What is Scarce When Quality is Abundant

Where Does Value Accrue?

[Note that this essay was originally published on Medium]

Vizcom rendering of my sketch

Many of my recent posts explore the following idea: the last decade in film and TV was defined by the disruption of content distribution and the next decade will be defined by the disruption of content creation. The premise is that over the next five-seven years several technologies, particularly AI (including GenAI), will further blur the quality distinction between professionally-produced (or “Hollywood”) content and creator or independent content, resulting in effectively “infinite” quality.

This idea raises a lot of questions, some of which I’ve tried to answer in posts like Forget Peak TV, Here Comes Infinite TV, How Will the Disruption of Hollywood Play Out? and AI Use Cases in Hollywood. But here’s another question: what becomes scarce when quality is abundant? Where will value accrue in an abundant quality world?

Tl;dr:

• In analyzing any industry, it’s critically important to understand which resources are abundant and which are scarce. That’s because value accrues to the scarce resource in a value chain and, accordingly, it shifts along the chain when the relative abundance/scarcity of resources changes.

• Hollywood will need to prepare for abundant quality content.

• Last year, Hollywood released about 15,000 hours of new TV episodes and films in the U.S. Creators upload 500 hours of content to YouTube each minute, or over 250 million hours per year. If consumers consider just 0.01% of this to be competitive with Hollywood, that would double Hollywood’s annual output; if they consider 0.1% competitive, it would be 20x.

• AI is set to democratize high production values. At the same time, many consumers’ definitions of quality are shifting away from high production values — and therefore lowering the bar — at least some of the time. YouTube is already the most streamed service in the U.S. to TVs, equivalent to Hulu, Disney+, HBO Max, Peacock and Paramount+ combined. Or, consider that Mr. Beast’s last video, which is performing near his average, got enough viewing to be a top 10 series on Netflix globally.

• So, what becomes scarce (and more valuable) when quality becomes abundant? A few things: consumer time and attention; hits; marketing prowess; curation; fandom and community; IRL experiences; premium IP; library; and (maybe) certain picks and shovels.

• Big media companies should invest in scarce resources where they can.

• One opportunity is a much more purposeful effort to cultivate fandom, or what I refer to as “fanchise management.” Below, I discuss what this might mean in practice.

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Scarcity, Abundance and Value

In analyzing any industry, understanding the relative scarcity and abundance of key resources is critically important for two simple reasons: 1) value accrues to whomever controls the relatively scarce resource(s); and 2) when the relative abundance and scarcity of resources changes, value shifts along the value chain.

Value Flows to the (Relatively) Scarce Resource

The idea that value flows toward scarce resources is a foundational concept in economics. Somewhere in the second or third chapter of every Econ 101 textbook is a discussion of market structures. It usually includes a few charts with a bunch of intersecting supply, demand, marginal revenue and marginal cost lines that illustrate the differences between pricing, profits, consumer surplus and producer surplus (among other things) for different market structures.

The two extremes in these textbooks, perfect competition and monopoly, illustrate why value flows to the scarce resource.

• In perfect competition, no company controls the key resources, all competitors are price takers and they generally only earn enough profit to offset their cost of capital (if that), earning no economic profit.

• In a monopoly, at the other extreme, one company controls the scarce resource. As a result, it can set prices and extract profits above its cost of capital.

The graphs usually look something like Figure 1. As shown, relative to a perfectly competitive firm, a monopoly extracts much more producer surplus (and consumers extract less consumer surplus) — because it controls the scarce resource(s).

Figure 1. Value Flows to Whomever Controls the Scarce Resource

Note: Consumer surplus is the difference between what consumers would be willing to pay and the market clearing price; producer surplus is the difference between the price at which producers would be willing to supply and the market clearing price; and dead weight loss is the loss to society from market inefficiency (i.e., units that could have been bought/sold but are not). Source: Every economics textbook ever.

Value Shifts When Relative Scarcity and Abundance Change

It follows that when the relative scarcity and abundance of key resources changes (and consequently who controls the scarce resource(s) changes), value shifts along the chain. Industries are often disrupted expressly because a key input that was scarce becomes abundant and entry barriers fall.

