MovieCoin, a Blockbusting Tokenization Platform backed by BANKEX

MovieCoin, a Blockbusting Tokenization Platform backed by BANKEX

November 21, 2018 0 By Ray

A very brief history of film

We can trace the origin of movies and motion pictures back to the late 1800s. “Motion toys” (such as the thaumatrope and the zoetrope) were invented around this time, and were designed to deceive the viewer into seeing an illusion of motion from a display of still frames in quick succession.

  • In 1872, Edward Muybridge created the first true “motion picture” by placing twelve cameras on a racetrack and rigging the cameras to capture shots in quick sequence as a horse crossed in front of their lenses.
  • The first film for motion photography was invented in 1885 by George Eastman and William H. Walker, which contributed to the advance of motion photography. Shortly thereafter, the brothers Auguste and Louis Lumiere created a hand-cranked machine called the cinematographe, which could both capture pictures and project still frames in quick succession.

The 1900s set the scene as an amazing time for great advancements in film and motion picture technology. From editing to backdrops, new techniques and new equipment allowed filmmakers to continually push the boundaries both creatively and technically.

It could be said that film was integral to form the foundations of culture, especially in the United States for the next century. As can be imagined, the investment that is required to fund the films and TV is significant. While these industries do have a history of encouraging outside investment in film development and production, as they move into new technologies such as streaming, on-demand, 4K, 3D and high-end scripted television the costs only increase. As these disruptive technologies continue to take grasp, the trend of complex film financing has advanced. Investment structures often involve multiple contractual arrangements and sometimes the use of legal entities in which investors take equity stakes. The accounting for such  film financing arrangements can present at least three key challenges for the film company:

  • If a separate funding entity is used, should it be consolidated?
  • Should the investor’s interest be classified as non-controlling interest or debt?
  • If the funding is via contractual arrangements, has the film company entered into a service contract and if so when should it recognise revenue, other income or a contra-expense?

Film and TV transactions are often complex and can include features such as embedded derivatives or other put and call arrangements that need to be evaluated. This goes above and beyond other financial and legal commitments.

It doesn’t take much research to realise that procurement and management of the finances required to develop and monetise high value content is not only complex but difficult, with far reaching and significant follow on effects that are based on earlier decisions and directions.

It leads one to imagine how are film financing arrangements structured? At a low level, it may just mean involvement by the financial investors and the operating policies of the film production crew. These arrangements, even at the lower and simpler level of the vertical still require the inclusion of legal representation and contractual documentation. As can be easily believed, this can quickly become complicated and require significant red tape, legal involvement and result in financial repercussions.

Additional Reading and Research:

Enter MovieCoin

The MovieCoin bio states that:

MovieCoin is a next-generation financial technology company focused on leveraging blockchain technology, proprietary applications and cryptographic tokens to become the leading entertainment transaction platform for businesses and consumers and the standard currency for funding motion pictures, television and other media.

The Company has operations spanning content finance and production, business and consumer services and technology development and licensing. MovieCoin’s content finance and production businesses offer programmatic ownership of filmed entertainment assets to financial investors seeking institutionalized exposure to premium content, while the technological development of its digital assets platform utilizes cryptographic tokens to provide businesses with innovative solutions to streamline operations and entertainment enthusiasts with unique and more engaging ways to participate in the movie experience.

The Company was founded in 2017 by Christopher Woodrow in partnership with BANKEX and has offices in Vancouver, British Columbia and Santa Monica, California.

On the surface, it would appear that MovieCoin is geared to take advantage of new disruptive technologies to make it easier to both manage assets and finance film and tv projects, by leveraging the power of blockchain, proof of asset and smart contracts; as well as provide investment and financing options via their token.

Beyond the premise of film financing, the Moviecoin token can be used for other transactions on the MovieCoin platform, such as acquiring financing tools, renting content through on-demand services, and transferring loyalty rewards like special screenings, set visits and memorabilia.

Where the rubber hits the road, the Proof-of-Asset Protocol, smart contracts and smart asset assembly are provided by leading fintech firm BANKEX. An immutable distributed ledger will also track expenditures, receipts, entitlements and asset ownership to provide an end-to-end view of each project’s financing, distribution and exploitation history.

