EY OpsChain Contract Management Solution

In TMT

The digitalization of Technology, Media & Entertainment, and Telecommunications (TMT) companies’ products, services and value chain has opened up massive opportunities. But it has also created challenges — especially around creating and applying complex commercial agreements. Our blockchain-based solution provides the answer.

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How blockchain helped a gaming platform become a game changer

Microsoft Xbox and EY implemented a transparent blockchain network so game publishers, creators and asset owners can focus on the future.

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How can blockchain transform a gaming platform into a game changer?

A blockchain solution gives Microsoft Xbox an infrastructure that helps them manage and provide a better partner experience.

The $120b video game industry employs some of the brightest creative and technological minds. While this marriage of creativity and technology was bringing enjoyment to the masses, Microsoft Xbox’s royalty process meant that game publishers faced some unique challenges due to legacy technologies limitations.

Global gaming industry

$120b

of forecasted revenue, serving over 2.7 billion consumers worldwide.

The gaming industry serves over 2.7 billion consumers worldwide. This is enabled through partnerships between gaming platforms such as Xbox and thousands of publishers, developers, authors, designers, production houses and distributors. These relationships are all key in maintaining a high-quality product and attracting the best talent and creators to the platform.

Microsoft Xbox’s legacy system for securing and managing royalty processing was cumbersome, taking 45 days to access validated financial information about royalties earned.  Along with paperwork, this was not giving the best experience to many game publishers, especially the ones with small businesses and limited resources.

EY and Microsoft wanted to help the gaming industry play fair, so the team asked themselves: could blockchain be a game-changer for the gaming industry?

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A blockchain solution that integrates with publishers and creators

Together, EY and Microsoft Xbox are implementing smart digital solutions to help game publishers and creators do their best work.

Microsoft Xbox and EY worked together as one team to help deliver a transformation. Microsoft and EY teams’ joint capabilities and suite of digital solutions became a game-changer, helping Microsoft Xbox reduce the manual effort and the operational hours associated with processing royalties for publishers through automation of the royalties processing, starting to transition off the legacy system. 

Smart contracts encode game creators’ IP rights

The first step in refreshing Microsoft’s legacy systems was to onboard royalty contracts onto blockchain in the form of digital contracts. The legal terms were then encoded in the blockchain network in the form of smart contracts. By opting in, industry participants can review and validate that onboarded digital contracts are the same as the royalty contracts in a confidential manner.

An automated solution that brings down operational costs

Building on the foundation of contractual transparency, the team focused on providing improved transparency to the game publisher for the royalty processing — a major pain point for Microsoft Xbox. The existing system of processing and distributing royalties was plagued by loads of reviews and tedious manual processes.  Automation of the system sped up the process, reduced the effort and provided more transparency to participants, while at the same time maintaining a high degree of privacy and confidentiality between Microsoft and the game publisher.  A user-centric interface adds a simple, well-designed interaction layer to the royalty distribution system for game developers.

Near real-time purchase records show game creators what they have earned

While smart contracts were used to accurately and transparently process the royalties for Microsoft Xbox’s partners, the next step was to securely and transparently share the information with them in near real-time, cutting access to royalties from 45 days to 4 minutes.

Providing near real-time access to data greatly improves the process’s effectiveness, and insights that lead to a more enriching experience for the partners,” Tim Stuart, Xbox Chief Financial Officer at Microsoft.

As consumers purchase Xbox games, other merchandise and digital content, the smart contracts apply the encoded contractual logic and instantly calculate the royalty. This information, when ready, is then sent to each participant who has a node, creating an immutable record of transactions and royalty obligations in a secure and confidential manner. Not only does this provide creators peace of mind, it allows them to record financial transactions daily, it can also vastly improve their forecasting and reporting capabilities.

Providing near real-time access to data greatly improves the process’s effectiveness, and insights that lead to a more enriching experience for the partners.
Tim Stuart
Xbox Chief Financial Officer at Microsoft.
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The better the question. The better the answer. The better the world works.

A transparent blockchain ecosystem that empowers creators

Microsoft Xbox’s new blockchain network is better for business and better for game creators.