As an example, here’s an excerpt from Web3 Could be Even More Disruptive than You Think describing the shifting relative scarcity and abundance of bandwidth and processing power over the last 60–70 years:

· In the first enterprise computing systems, local bandwidth was cheap and processing power was expensive. Dumb terminals were connected over a local area network to a centralized mainframe, which performed the processing.

· In 1971, Intel invented the microprocessor and processing power became more abundant than bandwidth. That change birthed the modern computer industry and everything related to it — the PC, peripherals, consumer software, enterprise software, video games and mobile phones, etc., etc.

· With all that distributed (and eventually commoditized) processing power in place, capital flowed toward the new scarce resource, bandwidth. During the ’90s and ’00s billions of dollars were spent laying fiber and putting up cell towers which, along with improved multiplexing technologies, compression algorithms and network architectures, flipped the script again, making bandwidth relatively inexpensive and processing power again relatively scarce. In turn, from cheap bandwidth emerged the cloud, the SaaS business model, streaming media and mobile gaming, among many other things.

The biggest beneficiaries of technological change are those who can anticipate which resources will become abundant and which will become scarce and are able to squander the abundant resource to corner the scarce one.

The Math of Abundant Quality Video

Let’s turn to the math.

To use round numbers, Hollywood put out around 15,000 hours of new film and TV content in 2022 in the U.S. That includes 496 films with an average running time of about 100 minutes, or about 800 hours of film content. As shown in Figure 2, last year there were an estimated 2,000 original series on TV in the U.S., including almost 600 scripted series. Assuming an average of 10 episodes per series and 40 minutes per episode, that is another 13,000 hours of original video. So, we’ll call it 15,000 total, if we’re rounding up.

Figure 2. There Were ~2,000 Originals on TV in the U.S. Last Year

Source: Variety Insight by Luminate, Variety Intelligent Platform analysis.

By contrast, in 2019 YouTube disclosed that 500 hours of new video are uploaded every minute, or 30,000 hours per hour. That is double the amount of new content released annually by Hollywood and equivalent to Netflix’s entire domestic library — every hour. And keep in mind that was in 2019. It has surely increased since then.

Figure 3. A Vast Amount of Content is Uploaded to YouTube

Source: YouTube Newfronts presentation, May 2019.

But let’s stick with the 30,000 hours per hour (or over 250 million hours per year). Obviously, most of that is not considered competitive with professionally-produced, Hollywood content. But consider this: if 0.01% of it is, that would equate to ~30,000 hours of new, competitive content produced annually by independent creators, or double Hollywood’s annual output. If 0.1% is considered competitive, that would be 20x what Hollywood produces per year. Either way, it would be enough to completely upend the supply-demand dynamic.

If 0.01% of independent content is considered competitive with Hollywood, that would equate to 2x Hollywood output annually.

Defining “Quality”

How realistic is it that consumers will eventually consider 0.01% or even 0.1% of independent content to be of sufficiently good quality to compete with Hollywood? Pretty realistic.

There are two primary reasons for this. The first, which is causing hand wringing throughout Hollywood, is that AI is democratizing high quality production. In a recent post (AI Use Cases in Hollywood), I discussed in detail both current and potential future AI use cases in film and TV production and why (and how) they may dramatically reduce production costs. The second reason, which is more subtle, is that many consumers’ definition of quality is shifting away from high production values.

The assertion that independent content will increasingly be able to compete with Hollywood content is sometimes misconstrued to mean that the production values of independent content will match the upper echelon of blockbuster movies and premium TV. I’m not making that case. The question is not whether the production values of independent content will be comparable to the best Hollywood output, it is whether consumers will consider it competitive for similar use cases based on their own definitions of quality.

The question is not whether the production values of independent content will be comparable, it is whether consumers will consider it competitive for similar use cases based on their own definitions of quality.