How does it all work, what is the structure behind MovieCoin and where does BankEX fit into the picture?

MovieCoin Explains: The MovieCoin Smart Fund and MSF Tokens

MovieCoin Explains: Moviecoin Tokens (MOV) and the Movie.io Portal

 

MovieCoin Operational Structure

  • MovieCoin Entertainment serves as a production supervisor and financing manager on behalf of the Company’s content financing entity, MovieCoin Capital. MovieCoin Entertainment is staffed with seasoned Hollywood media executives primarily to originate and qualify commercial, theatrical feature film financing and investment, and also to identify attractive non-film content acquisitions or investments such as television or other entertainment assets.
  • MovieCoin Capital has been created as an organisation layer, facilitating content investment originated and qualified by MovieCoin Entertainment through a producer services agreement. The company intends to execute programmatic financing of multiple film and television projects. Content is to be produced, financed and managed throughout its life-cycle via the issuance of cryptographic tokens. Financing of content acquisitions is intended to be conducted through co-financings with third parties, private securities transactions structured as security token sales and/or credit facilities to be established with banks or other institutional lenders.
  • MovieCoin Services has been formed to direct the benefits associated with the MovieCoin platform and Moviecoin Tokens to active participants in the entertainment business (e.g., talent or production companies and various service providers) and consumers who seek to engage and participate in entertainment in new ways offered through the Company’s platform capabilities. Financing of the build out of the services platform is to be executed through the issuance of Moviecoin Tokens that business clients can use to access trade finance and the MovieCoin platform, and consumer clients can use to purchase movie tickets or other entertainment offerings.
  • MovieCoin Technologies will hold all of the Company’s technology assets, including licensed intellectual property or technology developed by or for the Company itself. MovieCoin Technologies also exists to manage all technology applications, use of licensed technology from affiliates or third parties and development of tech-based intellectual property for use in connection with the MovieCoin platform. This subsidiary maintains exchange-based tech solutions to facilitate token surveillance, ownership, reporting and trading application. In addition, MovieCoin Technologies will own and operate consumer-facing interactive media applications, including Movie.io, the trademarks and patents, if any, associated with the platform, and the applications to
    enhance the build out of consumer engagement initiatives. To fulfill its technology requirements, the Company has aligned with BANKEX through a comprehensive license agreement, development agreement and servicing transition arrangement, pursuant to which BANKEX2 licenses its technology built on Ethereum3 and agrees to develop additional functionality required to manage and operate the MovieCoin platform.

In full operation, there will be a broad array of features via the MovieCoin platform, including:

Moviecoin Tokens: A new economy based on the proprietary Moviecoin Token which as previously hinted, will allow customers to purchase movie tickets, gift cards, on-demand video and movie tickets. MovieCoin is slated to purchase upwards of one million tickets globally over the next three years to provide discounted tickets, leveraging a ticket that will be established by strategic partnerships with major theater chains.

Contests, Private Events & Unique Shopping and Memorabilia Auctions: Fans can enter contests to pick award winners, guess box office successes, suggest alternative movie posters and best alternate endings to name a few. Users will also be able to challenge each other and their friends on movie-related knowledge via select social media platforms. Prizes will include exclusive local pre-opening screenings and celebrity red carpet premieres. Fans will also have access to unique online and offline events where they can interact and engage with the cast and crew from their favorite films and will have the ability to purchase and bid on authentic, limited-edition film memorabilia exclusively available on Movie.io;

Exclusive Forums & Behind-the-Scenes Access: Unprecedented access to sneak peaks behind the camera, rare content from the editing room and opportunities to visit movie sets and meet the cast. Fans will also be able to connect with filmmakers and celebrities via live chats to discuss movies;

Customized Recommendations and Search Engines: Users will have the ability to create “must-watch” lists based on their interests and activities and will be able to share their favorite movies via tailored “playlists.” Fans will also have access to tools that will enable them to search for venues where they can screen films they may want to watch on platforms such as Amazon, Apple, HBOGo, Netflix and YouTube amongst others;

Film Database & User Reviews: A dedicated resource that enables MovieCoin members to look up facts and figures on their favorite movies. Users can write reviews to be commented on by the MovieCoin community. The highest rated reviewers will earn a greater number of Moviecoin tokens, which can be used to purchase premium services offered by MovieCoin.

