The benefits promised by blockchain technology are starting to make its way to Hollywood.
Christopher Woodrow, American financier and CEO and Founder of MovieCoin, a financial technology company that leverages blockchain and digital assets within the film and entertainment industry, has announced today the start of its public presale.
Since the launch of MovieCoin, we’ve had tremendous interest from people all over the world. In particular, we’ve discovered that blockchain technology can have a big impact on entertainment financing. To invest in Hollywood, one previously had to show up with a check for $50 million dollars for anyone to take them seriously. Utilizing blockchain can open up an entirely new asset class to accredited investors, Woodrow told me.
With a hard cap of 10,000 Bitcoin (BTC), the public presale follows the conclusion of MovieCoin’s private presale, which successfully reached the company’s soft cap of 2,000 BTC. MovieCoin will simultaneously issue two types of tokens during its presale – the Moviecoin Utility Token (MOV) and the MovieCoin Smart Fund (MSF) Security Token. According to Woodrow, MovieCoin’s MSF token is Hollywood’s first SEC compliant security token, which will be tradable on security token exchanges after a one-year lock up. The security tokens are being sold pursuant to Regulation D (Reg D) in the United States and Regulation S offshore.
Woodrow, who is no stranger to Hollywood, has financed and produced a number of notable feature films including box office hits, Black Mass and Hacksaw Ridge, as well as the critically acclaimed hit Birdman. Woodrow’s films have grossed in excess of $700 million worldwide and have been nominated for 16 Academy Awards, winning six Oscars, including Best Picture.
I had the opportunity to speak with Woodrow about MovieCoin’s public presale, how a security token will benefit Hollywood and why blockchain technology will advance the film industry.
Rachel Wolfson: How will the “MovieCoin Smart Fund” (MSF) security token impact Hollywood?
Christopher Woodrow: We believe that the MovieCoin Smart Fund (MFS) security token will be groundbreaking for Hollywood in a number of ways. First, we are selling $250 million dollars worth of security tokens to finance 60 movies over the next six years. This means that 10 movies a year will be financed with security tokens. All of the films will fall within the $15-$65 million dollar budget range.
This will have a big impact on Hollywood in terms of investing in films, a sector that has been incredibly illiquid. For instance, those investing in a movie are locked up for several years. Those investing in several movies could be locked up for a decade. The MovieCoin MFS security token will be freely traded on security token exchanges after a one-year lock up. This means that investors will be able to buy and sell tokens that represent ownership of the underlying portfolio of movies. This is a real significant change in Hollywood, as a tremendous amount of liquidity is being brought to an illiquid asset class.
Moreover, aside from blockchain technology providing greater transparency and trust to investors, the MFS token is being offered to accredited investors all over the world. High net worth individuals everywhere can now participate in the financing of major Hollywood movies. Hollywood is still very much a closed club. Unless you know someone, you can’t just go and finance a movie. But now for a relatively small amount of money, investors all over the world can participate in the financing of real movies.
We are also working with BANKEX, a top-20 global financial technology company that is developing MovieCoin’s Proof-of-Asset Protocol. BANKEX’s CEO, Igor Khmel, immediately recognized the value in what we were trying to do with MovieCoin. We formed a partnership about a year ago with BANKEX and Igor raised about $70 million dollars for our token sale in 2017. BKX tokens are issued by BANKEX, as a variation of the ERC-20 utility tokens attached to Ethereum’s blockchain. BKX tokens are also accepted for the public presale with an added 5% bonus rate.
Wolfson: Why did you decide to offer both a security and a utility token?
Woodrow: While utility tokens appeared to gain more hype in 2017, we still see a need for it. By offering the MovieCoin Utility Token (MOV), we can add tremendous value. And by offering both of these tokens, which are in many ways tied together, we can really do something very unique for the film industry.
Wolfson: Do you believe that security tokens are the future of the cryptocurrency market?
Woodrow: Without question, security tokens are the future. I think it could be 20 times the size of the current cryptocurrency market, and security tokens will be groundbreaking in many ways. However, with respect to Initial Coin Offerings (ICOs) and cryptocurrency in general, I don’t think this is something that is dying. ICOs were hyped last years and are now cooling off a bit, but this is becoming more regulated, which is good for everybody involved.
Wolfson: How exactly is blockchain technology benefiting Hollywood?
Woodrow: In terms of blockchain, one of the key things to consider is access. To previously invest in Hollywood films, someone had to show up with a check for $50 million dollars to be taken seriously. Utilizing blockchain technology can open up an entirely new class to accredited investors who previously couldn’t do this.
Also, liquidity is a significant breakthrough. We are talking about a market with above average returns, but historically has had very little liquidity. Now, suddenly you have liquidity. In my mind, we will see more money coming to this asset class.
Finally, transparency is a key driver of blockchain and something that the entertainment industry has lacked for years. Hollywood has been one of the few places where not a lot of new technology has been implemented in the last 30 years. Adding a level of trust and transparency will bring more capital to this asset class.
Wolfson: What are your thoughts on the future of Bitcoin and the cryptocurrency market in general?
Woodrow: There is a good quote by the American journalist, Charles Dow, that someone told me in 2001 during the NASDAQ selloff. The quote turned out to be very accurate and I think it’s timely considering where we are with the crypto market.
“There is always a disposition in people’s minds to think the existing conditions will be permanent,” Dow wrote, and went on to say: “When the market is down and dull, it is hard to make people believe that this is the prelude to a period of activity and advance. When the prices are up and the country is prosperous, it is always said that while preceding booms have not lasted, there are circumstances connected with this one, which make it unlike its predecessors and give assurance of permanency. The fact pertaining to all conditions is that they will change.” – Charles Dow, 1900