by watching content on Cinedigm’s CONtv channel, which is integrated with the Theta Network.

Taxation in the new tokenized streaming economy

Tokenized streaming leveraging edge technology and AI has fundamentally altered global film and TV distribution by enabling a direct-to-consumer, watch-to-earn mechanism that circumvents traditional intermediaries, generating new tokenized revenue streams for viewers while lowering entry barriers for international and independent creators. Navigating a complicated international tax framework marked by the rise of Digital Services Taxes introduces notable uncertainty and compliance challenges for stakeholders.

Taxation in the U.S. for individuals engaged in tokenized streaming services aligns with existing IRS guidelines regarding digital assets and self-employment income, mandating that all earnings be reported, regardless of payment methods or the receipt of Form 1099 or 1099-DA. 

Taxpayers are required to keep meticulous records of all digital asset transactions, including dates and market valuations, and to respond to the digital asset query on Form 1040, reporting all income, profits, and losses on their tax returns.

Tokens as property: The core principle set forth in IRS Notice 2014-21 is that virtual currency constitutes property for federal tax purposes. General tax principles pertaining to property transactions are applicable. 

Receiving tokens (Ordinary income): Earning tokens as compensation for services via activities such as viewing films, advertisements, mining, staking, or airdrops is categorized as ordinary income. The taxable amount is the fair market value of the tokens in U.S. dollars at the time of receipt. Ordinary income from services should be reported on Form 1040, Schedule 1, or Schedule C. 

Sale/trade of tokens (Capital gains/losses): When a taxpayer sells or exchanges tokens, or utilizes tokens to purchase fiat currency, other cryptocurrencies, or goods/services, this constitutes another taxable event that triggers a capital gain or loss based on the difference between the FMV obtained and the taxpayer’s cost basis (initial value upon acquisition). 

Short-term gains (held one year or less) are taxed at ordinary income rates (up to 37%). On the other hand, long-term gains (held for over one year) benefit from reduced capital gains tax rates (0%, 15%, or 20%). Additionally, NFTs representing art or other items classified as “collectibles” may incur a higher collectibles capital gains tax rate, reaching up to 28%. The IRS employs a “look-through analysis” to ascertain the underlying asset’s classification. Capital transactions are primarily reported on Form 8949 and Schedule D.