The technology solutions implemented in this project — including instant transactional details — led to profound benefits for Microsoft Xbox and its partners. It seamlessly connected these parties and enhanced their experience.

The blockchain solution integrates closely with game creators to give Microsoft Xbox an infrastructure that helps them manage and reward game publishers and creators. Creators now have more trust in the process and can focus on creating new games.

“By implementing a blockchain-based network and streamlined royalty processing, game publishers and Xbox benefit from a more trusted, transparent and connected system from contract creation through to royalty settlements,” Luke Fewel, General Manager, Global Finance Operations at Microsoft. The new solution enables a 99% improvement in processing time and is fully integrated with ERP for automated invoicing and recording accounting entries. It enables near-100% real-time royalty statements for game publishers, 40% plus operational effort reduction and eliminates reconciliation needs.

This technology will help transform the future of entertainment.

By implementing a blockchain-based network and streamlined royalty processing, game publishers and Xbox benefit from a more trusted, transparent and connected system from contract creation through to royalty settlements.
Luke Fewel
General Manager, Global Finance Operations at Microsoft.

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What EY can do for you

Powered by advances in technology and surging customer demand, TMT companies have made huge strides in digitalizing their products, services and business relationships. The result? A seamless value chain for digital content running all the way from artists and creators, via producers and directors, to distributors and — ultimately — the end customer. A value chain that creates substantial and growing worth and appreciation for participants at every stage.

But there’s a bottleneck. While TMT services and content have progressed rapidly into the digital age, companies’ procurement and contracting have remained mired in the past. Burdened by legacy applications and processes, procurement teams across TMT are good at negotiating complex agreements such as revenue-sharing deals with business partners — but then struggle to execute these effectively.

This procurement pinch-point is acting as a brake on TMT companies’ realization of the benefits of their digital innovation and investment. Its impacts include mistrust and litigations between companies, major challenges in managing digital asset rights, and heightened piracy and security. Worst of all, TMT asset owners are not able to get fair exchange for value due to factors such as siloed processes and systems, and overly complex value chains with a multiplicity of revenue-sharing parties.

Now a solution is at hand with EY’s OpsChain Contract Management for TMT. The first solution of its kind for the industry, it enables companies of all sizes and in all segments of TMT to simplify and manage the complexity created by extended digital business ecosystems, fragmented IT systems and increasingly variable commercial agreements.

How does our solution do all this? We empower your business to run end-to-end procurement activities using tokens and smart contracts. This is underpinned by the global partnership between EY and Microsoft — two world leaders who collaborated to put this same technology at the heart of the solution used to manage Xbox royalties.

Building on this solid foundation, the EY OpsChain Contract Management solution for TMT is ideally equipped to solve industry-wide challenges. For example, in the over-the-top (OTT) streaming and subscription video-on-demand (SVoD) segments, it enables ecosystem-wide user management to support growth in partnerships and utilization. In digital advertising, it provides omnichannel data to inform programmatic and addressable advertising. And in data and content security, it automates complex agreements and asset monitoring to secure content and intellectual property.

The result is a new paradigm for digital rights management, including:

  • Creation of digital assets: Artists and innovators can digitize their work to prove ownership and micro-monetize it without the risk of it being stolen. 
  • Capability to have digital smart contracts: Companies can define and agree on terms for revenue sharing for digitized assets and usage with distributors, and then automate these in smart contracts.
  • Transparent ledger and micro-metering: Consumption must be fully transparent to everyone across the ecosystem at the transaction level. 
  • Tokens for transactions: Creating tokenized asset ownership, usage, and fiat currency can simplify purchases.

At the same time, the solution delivers critical strategic benefits to all participants in the ecosystem:

  • Better revenue management: Revenue is shared in near real-time based on digital contracts and creators are paid immediately.
  • Enable analytics on usage and data: This enables you to attract merchandisers and distributors, plan promotions, experiment with dynamic pricing and get funding for future projects.r
  • Piracy protection: Public key infrastructure and asset provenance management mean artists and innovators can exchange their assets securely over the network.

Your TMT business already operates at digital speed in delivering its products and services. The EY OpsChain Contract Management solution for TMT brings the same pace to your commercial contracting and execution. To find out more about what our solution can deliver for your business, contact us today.

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