The Definition of Quality is Fluid

I’ve written about quality before, such as in The Four Horsemen of the TV Apocalypse, but I’ll revisit it briefly. The word “quality” is hard-to-define, but here’s what I mean: quality is the weighted combination of attributes one considers when choosing between identically-priced choices. So, quality is based on revealed preference; each person may have a different definition of quality; it is context dependent (e.g., you will have a different definition of quality when settling down with your family on a Sunday night than while sitting on a long flight); and it can change over time.

It is self-evident to most younger consumers, or anyone who observes younger consumers, that social video is changing the definition of quality for many. Some Hollywood executives may define TV and film quality as high production values, good writing, well-known above the line talent (writers, directors, showrunners, actors), expensive effects, etc. But social video has introduced all kinds of potential new attributes to many consumers’ quality algorithms, like accessibility (low friction), digestibility (easy and quick to watch), authenticity, virality and relevance to my sub-community or social circle, etc. The introduction of these new attributes lowers the weighting of more traditional attributes. That’s not to say that high production values no longer matter, just that the introduction of new attributes necessarily means they matter less.

The introduction of new quality attributes necessarily means that traditional measures of quality, like high production values, matter less.

Let’s make this less abstract. My wake up call occurred years ago, when I saw my son switch his Saturday-morning viewing from Teen Titans Go on Cartoon Network to watching gaming streamers DanTDM and LazarBeam on YouTube. Since he didn’t pay the bills then (and still doesn’t), his marginal cost to view everything was zero. So, when he chose a streamer over traditional TV, he revealed that he considered the former to be higher quality than the latter (at least at that moment). Or consider your own experience. If you subscribe to one or more streaming services, your marginal cost of consumption is also zero. If you’ve ever plopped down on the coach and scrolled through TikTok for 30 minutes rather than watch Netflix, you’ve signaled that TikTok was higher quality than Netflix at that moment — whether you explicitly thought about it that way or not.

The Data Illustrate that the Definition is Changing

As shown in Figure 4, according to Nielsen, YouTube is the most streamed service in the U.S. to televisions. It gets the same viewing as Hulu, Disney+, Max, Peacock and Paramount+ combined. Note that this excludes viewing of the YouTube TV vMVPD service and YouTube viewing on PC, mobile or other devices. The usual rationale for why independent or creator content doesn’t compete with Hollywood is that it is a very different use case. But this comparison is measuring precisely the same use case — watching on a TV. When looking to be entertained on their TVs, more people pick up a remote and select YouTube than any other service.

YouTube already surpasses every other streaming service for their primary use case — watching on a TV.

Figure 4. YouTube is Already the Most Streamed Service on TVs

Source: Nielsen.

To underscore the point, Figure 5 compares the first week viewing of Mr. Beast’s latest video on YouTube (World’s Most Dangerous Trap!) to the most watched English-language series on Netflix globally around the same period. The video garnered over 100 million views in its first week, which is about the (recent) average for a Mr. Beast video. With a 20 minute running time, it would rank right alongside Netflix’s top viewed series whether you assume a 75%, 50% or even 25% completion rate.

Figure 5. Mr. Beast’s Last Episode Would Rank With Netflix’s Top Series Globally

Source: Netflix, YouTube, Author (concept from Benedict Evans).

According to the collective judgment of bettors on Manifold Markets, at the time of this writing there is a 26% chance that a film created using a text-to-video generator (like Runway) will be nominated for an Academy Award (in any category) by 2030. But the bar is far lower than that. “Abundant quality” merely means that there will be a lot more content that competes with Hollywood in similar use cases and similar contexts, for a sufficient number of people.

What Becomes Scarce When Quality is Abundant?

Let’s paint a blurry picture of 2030.

• The cost to produce “quality” video content (as defined above) has dropped several orders of magnitude as a larger proportion of what appears on screen is synthetic.

• In 2027, Runway achieves its stated goal of enabling the first (watchable) feature-length film entirely created by stitching together text/image/video-to-video generated video, so by 2030 it is common to see video that largely or entirely comprises synthetic scenes. Human actors are still prevalent in comedies and dramas, but less so in sci-fi, fantasy, action/adventure and horror genres.