The Team

The MovieCoin team are made up of a collective of extensively experienced individuals who not only have the vision required for such a project, but the insider connections and operational knowledge to execute such an endeavour.

Christopher Woodrow

Christopher Woodrow

Christopher Woodrow
Chairman and CEO

Mr. Woodrow is responsible for guiding the strategic vision of the company and he oversees the global development of its brand and franchise. He has financed and produced numerous notable feature films including the box office successes “Black Mass” and “Hacksaw Ridge” as well as the critically acclaimed hit “Birdman.” Mr. Woodrow’s films have grossed in excess of $700 million worldwide and been nominated for 16 Academy Awards® and won 6 Oscars® including Best Picture.

Igor Khmel

Igor Khmel

Igor Khmel
Founder and CEO

Mr. Khmel is a Stanford GSB M.B.A. graduate and he also holds degrees in Economics and Physics. He worked in Management Consulting at McKinsey & Co. and Deloitte focused on corporate finance and in investment & trading at Citadel. Mr. Khmel then founded a number of technology startups in California before founding the fintech lab at Sberbank, the largest bank in Eastern European.

Jeff Ivers
Chief Operating Officer

Mr. Ivers is responsible for day-to-day operations of the company and he oversees the execution of its strategic plan. He is the former COO and CFO at Participant Media, where he negotiated investments in over 70 films, including Academy Award winners “Spotlight,” “Lincoln” and “The Help,” along with investments in other media companies including Summit Entertainment. Mr. Ivers was previously a senior executive at MGM/UA Home Entertainment, Motion Picture Corporation of America and Orion Pictures.

JC Oliver
Head of Innovation

Mr. Oliver is an award-winning digital creative, strategist and investor with 25 years of media experience. He was the Global Chief Creative Officer at Unlockd, a revolutionary platform that rewards partners, advertisers and consumers for time spent on mobile devices. Mr. Oliver was previously the Global CCO at AOL and he spent 10 years as the Head of Innovation at Microsoft.”

EVP of Corporate Strategy

Mr. Johnston is responsible for implementing global strategic initiatives for the company and he works closely with the office of the CEO. He served as EVP and Managing Director at Vendian Entertainment and VP of Business Development at Worldview Entertainment. Mr. Johnston has over 15 years of experience in the entertainment industry as a transactional attorney and investment manager. He holds a J.D./M.B.A. and a B.S. in Biology from Samford University.

Wendy Rutland
Head of Business Development

Ms. Rutland is responsible for global business development strategies for the company and she plays a key role in capital raising efforts. She has over 20 years of experience in the entertainment industry including content acquisition and valuation, raising capital, film finance, sales and distribution. Ms. Rutland has spent half of her life living in the UK and has an extensive worldwide network. She is the recipient of a British Independent Film Award and holds an M.B.A. from Cass Business School, London.

Elexa Ruth
SVP of Corporate Affairs

Ms. Ruth is responsible for creating and implementing the communications strategy for the company and she oversees global business operations. She served as VP of Operations at Vendian Entertainment and worked in the Office of the CEO at Worldview Entertainment, where she gained extensive experience structuring the financing for motion picture transactions. Ms. Ruth co-produced the box office success “Hacksaw Ridge.” She holds a B.A. in English from Tulane University and serves on the Board of Trustees at Aspen Film.

Marcello Mari
Head of Marketing and Public Relations

Mr. Mari is responsible for coordinating global marketing and public relations. He has extensive experience working on successful blockchain projects including SingularityNET, a decentralized Artificial Intelligence platform, and TaTaTu, a social entertainment platform, which raised $575 million in private capital. Prior to this, Mr. Mari was a contributor to some of the most prominent international technology publications such as TechCrunch, Wired Italy, Business Insider and The Guardian.

Moviecoin Token Offering Summary

MovieCoin operates using custom BANKEX directed PoAP, built on the ethereum blockchain. Currently undertaking initial sales; the distribution of tokens will be allocated per the images above.

