EY and Microsoft unveil blockchain royalties management solution

06 July 2018 Consulting.us

EY and Microsoft have launched a new blockchain solution that helps media authors and licensors better manage royalties-related transactions. The smart contract solution, which will be introduced with Microsoft’s video game publishing partners, will allow for near-instant tracking of transactions, while streamlining processes and improving transparency and security.

In the media and entertainment industry, the intellectual property of creators (authors, songwriters, game developers, etc.) is licensed to third parties who pay royalties to the creators. The transactions, like someone buying a song on iTunes, a video game on Steam, or an e-book on Amazon, equate to billions of dollars per month in royalties that need to be paid. In today’s systems, the royalty calculations are mostly manual and managed through offline data sources.

In response, EY and Microsoft have launched a blockchain solution for content rights and royalty management that streamlines today’s costly and time-intensive process. The new system will increase transparency while eliminating costly manual reconciliation and partner reviews in royalties management. The blockchain solution will initially be tested with Microsoft’s game publishing partners, including industry heavyweight Ubisoft.

"We are always looking at how to leverage emerging technologies in all facets of our business,” said Loic Amans, Senior Vice President, Finance & Strategic Planning at Ubisoft. “The opportunity to collaborate with EY and Microsoft on blockchain use cases in the domain of digital contracts and royalties is truly exciting.”EY and Microsoft unveil blockchain royalties management solutionBuilt on Quorum blockchain protocol and Microsoft’s Azure cloud and blockchain tech, the solution will provide real-time visibility of sales transactions to participants, while allowing for real-time calculations of creator and licensor’s royalty positions. The almost instant availability of royalty info will allow parties to react more quickly and effectively to the market by better seeing content purchases.

Instead of the current process which can take up to 45 days or more, the smart contract blockchain solution gives network participants near-instantaneous transaction visibility. As such, partners will now be able generate accounting accruals on a daily basis.

“The scale, complexity and volume of digital rights and royalties transactions makes this a perfect application for blockchains,” remarked Paul Brody, EY Global Innovation Leader, Blockchain. “A blockchain can handle the unique nature of each contract between digital rights owners and licensors. Contracts can be handled in a scalable, efficient manner with an audit trail for the participants.”

Microsoft will initially deploy the solution with game publishing partners (like Ubisoft) in a phased fashion. In its final phase, the network will include thousands of Microsoft royalty partners, processing millions of transactions per day.

“Deploying this blockchain solution will allow us to efficiently manage high volumes and automate processes, while at the same time improve partner satisfaction and enhance compliance,” commented Grace Lao, General Manager of Finance Operations, Microsoft. “Smart contract technology is far more flexible and scalable than any prior solution for managing business agreements. We look forward to deploying this solution across our gaming ecosystem and exploring additional blockchain applications for other finance processes at Microsoft.”

In the future, EY and Microsoft will explore expanding the solution as general infrastructure for royalty transactions in everything from software to digital media.

The solution builds on EY’s blockchain ventures in other industries. The consultancy recently partnered with Microsoft and Towers Watson to create the world’s first marine insurance blockchain platform. The solution streamlines processes while linking insurers and policy holders in a secure network with an accurate and unchangeable audit trail.

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Google topples Apple to take top spot on BCG's list of innovative firms

28 March 2019 Consulting.us

After ranking first on strategy consultancy Boston Consulting Group (BCG)’s top innovators list for 13 years, Apple has finally been knocked off the top spot, landing at third place.

Google usurped Apple’s crown, and Amazon rose to second place on BCG's ranking of the top 50 global innovators. Microsoft and Samsung rounded out the top five, with Netflix, IBM, Facebook, Tesla, and Adidas filling out the top 10. BCG’s ranking was based on a global survey of more than 2,500 senior innovation leaders.

Tech firms dominated the top end of the innovators list. Traditional industries, however, still accounted for more than half of the top 50: Adidas, Boeing, BASF, Johnson & Johnson, and DowDuPont all ranked in the top 15.

The rising importance of digital technology – including artificial intelligence (AI), platforms, and ecosystems – was the central touchpoint of BCG’s survey. Top innovators are increasingly embracing AI in particular to develop new products and services, and to improve the internal innovation process itself.

"Digital technology and external innovation have become watchwords," Ramón Baeza, a BCG senior partner and the report's coauthor, said. "All of the top 10 companies – and many in the top 50 – use AI, platforms, and ecosystems to enable themselves and others to pursue new products, services, and ways of working."

2019 Most Innovative Companies

Platforms provide a foundation on which companies can develop their business offerings, with Amazon Web Services (AWS) and Microsoft's Azure offering some of the leading cloud-based platform services. According to BCG, ecosystems go a step further, pulling together technologies, apps, platforms and, other services to build an integrated solution. Android and iOS, for example, are now a complex ecosystem of telecoms, phone manufacturers, and app developers. AI, meanwhile, simulates human intelligence to achieve groundbreaking new technologies such as self-driving cars and "smart" digital assistants.

The top firms on BCG’s list extensively use AI, platforms, and ecosystems. Google has invested heavily into AI, which is apparent in the company's smart speaker Google Home, the accurate autocompletion of sentences in Gmail, or in its autonomous driving venture. Android, meanwhile, is a truly expansive ecosystem.

Amazon utilizes the cutting-edge Alexa AI voice technology as well as the widely used AWS platform. Apple offers Siri and iOS.

Of survey respondents, 90% said their firms are investing in AI, with more than 30% expecting it to be the innovation area with the highest impact on the businesses in the next three to five years.

Just under 20% of respondents said their companies were strong innovators and above average in AI innovation (what BCG terms "AI leaders"). Among the subgroup of AI leaders, 94% said they see AI as important to their companies’ future growth, as opposed to 56% of AI "laggards" (who rate their AI capabilities as below average).

"AI will have a significant impact on business processes, but its biggest potential lies in developing new products and services that can yield major revenue streams over time," Michael Ringel, a BCG senior partner and the report's coauthor, said.

Which areas of innovation are you actively targeting?

McDonald’s (21st on the list) is using AI algorithms on digital menus that change according to time of day, restaurant traffic, and the weather. Philips (29th) last year launched an AI platform that allows healthcare industry workers to access advanced analytics that curate and analyze healthcare data.

AI is already unlocking value for advanced users: 46% of AI leaders said AI-enhanced products and services represented 16% of sales, versus 10% for laggards.

In a world of platforms and ecosystems, the BCG report found partnership models are gaining steam. Strong innovators have upped their partnership usage from 2015-18, with incubator use rising from 59% to 75%, academic partnerships from 60% to 81%, and company partnerships from 65% to 83%.

Platforms and ecosystems help facilitate innovation, while expanding reach and collaboration, allowing for stronger, multiparty solutions. “Not all ecosystems are alike, however. They have different types of glue that bind their participants. Money is one type, of course, but knowledge, data, skills, and community can be equally important," Florian Grassl, BCG partner and report coauthor, said.

Four companies on 2018's top 10 list were also in the top 10 in 2005: Google, Amazon, Microsoft, and IBM. BCG deems these companies “serial reinventors,” which sets them up well for continued innovation dominance. Google continues to revise its offerings and algorithms, Amazon disrupts new categories and builds new services, and Microsoft and IBM have successfully transitioned into cloud-based services.

"The tools and technologies of innovation evolve,” BCG’s report states. “The basic orientation toward change – never being satisfied and always being willing to reinvent oneself – remains part of some companies’ lifeblood.”