• With much lower cost, and risk, it is economically feasible to distribute content for free on ad-supported platforms, like YouTube and maybe TikTok.

• The ability to render video near-real time enables dynamic, contextually relevant or perhaps even personalized content.

• In 2029, three of the top 10 most popular shows in the U.S. are distributed on YouTube and TikTok, for free (ad supported).

• YouTube exceeds 20% share of viewing by seamlessly combining Hollywood content and creator content, premium and ad-supported, in one consumer experience. For consumers, the distinction between “professionally-produced” and “creator” content becomes even less meaningful.

In other words, while it already feels like consumers are faced with infinite choice, it will become even “more infinite” (yes, there is such a thing).

So, back to the questions I posed at the very beginning: When quality is abundant, what is scarce? Where does value flow?

Some of my answers below are obvious, in part because we’ve already seen this play out with other media, and only warrant a few sentences. Others would justify (or already have justified) an entire essay in themselves:

Consumer Time and Attention

Consumers will clearly benefit. With more people competing for their time and attention, consumers will have even more choice, at higher quality and lower cost. We may not always think about consumers as competing for value within the value chain, but they do.

Beneficiary: consumers

Hits

Hits will be scarcer and more valuable than ever. I discussed why in an essay a few months ago, called Power Laws in Culture, which has been one of most-read posts. As I wrote in that piece though, hits are hard to harness because they include a large dose of luck.

Here’s a quick summary. When confronted with so much choice, consumers need filters. One of those filters is popularity, because people assume that other people’s choices contain valuable information (i.e., “the most popular stuff must be popular for a reason, right?”). This causes an “information cascade,” a powerful positive feedback loop that amplifies hits. Across media this is resulting in persistently, and sometimes increasingly, extreme power law-like popularity distributions — a few huge hits and a massively long tail of misses. (In the essay, I show this empirically for Netflix shows, songs on Spotify, U.S. box office and Patreon patrons.) Over time, these distributions may become relatively more extreme as the tail gets ever longer. While in the future the hits may not be absolutely bigger, they will be relatively bigger, and therefore more valuable, than ever.

Who benefits from this? As I discuss in the Power Laws essay, information cascades are “highly sensitive to initial conditions” that are difficult to predict or control. So, while successful content must exceed some quality threshold, hits are heavily influenced by luck.

Beneficiary: a lucky few

Marketing Prowess

Another implication of abundant quality is that marketing becomes more important and a lot harder.

An instructive example is the major music labels, as I discussed in Will Radio Save the Video Star? They already confront “infinite quality” (Spotify boasts 100 million tracks and an estimated 100,000 new songs are uploaded to streaming services each day). Plus, the value they provide artists — which was historically financing, marketing and distribution — has changed as technology has made it easier for artists to do these things themselves. But they have maintained their primacy in the value chain, and their value to artists, in part because of their marketing prowess and ability to manage artists’ brands and images holistically.

But marketing also gets tougher, for a bunch of reasons: there is much more competition for users’ attention; fragmentation makes it harder to reach consumers using traditional mass media; the consumer decision journey becomes more complex, as does attribution; the rising ability to segment and target consumers raises the bar (and the cost) for everyone; and you need to monitor and, if possible, dynamically influence or counter, the organic signals arising from the network itself. So, the job becomes a lot more analytical, data intensive and difficult to manage.

Beneficiary: good marketers

Curation

Another filter consumers use is curation. This obviously shifts value to the platforms that control distribution. They have reams of data and control the UI. When done correctly, recommendation systems give the platforms the power to increase consumer usage, engagement and retention and perhaps steer viewers to content in which they have a vested interest (such as content they own or for which they pay lower license fees).

