Tokenization and AI: Hollywood and streaming consolidation

The global tokenization market size reached approximately $1.24 trillion in 2025, a significant increase from $865.54 billion in 2024, with projections for multi-trillion-dollar growth by the end of the decade. This growth was primarily driven by regulatory clarity in key jurisdictions. This is Part Three, which evaluates key tokenization and AI technology developments in Hollywood during 2025. Part One: 2025 was the year of tokenization. Part Two focuses on energy requirements to support the growth in AI-driven tokenization, necessitating orbital cloud data centers. Part Four of a four-part series where I evaluate how tokenized edge cloud streaming and AI are transforming sports and prediction markets betting, which is a rapidly developing immersive experience.

Tokenized edge cloud streaming and AI are transforming Hollywood

The U.S. media and entertainment industry is the world’s largest. Major Hollywood studios have historically held a first-mover advantage in industrializing and distributing films and TV programs with broad international appeal. In the U.S. and global markets, the major film studios, often known as the Big Five studios — Universal Pictures (Comcast Parent), Paramount Pictures, Warner Bros., Walt Disney Studios, and Sony Pictures — have been commonly regarded as the five diversified media conglomerates whose various film and TV production and distribution subsidiaries collectively command approximately 80 to 85% of the U.S. box office revenue. 

In 2025, Hollywood experienced a significant power shift driven by major consolidation in the entertainment and media industry, highlighted by a bidding war for the Big Five Studio Warner Bros. Discovery by one of the largest streaming companies. Netflix has reached a definitive agreement to acquire Warner Bros. Discovery in a deal announced on December 5, 2025, for approximately $82.7 billion, which is currently pending regulatory and shareholder approval, a hostile counterbid of $108 billion from another Big Five Studio, Paramount, along with Jared Kushner’s private equity firm, Affinity Partners. And a class action lawsuit^.

Actor Matt Damon has said that streaming negatively impacts cinema, primarily by eliminating the backend revenue (residuals) that used to come from home video sales (DVDs, etc.). Streaming makes it harder for mid-budget, non-franchise adult dramas to be financially viable because streaming viewership doesn’t offer the same kind of profit participation or bonus structures as traditional box office and home video sales, so artists get less compensation for successful projects. As an example, Matt points out his movie Air, which was streamed worldwide by Amazon Prime, which barely covered its  $90 million budget at the box office.

In recent period, streaming giants like Netflix, Amazon Prime, Hulu, Apple TV, Warner Bros spent significantly more on international productions than domestic ones with France, Italy, Mexico, Columbia, Canada, Japan, UK, Australia, New Zealand, Ireland, Hungary, Germany, Spain, Portugal and Czech Republic benefiting from Hollywood’s filming moving overseas, through a combination of generous financial incentives, diverse locations, and a robust local film industry infrastructure. Actor Matt Damon’s lifelong friend and business partner Ben Affleck, who directed and acted in the film Air, which was filmed extensively in the Los Angeles area, pointed out that California’s lack of tax credits makes it cheaper to fly crews to places like Ireland or Hungary than to film locally in CA.

US President Donald Trump, who campaigned using lines from the film Air, has been concerned about Hollywood’s TV and film production and distribution, being ‘stolen’ away by other countries.

This prompted him to propose a 100% tariff on foreign-made films first during May and again in September, framing it as a national security issue to bring film and TV production back to the U.S., citing overseas tax incentives luring away U.S. jobs and studios. Trump also recently stated he will be involved in the regulatory review of potential deals for Warner Bros. Discovery and signaled that the deal could face antitrust scrutiny. 

The shift to streaming technology developed by US companies like Netflix, Hulu (Walt Disney Parent), Warner Bros. Discovery (Max), along with major tech companies such as  Amazon (Prime Video), Apple (Apple TV+), and Google (YouTube), has fundamentally transformed film and TV distribution by disrupting traditional models, changing how content is consumed. The consolidation of power among a few major U.S. media and tech companies has created significant concerns regarding control over information, reduced diversity of voices, potential for biased content, and anti-competitive practices. These companies control a vast portion of the streaming platforms, AI produced content, and the underlying edge cloud streaming technology infrastructure that are revolutionizing Hollywood by changing content creation (AI for scripts, visuals), streamlining production (AI automation, edge cloud), enhancing distribution (faster delivery via edge cloud), personalizing audience experience (AI algorithms), and reshaping business models (blockchain for royalties, ownership, earn-to-watch model), leading to democratized tools, new revenue streams, but also profound industry shifts that gives rise to age old debates over creativity vs. automation and lawsuits of whether AI is infringing on copyrighted TV and film content.

President Donald Trump signed an executive order that blocks states from enforcing their own regulations around artificial intelligence, aiming to create a “single national framework” for AI.

Edge cloud streaming

The digital revolution, accelerated by the COVID-19 pandemic, has led to a fundamental reshaping of Hollywood, characterized by the dominance of streaming-first distribution, data-driven production, massive investment in original content,  delivery of on-demand, mobile-centric viewing experiences, and a notable decline in traditional cinema attendance.

Amazon Web Services, Google Cloud, and Microsoft Azure are extending their robust cloud infrastructure to the edge, offering services like AWS Local Zones, Google Cloud’s Anthos, and Azure IoT Edge. These platforms enable customers to deploy and manage applications closer to end-users, leveraging the scalability and features of the central cloud while benefiting from reduced latency and localized processing. Edge cloud streaming can be blockchain-based, as these technologies complement each other for secure, efficient, and peer-to-peer content delivery, creating decentralized content delivery networks or marketplaces.

