1AssetExchange is thrilled to announce the upcoming launch of "Sangamithra" on the IXS Launchpad, marking a significant milestone in film financing and intellectual property (IP) rights management. Through this project, IP revenue linked to the epic cinematic masterpiece "Sangamithra" will be tokenized to offer investors  a unique opportunity to engage with and benefit from this project.

"Sangamithra" brings a lot of potential to the future of  film financing through Security Token Offerings (STOs), but to fully appreciate its impact, it is essential to understand the traditional methods used by the film industry. 

Traditional Film Financing

Traditionally, financing a film involves securing funds from a variety of sources to cover the film’s production costs. Here are the main types and sources of financing typically used in the industry:

1. Studio Financing

Film studios like Warner Bros., Universal, and Disney finance films in exchange for distribution rights. They may provide the entire budget or a significant portion of it.

2. Private Investors

Wealthy individuals invest in films, often motivated by potential returns and the glamor of the film industry. Collectives of private investors can also pool resources to fund film projects.

3. Bank Loans and Financial Institutions

Filmmakers can obtain loans from banks, using pre-sales agreements or distribution deals as collateral. Banks or specialized lenders provide loans to cover the "gap" between the amount of funds raised and the total budget needed for the project.

4. Grants and Tax Incentives

Many governments offer grants to support local film production. These funds do not need to be repaid but often come with certain conditions. Some countries and states also offer tax credits or rebates to attract film productions. Altogether, these incentives can significantly reduce production costs.

5. Crowdfunding

Websites like Kickstarter and Indiegogo allow filmmakers to raise money from fans and supporters, who contribute to the project in exchange for perks, such as an exclusive director’s cut of the finished film.

6. Product Placement and Sponsorships

Companies pay to have their products featured in the film in exchange for marketing opportunities and brand association.

7. Equity Financing

Investors provide capital in exchange for a share of the profits. This is a common practice in independent film production. In fact, some companies create funds specifically for investing in multiple film projects, spreading the risk.

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Through these diverse financing sources, filmmakers can gather the budget they need to bring their projects to life while managing risks and maximizing potential returns. They have been very successful over the years, however, a new type of financing called Security Token Offerings (STOs) is beginning to revolutionize the industry. 

Security Token Offerings (STOs)

STOs are digital tokens issued on the blockchain that are backed by real-world assets, such as shares in a film. This approach combines the accessibility and liquidity of blockchain technology with the familiarity and security of traditional film financing. 

The launch of "Sangamithra" on the IXS Launchpad is a prime example of how STOs can be utilized in film financing. 

"Sangamithra" on the IXS Launchpad

"Sangamithra" narrates a gripping tale of courage and redemption set in the 8th century AD. The story follows Sangamithra, a beautiful and determined protagonist on a journey to reclaim her kingdom. This ambitious two-part saga, produced by Bollywood-renowned Thenandal Films, utilizes filmmaking techniques and world-class visual effects to captivate audiences globally.

Benefits of STOs for Film Financing

Traditional film financing ties up capital for long periods, but STOs enable fractional ownership and secondary market trading. Investors can trade their tokens representing IP revenue rights more freely, thus reducing the time their capital is locked in. STOs also facilitate global investment, attracting a broader investor base beyond traditional financing avenues. This diversifies funding sources and brings in capital from international investors who might not have participated otherwise. Additionally, smart contracts associated with tokens can automate royalty payments, ensuring transparent and efficient distribution of earnings to token holders. This reduces administrative burdens and enhances trust among investors.

Ownership of TSL1, the security token for Sangamithra, provides exclusive access to behind-the-scenes content, early or premium viewing opportunities, and priority booking for premieres and special events. 

The tokenization of "Sangamithra" is expected to bring a lot of  value to the project and its stakeholders. By tokenizing the film's IP revenue, 1AssetExchange transforms an otherwise illiquid asset into a tradable digital asset and opens up  more investment opportunities for both producers and investors worldwide.

Relevance to the Philippines

The launch of "Sangamithra" on the IXS Launchpad is particularly relevant to the Philippines for several reasons:

In the Philippines, where access to high-value investment opportunities is often limited to a select few, the tokenization of film financing can democratize access, allowing everyday investors to participate in lucrative projects. This can be especially appealing to a tech-savvy and growing middle class looking for new investment avenues.

The Philippine movie and TV industry heavily relies on freelance workers, a situation that requires attention, according to Assistant Director Jo-Dann Darong of the Department of Trade and Industry (DTI). He pointed out that even large studios can only hire a limited number of full-time employees, leading to lower pay and compensation for unorganized film workers and technical crews. As of 2018, only 5,927 individuals were fully employed in the motion picture, video, and television industry. The number is unlikely to have increased due to the COVID-19 pandemic, which further complicated the production process, forcing studios into costly production bubbles and limiting freelancers' opportunities.

Lawyer and film producer Joji Alonso noted that high taxes and additional costs often leave producers with significant losses, even for successful films.

Given these financial constraints, the tokenization of intellectual property (IP) revenue through platforms like the IXS Launchpad for projects like "Sangamithra" presents a viable alternative to traditional fundraising. The success of "Sangamithra" could serve as a model for the Philippine film industry and encourage local filmmakers to explore tokenization for their projects. This could lead to increased funding for local films, as well as higher production values, and greater global reach.

By comparing traditional film financing methods with the innovative approach of tokenization, it becomes clear that tokenization has the power to modernize film financing, empower investors, and enhance liquidity and transparency. The tokenization of "Sangamithra" in particular is a huge stepping stone on the path toward a future where entertainment and blockchain technology converge.

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