But there are limits. As I also discussed in Power Laws in Culture, not all recommendation algorithms are equally valuable. Consumers’ dependence on recommendation engines seems directly correlated with search costs and inversely correlated with the opportunity cost of consumption. In music, for instance, the search costs are extremely high (100,000 new tracks per day!) and the opportunity cost of trying out a new song is very low (and easily surmounted by skipping it). By contrast, in TV the search costs are not as high (there are a lot of shows, but not as many) and the opportunity cost of watching a few episodes of a new series is very high. It is telling, for instance, that Netflix recently eliminated its “Surprise Me” button because “users tend to come to the service with a specific show, movie or genre in mind.” Rather than rely on recommendation algorithms, some consumers prefer to carefully manage their curation, outsourcing it to their most reliable friends on Facebook, favorite influencers on Instagram or TikTok, tastemakers on Spotify or chosen thought leaders on Twitter/X. Or, in some cases, they rely on good old word-of-mouth.

In addition, there’s an open question whether technology will ultimately supplant the recommendation algorithm as we know it. Today, Spotify, Netflix or YouTube benefit by observing our behavior on-platform and perhaps appending additional first-party data they obtain through ownership of adjacent platforms or third-party data (such as might be obtainable if they have personally identifiable information (PII), like credit cards). But everything they know about us is by inference and they can’t see all our behavior across digital platforms and offline. In the future, will we all have AI agents that both know our intentions (“pull me up a Lizzo-vibe playlist” or “what was that article I bookmarked on Twitter the other day?” or “give me a list of the top 10 movies I should watch with my 6-year-old daughter and 10-year-old son”) and have access to behavioral data across platforms and even IRL? Probably.

Beneficiary: the platforms, for now

Fandom/Community

Yet another filter consumers will use to choose content is fandom or community. As Ben Valenta and David Sikorjak explain in their recent book Fans Have More Friends, fandom is ultimately driven by a deep-seated need for belonging. Fandoms provide a sense of connection, a common vernacular and perhaps even a shared value system. (We’ve all had that experience of meeting someone and realizing we share similar tastes in music, TV series or authors, and feeling a tighter bond.) When confronted with infinite choice, people will not only gravitate to content about their fandom, they will actively seek it out.

In the future, having an engaged, loyal fan base will be more important than ever.

The challenge for IP owners is how best to foster this fandom. For most traditional entertainment companies, it is an afterthought today. But as the volume of quality content explodes, having an engaged, loyal fan base will be more important than ever. Below, I discuss how entertainment companies should think about what I call “fanchise management.”

Beneficiary: IP owners, if they prioritize it

Premium Brands and IP

Following from the prior point, diehard fans will actively seek out content that relates to their fandom. But even casual fans will lean on well-known brands and IP as yet another filter to help them cut through the clutter. This is partly due to what behavioral economists call the “mere exposure effect:” people tend to like something just because they’ve been exposed to it before.

The big media companies already know this, as evidenced by Disney’s investments in Star Wars and the MCU, WarnerBros. Discovery’s announcement of a reboot of Harry Potter or NBCU’s reported interest in bringing back The Office.

With lower production costs, it becomes less risky to resuscitate dormant or underleveraged IP.

Of course, you can take this too far and risk weakening the value of IP by creating so-called franchise fatigue. Perhaps a more interesting opportunity is to leverage falling production costs to try to resuscitate dormant or elevate underleveraged IP. Think it might be time to bring back Thundercats or reach deeper into the DC library and give Ragman or Metamorpho a shot? Might as well.

Beneficiary: IP owners

Library

The major media companies have enormous libraries of content. For instance, this is from the Warner Bros. website (and this doesn’t include HBO or the Turner networks):

The company’s vast library, one of the most prestigious and valuable in the world, consists of more than 145,000 hours of programming, including 12,500 feature films and 2,400 television programs comprised of more than 150,000 individual episodes.

No matter how inexpensive it gets to create new content, these libraries will retain value: they can be re-monetized through licensing or owned SVOD or FAST networks; they can be licensed to train generative AI models; they can be trained for proprietary internal generative models; it may be possible to upscale 2D content to 3D (using technologies such as NeRF or Gaussian Splatting) to give some of this content a new life and enable new experiences or create digital asset libraries for future games or productions; and, using new dubbing technologies, it may be possible to re-exploit them in non-English language countries.