BankEx Relationship

Key to the delivery of the MovieCoin platform, as well as delivering on its operating strategy, is the engagement of an agreement between MovieCoin Technologies and BANKEX. Specifically, this agreement allows for MovieCoin to leverage the deep domain expertise of BANKEX’s existing Proof-of-Asset Protocol (“PoAP”) and commission BANKEX to rapidly build and deploy the MovieCoin platform. The agreement between the Company and BANKEX provides for the license of the BANKEX platform, software development services and technical support to operate the MovieCoin platform.

The BKX Core Platform includes digital wallets, ICO offering tools, asset tokenization tools and other blockchain and
cryptocurrency functionality. BANKEX is continuing to develop additional functionality, including machine learning, asset assembly, artificial intelligence, and app-authoring tools into the BKX Core Platform, which can be used to accelerate the development and deployment of the Company’s platform.

Taken directly from the whitepaper; BANKEX plans to have invested approximately US$5 million in the Company through a combination of equity and purchases of Moviecoin Tokens at the time of sale of Moviecoin Tokens. In addition to its financial investment, BANKEX is also contributing valuable intellectual property, development and support services to the Company through the following contractual agreements between BANKEX and the Company:

  • A Software License Agreement, pursuant to which BANKEX licenses the BKX Core Platform to the Company. The arrangement provides the Company with an exclusive license in the North America territory and a non-exclusive license in all other territories for a period of 10 years as of the effective date of the agreement. Among other payment obligations specified in the agreement, the Company is obligated to make certain annual royalty payments to BANKEX to be paid in BKX Tokens during the term of the license and to pay 10% of all transaction commissions generated on the MovieCoin platform to BANKEX, payable in BKX.
  • A Software Development Agreement, pursuant to which BANKEX agrees to provide software development services to build out the MovieCoin Roadmap. The initial focus is on developing smart contracts to connect the consumer’s use of Moviecoin Tokens to purchase tickets or license content to the waterfalls that distribute these Tokens to the residual rights holders. BANKEX and the Company have collaborated to develop the MovieCoin Roadmap and to coordinate with strategic updates and additions to the BKX Core Platform on the BANKEX Roadmap.
  • A Management Services Agreement, pursuant to which BANKEX is to provide operations support to the Company for the development and maintenance of the MovieCoin platform, including systems administration, data security and privacy and other critical operational functions. The Management Services Agreement will provide for a transitioning of such operational support to the Company over an 18-month period commencing as of the effective date of the agreement.

Questions with the MovieCoin Team

After reading the MovieCoin Whitepaper, I had a number of questions for the MovieCoin team, who I am very happy to advise were more than accommodating to my queries. Their answers to my questions were as follows:

Question: Does moviecoin have its own main net, or is it intending on relying on the ethereum network?

Answer: MovieCoin operates on the Ethereum blockchain using the Plasma protocol provided by BANKEX, a top-20 fintech company. This combination allows MovieCoin to scale up its operations as the organization anticipates an increase in the number of transactions conducted on the MovieCoin platform using MovieCoin-derived tokens.

Question: When the whitepaper/lightpaper talk about the conservative nature of the industry, but then the objective of the company is essentially be a disruptive force that becomes the de facto methodology for financing, asset management and so forth ; are those statements not contradictory?

Answer: No, the industry is conservative from a historical perspective; it’s an incredibly hardened industry.  This new pursuit will transform how business will be conducted in the future.

Question: I’m trying to fully understand exactly what Moviecoin sets to resolve here; and why it would be adopted

Answer: Film financing is saturated with inefficient processes, and traditionally the course of investment would take years. With the capabilities of MovieCoin, these processes will be instantaneous. Further, entertainment investment has only been open to a handful of companies and privileged insiders.  Now, Chris and Igor are democratizing this process to make an investment in movies, television shows and other media projects across the $2tn/year global entertainment industry more accessible for institutions and individuals outside of the Hollywood’ bubble. Casting a wider net will generate a more lucrative financing system and, in turn, commit $1 billion to film and entertainment financing over the next 3 years.

Question: A minimum 5 BTC contribution to get into the ICO is quite significant, would you agree?

