By Pan Lorattawut, CEO of VUCA Digital, creators of the CROWN Token Project
As we approach the new year, business owners have to pay close attention to the subtle, but permanent shifts Web3 has had on consumer behavior. Despite FTX’s recent events and the public’s understandable wariness of the Web3 space, the impact that the blockchain has had on our culture – and will continue to have – is undeniable.
The biggest impact is that volatility in business models will be expected, and to some extent, desired. Consumers demand businesses to respond faster to their needs and adjust their models in response to the voice of their communities. Looking at the entertainment industry alone, we can point to a few tactical examples, and begin to unravel how businesses need to be prepared to constantly shift in order to keep up.
What stability has missed
The entertainment industry traditionally has followed a simple model: create, distribute and measure. Generally controlled by big investors and studios, executives would go back to the drawing board after the project was complete, data had been collected, and millions had been spent. Although simple and timeless, this linear way of creating results in expensive bets and limited input from the end consumer.
The perk of this type of model is that businesses using it can recruit and train true professionals with a deep understanding of the market and niched talents with proven track records. The model’s weakness lies within its one-way communication, eliminating the voice of the end consumer, who ultimately drives the success of the project.
Shift it or lose it: Understanding the distribution of power
You may have heard the term “distribution of power” and dismissed it as another arcane Web3 buzzword. Despite the fragility of this past year's plethora of digital assets, the technology has pointed to a fundamental change in consumer behavior.
Distributed power will not only transform what we view as “valuable,” it will increase the value of what the market deems worthy. An example in entertainment is the increased value of intellectual properties by transforming them into NFTs, tokens and other forms of virtual assets that holders can buy, trade or sell. Holders will literally own part of the production.
How does digital ownership tactically distribute power? Using film production as an example, blockchain has the power to give control to holders by tokenizing privileges like the right to participate in the design of their favorite characters or have a say in who directs the sequel in a film. Consumers are not passive participants, they are active creators, with the opportunity to invest and the right to fund the projects they love.
Although this is a specific example within entertainment, the implications to other business models cannot be ignored. The market wants power. Although a complete distribution of power might be challenging in terms of business requirements and regulations, once solved, it will revolutionize market testing by providing better and more accurate data that will reflect the consumer’s needs before making significant investments.
What's to come and how to prepare
Recruiting consumers as collaborators will present many challenges. Initially, it will take a significant investment of time and money to solve tech and regulation issues and to manage realistic expectations.
There will be many technological barriers, but efforts to overcome those barriers are vital to ensure that platforms and features are aligned with business requirements and achieve high-level IT security for users. Educating users on how to properly take advantage of their potential privileges and overcome their own technical limitations will be a top challenge.
Businesses will also have to pay close attention to regulations. A model that includes blockchain technology is fairly new, so it will be vital to work closely with the legal team to ensure the business meets both commercial and compliance requirements. Laws on intellectual property rights and requirements on AML/KYC, for example, will need to be considered.
Lastly, although promising power to consumers is ideal, in most cases, there will be natural limitations to the level at which they can participate, due to budgets and regulatory restrictions. Businesses in the future will need to invest more heavily in good community management that can navigate customer expectations and communication.
How to prepare to move forward
If businesses are comfortable with more transparency, releasing power and truly embracing a consumer-centric approach, their future in Web3 will be bright. Despite the logistical obstacles, and the swift punch to our thoughts that we know what's best, allowing the end user to have a say in what the entertainment industry creates not only ensures our efforts are more successful, but also gives those that we serve a better experience.
The conventional value chains, in most cases, are fixed, controlled and function as one-way streets. With blockchain technology and AI, the value chains will become more flexible, consumer-centric and interactive. This shift will demand businesses to be volatile.
About the author:
Pannathorn (Pan) Lorattawut, CFA, joined T&B Media Global in 2019 as their Chief Business Development Officer and has been working on the tokenization and digital asset projects since. She then assumed the role of Chief Executive Officer of VUCA Digital, overseeing the Crown Token Project, digitized assets and consulting businesses. Pan also oversees the T&B group’s investments, fintech, digital assets, strategy, and business development. For more information about CROWN Token, visit https://crowntoken.io.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.