In many cases, the owners of these libraries don’t know exactly what they have, where it is, what rights they have in different jurisdictions or how to administer royalties if they can monetize them again. This is one of those big problems that sound really un-sexy but could unlock a lot of value.

Beneficiary: Big media owners, if they can figure it out

IRL Experiences

There’s a trope that when information goods get cheaper, experiences get more expensive. That’s certainly been true in music. Live experiences offer a number of benefits that you can’t get at home: the exclusivity itself is a draw, the communal experience, the social status (such as posting online that you “were there”), the signaling of the degree of your fandom and establishing a lasting memory.

In film and TV, that probably benefits the companies who are best poised to create live experiences around their IP, namely Disney and NBCUniversal, who own theme parks. But that is an extremely capital intensive business and it’s highly unlikely any other major media company will take the plunge.

It is possible to create live experiences around entertainment IP with less investment, such as stage versions (like musical versions of Disney films) or traveling live shows (such as for Impractical Jokers). Netflix just announced plans to open brick and mortar locations for retail, dining and other live experiences. The challenge is that these businesses are definitionally tough to scale. Will it eventually be possible to create synthetic “metaverse”-type experiences that are compelling and exclusive, at scale? We’ll see.

Beneficiary: Disney and NBCU

Picks and Shovels, Maybe (?)

Many companies are currently trying to position themselves as the enablers of the democratization of content production. It’s very much an open question whether it is possible to establish a competitive moat around enabling tools. For instance, Runway has established itself as the frontrunner in AI video generation and just secured a $1.5 billion valuation in its last funding round. But competitors seem to crop up every month or so, such as recent entrants Replay and Moonvalley. Adobe could be an even bigger competitive threat as it adds its Firefly generative AI features inside Premiere Pro and After Effects, since this is already the most-used edit suite in the industry. Alternatively, OpenAI will surely eventually launch a video generator, so maybe multi-modal AI (text, image, video and probably audio) in one platform ultimately wins.

Will someone create the “TikTok” of high-quality content that provides easy-to-use, no code tools for content creation and a distribution platform all in one place? (And if so, why isn’t this TikTok itself or the evolution of Fortnite Creator?) Will someone create the digital watermarking system that enables content to be tracked and monetized wherever it appears online? Will someone solve the library rights management problem I cited above?

The answer to all these questions is a resounding: who knows? It’s too early to tell.

Beneficiary: if you know, tell me

What’s Big Media to Do?

As I’ve written before, disruption is never good for incumbents. But that doesn’t mean you shouldn’t play the hand you’re dealt as best you can.

If you’re a big media company, what do you do? When the relative scarcity/abundance of resources shifts, successful companies invest in the scarce resource. Looking through the list above, many of these new areas of scarcity aren’t accessible for media companies. There is no way to corner the market for hits and there is little opportunity to control curation. But there are a few areas where the big media companies should invest (and, in some cases, they already are):

• Premium IP and brands (particularly those that have the best potential to cut through the noise, such as those with rich mythologies).

• Marketing science.

• Library rights management and monetization.

• “Fanchise management.™”

The first three are pretty self explanatory, so let’s spend a moment on the last one.

(I didn’t really trademark “fanchise management,” but I should, right?)

From Franchise Management to “Fanchise Management”️

Above, I made the case that fandom and community will be an increasingly important filter as consumers confront infinite choice. What can entertainment companies do to foster it?

Fandom as Output, Not Input

Historically, Hollywood had a largely one way relationship with its fans, partly because there was no practical alternative. A TV series or film was made by a relatively small team of creatives and released and, if it succeeded, a fandom would emerge. Fandom was considered an output of the creation process, not an input. These fandoms started as fan clubs (sometimes “official”, sometimes not) and have evolved into dedicated websites, wikis and subreddits and conversations that happen on Twitter, Facebook, TikTok, etc. The most dedicated fans create their own fanfics or fan films, something I discussed in depth in IP as Platform.