Answer: The minimum commitment of 5 BTC is only applicable to the pre-sale of the Moviecoin utility token(MOV), which is separate from the token sale. The 5 BTC threshold is an arbitrary sum that is certainly not uncommon.

Question: What is the expected incentive for someone to buy these coins; when the whitepaper makes it clear that the coin and the company is quite divorced? There seems on the surface to be some contradictory statements, atleast in the lines of demarcation between entities that use the platform versus the end investors/traders that will be buying or trading the coins.

Answer: MovieCoin has developed a roadmap to guide the company’s short-term and long-term growth. Within this roadmap are plans to develop working partnerships with other organizations in the entertainment industry whereby utility tokens will be used in lieu of fiat currency to conduct B2B transactions. As these developments become reality, we anticipate more people recognizing the advantages of transacting in MOV when acquiring products and services.

We expect the same to happen as consumers also adopt MOV for entertainment industry transactions. MOV tokens provide a variety of benefits for those who use them, including efficiency, transparency, security and near real-time clearing and settlement. Consumers using MOV will also enjoy access to a unique array of products and services only available via MovieCoin’s Movie.io portal, a mobile web experience created by for film fans and filmmakers.

Question: Why are there both moviecoins and MSF tokens? Why is one reliant on liquidity provided by the other on an internal exchange?

Answer: The MovieCoin Utility Token is a utility token, whereas MSF tokens are securities that are only available to accredited investors.

Question: Does moviecoin have any existing customers?

Answer: MovieCoin does not have any pre-existing customers. MovieCoin caters to users and investors, it does not recognize these entities as ‘customers’. Along these lines, MovieCoin’s Smart Fund is the platform’s first proof of concept that investors can take part in via the acquisition of MovieCoin Smart Fund (MSF) tokens users. The organization is still in the process of raising capital before launching the platform for use. MovieCoin will focus on building its user base once sufficient capital is raised and the platform is live, using the executive team’s strong industry background and wealth of experience in film financing, production and distribution to engage prospective investors and find the best use cases for MOV tokens.

Igor Khmel

Igor Khmel

Question: Are the MovieCoin platform specific applications and offerings for customers available to be looked at? Are there production ready operations?

Answer: The MovieCoin platform will launch in 2019. This entails announcing investments selected for
MovieCoin’s initial Smart Fund, commencing production financing activities for film assets within with the fund’s portfolio, launching the platform for public access and continuing to form productive working partnerships that will grow the adoption of our MOV and MSF tokens.

Question: Can the team elaborate on the technologies and resources that MovieCoin is looking to take advantage from with the affiliation with BankEX?

Answer: BANKEX is developing a customized version of the Proof-of-Asset protocol for MovieCoin which, in turn,  includes a number of smaller sub-services and technologies (see full list on BANKEX website https://bankex.com/ru/#). The overarching agreement between the MovieCoin and BANKEX allows for the licensed use of the BANKEX platform as well as the software development services and technical support needed to operate the MovieCoin platform.

Question: What is specific to Proof-of-Asset that seperates it from other economic protocols (PoW/PoS)?

Answer: Proof-of-Work, Proof-of-Stake and other similar protocols are being developed to solve or otherwise improve core properties of blockchain networks associated with block obtaining and reward distribution among parties which provide infrastructure to keep the network operational. Proof-of-Asset (POA) is an entirely separate product, one which is designed at addressing other problems. Simply put, PoA is a stack of technologies that enables asset tokenization and subsequent trading whose end goal is to create  new asset classes and, by design, bring more liquidity to the
market.

Question: From where are the funds required to pay BankEX for services and return on capital for initial investment ($5mil) derived from?

Answer: MovieCoin expects funds to join the platform and be the main source of capital for movies which are tokenized and financed on the platform. While joining and transacting implicates some fees payable by funds, there are no direct payments to BANKEX. The platform itself utilizes both the Ethereum blockchain and BANKEX platform, meaning there are transaction fees in form of GAS for Ethereum and BKX for the BANKEX one. These fees are payable
through the platform, i.e. MovieCoin itself. BANKEX anticipates receiving a combination of equity and tokens in return
for it’s approximately US$5 million capital investment into MovieCoin.”