The shift to edge cloud architecture in streaming is enabling robust implementation of diverse monetization strategies, including subscription (SVOD), ad-supported (AVOD), and transactional (TVOD) models. By utilizing edge computing, media companies can deliver high-quality, low-latency streaming experiences while leveraging data processing closer to the user, which enhances ad targeting effectiveness and manages content delivery more efficiently for all revenue models.

You can watch a documentary about Melania Trump on Amazon Prime Video, delivered via AWS Cloud’s edge cloud technology called Melania, a behind-the-scenes look at her life as First Lady-elect.

Did you know that you could earn tokens to watch TV, film, and advertising content instead of paying for it? 

Tokenized watch-to-earn streaming

The “watch-to-earn” streaming model in edge cloud streaming leverages blockchain technology to reward user engagement. While still an emerging and niche area, it presents a compelling potential alternative to traditional subscription or ad-supported monetization models by turning viewing time into a form of cryptocurrency or digital asset that users can collect and potentially redeem or trade.

The top two watch-to-earn platforms include Basic Attention Token (BAT) and the Theta Network, which are two distinct blockchain projects, each aiming to disrupt online advertising and video streaming, respectively. The BAT is used within the Brave browser to facilitate digital advertising and content monetization. Brave Rewards allows users to tip creators directly with BAT on various platforms, including YouTube, Twitch, and Reddit. Theta Network, which streams NASA TV Programming, allows users to earn TFUEL (Theta Fuel) by watching videos and sharing resources by contributing bandwidth and computing power, such as relaying video streams and running Edge Nodes, to enhance streaming quality and reduce costs for streaming platforms.

Other watch-to-earn platforms include Rewarded.tv, Verasity (VRA), Edge Video, Script Network, DLive, Vuele, MovieBloc, Flixxo, Odysee (LBC), Permission.io (ASK), PlayNano (XNO), BitTube (TUBE), Cointiply, XCAD Network (XCAD), BitRealms Entertainment, Demand Film, Gaia Film, Film.io, Eluvio, Rad, Vabble, Myco.io.

AI connects creators and viewers with streaming

According to a Deloitte report, the use of AI and machine learning is becoming more prevalent in the media and entertainment industry, particularly in content creation and distribution. The top two streaming companies, Netflix and Amazon Prime, have already successfully integrated AI into their streaming services, with Netflix’s recommendation engine responsible for about 80% of the content watched on the platform. The top third streaming company, Disney, will invest $1 billion in OpenAI and let the ChatGPT maker use its characters and properties in a limited capacity as part of a three-year licensing agreement.

Platforms like Filmhub, Cineverse (formerly Cinedigm), use AI to connect creators with streaming platforms and brand opportunities, with specialized content monetization tools. Cineverse uses AI tools like cineSearch for content discovery and Matchpoint for automated content management, and partners with the Theta Network to leverage its decentralized infrastructure for cost-effective video delivery and a token-based incentive system for content creators and viewers. For example, it is possible to earn TFUEL by watching content on Cinedigm’s CONtv channel, as it is integrated with the Theta Network.

Taxation in the new tokenized streaming economy

Tokenized streaming with edge technology and AI fundamentally transformed global film and TV distribution by enabling a direct-to-consumer, watch-to-earn model that bypasses traditional intermediaries, fostering new tokenized revenue streams for viewers, and lowering entry barriers for international and independent creators. This shift is navigating a complex international tax landscape marked by the rise of Digital Services Taxes, creating significant uncertainty and compliance challenges for taxpayers.

The U.S. taxation of individuals involved in tokenized streaming services aligns with existing IRS guidance on digital assets and self-employment income, requiring all income to be reported, regardless of the payment method or whether a Form 1099 or 1099-DA is received. 

Taxpayers must maintain detailed records of all digital asset transactions, including dates and fair market values, and answer the digital asset question on Form 1040 and report all income, gains, and losses on their tax returns.

Tokens as property: The foundational principle, established in IRS Notice 2014-21, is that virtual currency is property for federal tax purposes. General tax principles for property transactions apply. 

Earning tokens (Ordinary income): Receiving tokens as payment for services through activities like viewing films, advertisements, mining, staking, or airdrops is considered ordinary income. The amount of income is the fair market value of the tokens in U.S. dollars at the time of receipt. Ordinary income from services is reported on Form 1040, Schedule 1, or Schedule C. 

Selling/trading tokens (Capital gains/losses): When a taxpayer sells or exchanges tokens, using tokens to buy anything for fiat currency, other crypto, or goods/services, it’s another taxable event that triggers a capital gain or loss based on the difference between the FMV received and the taxpayer’s cost basis (original value when acquired). 

Short-term (held one year or less) gains are taxed at ordinary income rates (up to 37%).  Long-term (held more than one year) gains benefit from preferential capital gains rates (0%, 15%, or 20%). Furthermore, NFTs that represent art or other items typically classified as “collectibles” might be subject to a higher collectibles capital gains tax rate, up to 28%. The IRS uses a “look-through analysis” to determine the underlying asset’s nature. Capital transactions are primarily reported on Form 8949 and Schedule D.