Even today, fandom is often viewed as something to manage, not cultivate.

Today, marketers engage with fans by establishing an official online presence, like dedicated Facebook pages or posts on YouTube, TikTok, Reels, etc., and use tools like sentiment analysis to monitor the online conversation. They’ll also engage key influencers and have special screenings or sneak previews and talent panels at events like ComicCon. Studios try to listen and cater to the fans — you definitely don’t want to piss them off — but fandom is often viewed more so as something to manage than cultivate. And almost all of these fan conversations are happening on platforms the studios don’t control.

Fanchise management is a much more purposeful approach to cultivating fandoms and developing community around them.

Fanchise Management

To truly foster fandom, studios need to move from franchise management to “fanchise management.” Most studios have some sort of franchise management function, the goal of which is to think holistically about a specific franchise and coordinate across the company on long-term creative strategy, brand marketing, merchandising, live events, licensing, gaming, etc. Sometimes it’s done well and sometimes it’s not, although it is often hard to tell from the outside (and sometimes even from the inside) whether this function is effective.

Figure 6. The Fanchise Management Stack

Source: Author

Fanchise management would be an extension of this, but with a much more purposeful approach to encouraging fandoms and developing community around them. In Figure 6, I show an illustrative “fanchise management stack” with a series of capabilities that correspond to a higher degree of engagement as you move up the stack. Also note that most studios are currently trying to do some of this (especially the bottom two layers), but much less so as you move up the stack.

• The foundation is, as always, making good stuff.

• On top of that is multiple, year-round content extensions that give fans the opportunity to engage with the IP and keep it top of mind, even outside of the normal content (TV, film) release cycle. This could include digital shorts, book or comic book publishing, mobile games, IRL events, podcasts, immersive experiences (eventually), physical and digital collectibles, etc. These are all potential revenue opportunities, but building fandom may be equally or even more valuable.

• From there it gets progressively less common. Loyalty and engagement incentives might include digital collectibles or badges in exchange for viewing, commenting, sharing, etc. They could also be paired with utility tokens that could be exchanged for discounts or exclusive merchandise or events. In Every Media Company Needs an NFT Strategy-Now, I discussed how NFTs could facilitate this. NFT has become a four-letter word of late, so perhaps we should just call them unique digital assets, but the infrastructure keeps maturing and it is increasingly possible to abstract away the “crypto” so that consumers aren’t even aware of it. For instance, Feature is currently partnering with media companies to create blockchain-enabled fan loyalty and engagement programs.

• On top of that is community tooling. Today, the conversations about IP are spread between multiple platforms, so the goal would be to aggregate more of those conversations in one place. That would require either adding social tools in the places where fans already congregate, namely streaming apps, or creating new products or services that draw fans and also have social features. That’s a good segue to the next layer.

• Co-creation refers to giving fans input into content creation. At the most conservative end of the spectrum, copyright owners could tightly control what elements of the story fans are able to influence. For instance, viewers could choose between a few plot developments. At the other end, creators would be encouraged to make entirely new content using the copyright owner’s IP, something I discussed in IP as Platform. I won’t repeat the entire essay, but the bottom line is that encouraging fan creation (with the appropriate guardrails) would strengthen the entertainment companies’ relationships with their most avid fans and attract new ones. (It might also provide free marketing; possibly source new stories and talent; and, to the degree they can monetize some of this new content, boost revenue.)

• By co-ownership, I mean the opportunity for fans to have an economic interest in the success of an IP. This is a natural outgrowth of some of the prior ideas. For instance, the value of rare digital collectibles would likely increase if a show or movie becomes more successful. Similarly, if fan-created content can be monetized, the creator should get a cut. Providing fans an economic interest in their favorite IPs would make them even more ardent evangelizers.

Hollywood Needs to Prepare

Right now, some of this might seem “out there.” But keep in mind that I’m writing about trends that will play out over the next five-10 years. In 2009, the idea that Netflix would upend the entire pay TV ecosystem — globally — seemed out there too.

Hollywood should be working overtime to position itself.