Question: What are the relationships between Entertainment, Capital, Services and Technologies? Are they seperate entities? Do they have autonomy? Could one go rouge? Can MovieCoin Holdings Inc divest from these entities?

Answer: The structure consolidates all ownership and control of the businesses at Holdings.  Each entity is a wholly-owned operating subsidiary of the holding company.  Management of each subsidiary reports to corporate officers that reside at Holdings.  The Corporate management team is governed by a Board of Directors.

Conclusions

Some time ago, I wrote about the huge amount of projects to choose from were turning into a plethora of ‘me too’ teams and it was not often you came across something that has the uniqueness to stand out on it’s on legs; or have the financial and resource backing to actually deliver what it promises. As more and more people enter the space to speculate on values; it’s not uncommon to see projects jump in value based on no underlying fundamentals what so ever. It’s important to deep dive into projects and get a really good idea of whom is behind it and why.

As it exists, there are un-ending ICOs being created that are essentially startups that are using ICOs as a means to generate capital. More power to them, but as ICOs are largely unregulated there is a requirement of investor confidence that the ICO crew manages this money well. As a parallel concern, it must be asked if the project is really just a startup doing a kick-starter and if the blockchain really is required. Statistics for startups in general aren’t the greatest, with most not surviving long term.

Those who follow this blog will remember the 7 points I often use as part of a decision matrix:

  1. Is the project and the currency compliant with the future of regulation and compliance.
    • This is a difficult call, especially in the light of current execution by the SEC on various projects. However, it would appear that MovieCoin and BANKEX have the industry experience to position themselves as favourably as possible.
  2. Is the project backed by a significant team, with credentials and experience that is searchable.
    • All of the team members I looked into had visible social media presence on multiple platforms. Being backed technically by BANKEX is certainly a plus for the MovieCoin team also.
  3. Is the project already operating, and has tangible products.
    • At the time of writing, it would appear that MovieCoin has the foundations here; however after the initial products are fully scaled and online – with a swarve of customers trying out the platform will that become clear.
  4. Is the project addressing a business requirement in the market today and Is the project addressing a specific niche and use case scenario.
    • The project is geared towards a specific use case and business requirement, in a very niche industry that has not been saturated by blockchain startups.
  5. Is the project scalable and able to handle significant transaction counts.
    • Currently built on top of Ethereum, this is a point of contention. However, could the project pivot to their own mainnet or a new technology? With the help of BANKEX that certainly is possible.
  6. Is the project resilient to change over time and able to be updated without issue.
    • This is yet to be seen under a true operational model, but it would appear that MovieCoin is positioning itself to be able to pivot where required.
  7. Is the project resistant to impact from Green Policy, Eco-Terrorism and other changes in the Energy Space.
    • If the underlying ethereum blockchain & associated tech moves to POW (or something else), then it would be possible to make this assumption.

Always conduct your own research before investing into a project or speculating on markets. Ensure you are comfortable with your risk profile and do not allocate more than you can afford to loose.

Additional Research

  1. MovieCoin on Medium
  2. MovieCoin on Telegram
  3. MovieCoin on Twitter
  4. MovieCoin on Linkedin
  5. MovieCoin on Instagram
  6. MovieCoin on Facebook
  7. MovieCoin on Youtube
  8. MovieCoin Website
  9. BankEX Subreddit
  10. MovieCoin Whitepaper
  11. MovieCoin Launches Revolutionary Blockchain-Based Entertainment Financing Fund and Platform
  12. Press Release: MovieCoin Appoints Six New Strategic Advisors
  13. MovieCoin Launching Movie.Io Portal To Create The Ultimate Interactive Fan Experience
  14. MovieCoin Partners with TV-Two to optimize film and entertainment advertising
  15. MovieCoin Launches Blockchain-Based Film Financing Fund
  16. HOLLYWOOD & BANKEX: Blockbuster Tokenisation
  17. BANKEX™ Presents First Case of Institutional-Grade Asset Tokenization
  18. MovieCoin Announces Public Presale for Security and Utility Tokens
  19. Rise of the STO: Digitizing Capital Markets