Babbitt Column | Why is the streaming industry the best application scenario for blockchain technology?

The recent on-demand events provided by iQiyi and Tencent Video for Qing Yu Nian have once again attracted market attention to the streaming media industry. Some essential flaws in this industry are once again exposed. Such defects are not only in one region, but are common in this industry worldwide. Such problems cannot be solved based on the existing centralized infrastructure and business model. The development of blockchain technology provides the possibility to solve the problems in this industry. This article is some reflections on the application of blockchain technology and business model in the streaming media industry.

Problems in the streaming industry

1.1 Strong intermediary

Like many other industries, the current streaming media industry is a strong intermediary model. This mode of strong intermediation is technically determined by the centralized computing model. The emergence of Internet technology and the development of applications have migrated this strong intermediary model to the Internet. Therefore, various industries on the Internet still adopt this model, such as news media, social networks, retail e-commerce and financial industries. Because the Internet can reach a large number of users worldwide, this model has been rapidly expanded. Therefore, the development of online intermediaries will have a monopoly effect on the industry. This situation has been fully manifested in the social networking and e-commerce industries. Because these intermediaries have a monopoly on channels, they can impose their will on the providers and consumers of products. As a result, standardization in the industries involved is becoming stronger and more efficient, and the range of users and markets reached is getting wider. However, the price paid by the industry for this is that such strong intermediaries are increasingly dominating the industry, the diversity in the industry is becoming smaller and smaller, and the choices of users are becoming smaller. Most importantly, when these strong intermediaries sacrifice the interests of other participants in the industry for their own benefit, it is difficult for other factors in the market to restrict it. The most representative situation in this regard is that these strong intermediaries increase their fees. Since there are no other competitors in the industry, the industry can only choose to accept this price increase.

The representative of channel intermediaries in the streaming media industry is Netflix. Netflix is ​​the largest channel intermediary in the streaming industry worldwide. Netflix's development allows users around the world to obtain video services in a more affordable way. In addition to Netflix, there are video streaming services from Amazon and Apple. These streaming media are still in a highly competitive state, and there has not been a monopoly company like some other industries. But with the continuous integration of the market, the concentration of channels will happen very quickly. A similar situation has happened in other industries, and the future development of the streaming media industry will certainly be the same. The result of this development is the emergence of a strong intermediary agency in the streaming media industry. At that time, the problems that currently occur in some other industries will definitely be reproduced in the streaming media industry.

1.2 Conflicts between channels and products

When a channel intermediary's monopoly position in the industry becomes stronger and stronger, it will certainly have a direct conflict with the product provider. If the product provider is weak, large, and scattered, these product providers cannot compete with a strong channel. They can only accept market rules determined by channels. But when product providers are more concentrated, they will take corresponding measures. For example, in the US stock exchange industry, exchanges are monopolized by three major trading groups. They can therefore determine for themselves the price of the services they provide. But some major trading members believe these prices are too high, so they are now co-founding a stock exchange, MEMX. These institutional trading members have their own large number of users, so they can jointly set up an exchange to provide trading services for their users at a lower price.

Netflix in streaming media is a typical representative of the conflict between the channel side and the product side. As Netflix continues to grow, conflicts of interest between it and video product providers have become increasingly apparent. The early conflict was with Starz. Netflix begins a $ 30 million contract with Starz. But when it expires in 4 years, Starz hopes to raise this price to $ 300 million. The two companies did not negotiate a cooperation, and Starz's 2,500 movies were taken off the shelves at Netflix overnight. This incident also prompted Netflix to enter the field of product production, and then to create explosive products such as "House of Cards." Netflix's subsequent commercial success in product production has also inspired other streaming media to enter the field of product production. These channels are investing more and more in product production. According to reports, in 2020, in the product production budget, Netflix plans to invest $ 18.5 billion, Amazon plans to invest $ 8.5 billion, and Apple TV + plans to invest 6 billion US dollars.

In terms of product providers, they are increasingly seeing the importance of streaming media, so they have also begun to enter this field and compete directly with existing streaming media. The most typical representative in this regard is Disney. Disney has seen the rapid development of Netflix, and its market value has exceeded that of Disney itself. Disney is even more reluctant to be a major content provider, and its distribution channels are controlled by Netflix. So Disney started to build its own online distribution channels, and provided global users with streaming services based on its products at very competitive prices.

Industry solutions based on blockchain technology

The most basic feature of blockchain technology is to ensure the consensus of multiple parties in a technical manner with the participation of multiple parties, and then to record the results of the consensus in the nodes of the network in an immutable manner. The original intention of Bitcoin is to be a digital currency that can be directly traded between peers. With the continuous development of blockchain technology, more rich types of digital products can be exchanged between accounts and accounts, instead of being limited to a single bitcoin.

For the streaming media industry, an industry solution based on blockchain technology can be provided, which directly connects the producers of video products with consumers, and uses technical means to greatly weaken the role of intermediaries. Such an industry solution mainly includes two components: direct information exchange between product providers and consumers, and direct payment. The former is based on Internet technology, and the latter is based on blockchain technology. In terms of digital product delivery, you can continue to use the existing methods. With the continuous promotion of 5G technology, the cost of delivery will be lower.

In terms of business organization, a membership alliance-based organization should be adopted on the basis of blockchain technology support. That is, an alliance of product providers to support the use of such a network. Members work together to formulate business rules in this network and execute them automatically in the network through smart contracts. In such a network, various channel intermediary services for video products (including information exchange, payment services, and product delivery) are performed by technology, rather than by a separate commercial organization. The operation part of the channel can be completed by the association of the product side (see my article "The biggest obstacle hindering the application of blockchain is the guiding ideology"). The Association's main work in this area is to formulate rules and conduct arbitration without the need for specific technical and commercial operations. Channel functions are therefore jointly provided and shared by the product providers.

Another contribution of such a network to the streaming media industry is to allow product producers to share market data directly. Currently, such market data is owned by intermediaries. Such data is a huge competitive advantage for channel intermediaries. Netflix can then customize such popular products as House of Cards. When other product producers have some product ideas, they need to communicate with such intermediaries to understand the market demand for the products they plan to release, before they can decide whether to invest more money for production. Therefore, channel intermediaries have an asymmetric advantage over product manufacturers in this respect. In the new network, market data is shared by product producers. Each product manufacturer can therefore focus on developing different types of products and form differentiated competition. The ecology in the network can thus develop into a healthy ecology.