Capítulo 309: Chapter 309: "Surging Sales"
Los Angeles.
Daenerys Entertainment's division in Burbank.
The date is December 1st, Friday.
"The Mark of Gucci" grossed $9.55 million in its first week with only 532 screens, far exceeding everyone's expectations. Eira Doichman immediately began preparing to increase the number of screens for this documentary, which was originally created for promotional purposes without a profit motive. However, Gucci made a decision that was hard for him to accept: "The Mark of Gucci" would maintain its screening on just 532 screens, with no additions.
With only 532 screens, "The Mark of Gucci" managed to earn $9.55 million in its first week, and its popularity and reputation were on the rise. If they took advantage of the momentum to gradually increase the number of screens to around 1,000, the documentary's total North American box office could easily surpass $50 million. Maintaining it at 532 screens, the total might only reach around $40 million, at least a $10 million difference in box office revenue.
Compared to that, adding 500 screens would only cost Highgate Pictures an additional $500,000 for copies and transportation.
"Eira, this is actually a decision made by Mr. Westeros himself."
In Eira Doichman's office, Angela Ahrends, who had come to Los Angeles to discuss the promotional matters of "The Mark of Gucci" with Highgate Pictures, explained this to Eira Doichman in response to his repeated queries.
Hearing that Simon decided not to increase the number of screens for "The Mark of Gucci," Eira Doichman immediately dropped the idea of persuading Gucci to change its mind.
Before officially signing the employment agreement, Eira Doichman had a face-to-face deep conversation with Simon, who made it clear that although his compensation agreement included a 5% net profit sharing clause from Highgate Pictures, the company's operations must still serve the interests of the entire Daenerys Entertainment, and the internal collaboration mechanism would not change.
This also applied to other companies within the Westeros system.
Eira Doichman's compensation plan included a 5% net profit sharing clause from Highgate Pictures, but due to Simon's requirements, he was destined not to prioritize Highgate Pictures' interests above all else, let alone turn it into his personal domain.
Eira Doichman, ousted from New Image Company by his partners, now held power and compensation in Hollywood far beyond what his former partners could imagine, satisfying him greatly. Thus, he did not resist Simon's decision.
He also dared not resist.
Working in Burbank, Eira Doichman could sense how difficult Robert Lem's life had been lately.
After his failed attempt to leave, Simon did not expel him from the company and even paid for his Manhattan property purchase. However, Lem, previously considered the third most powerful person in Daenerys Entertainment after Simon and Pascal, now saw his authority divided. Pascal began to interfere with the company's distribution matters more obviously.
It's foreseeable that once Pascal completes the takeover of the company's distribution network, Lem will be completely marginalized, becoming someone who can be dismissed at any time.
Moreover, with Daenerys Entertainment's influence in Hollywood, if Simon does not give his approval, Lem would have nowhere else to go. At over fifty years old, Lem could not switch careers outside of Hollywood.
Therefore, knowing he was being marginalized, Robert Lem could not resist and had to diligently fulfill his duties to avoid being fired prematurely.
After completing the three-year term in the contract, they could part ways peacefully, and Lem could still look for other jobs. However, if he were fired early, there would be no place for him in Hollywood.
Eira Doichman did not want to end up like Lem.
However, Eira Doichman still didn't fully understand Simon's decision, asking Ahrends, "Angela, I understand Gucci didn't intend to profit from 'The Mark of Gucci,' but as a brand promotional documentary, shouldn't we want more people to see it?"
"Eira, Gucci is a luxury brand, which means our products are not meant for the general public. If 'The Mark of Gucci' hadn't sold well, we would certainly want more potential customers to see the documentary. Now, we want to create a situation where everyone knows about the documentary but not everyone can see it. This maintains a distance between Gucci and the public, preserving our brand's style," Angela Ahrends explained, handing Doichman a follow-up marketing plan, "So, Gucci plans to add $3 million to the promotional budget to maximize 'The Mark of Gucci's' visibility."
Eira Doichman received the documents and quickly calculated in his mind.
Without increasing the number of screens and considering "The Mark of Gucci's" $40 million North American box office, Gucci's share of the profits from ticket sales would be about $3 million.
It was clear that Gucci intended to invest all earnings from the documentary into brand promotion.
With this in mind, Eira Doichman couldn't help but ask curiously, "Angela, may I inquire about Gucci's sales performance recently?"
Angela Ahrends smiled and nodded, "I'm not sure about overseas, but here in the US, Gucci's sales last week were $8.03 million, a 51% increase from the week before. This week, we should surpass $10 million."
Eira Doichman instantly understood why Gucci was willing to forego "The Mark of Gucci's" box office earnings.
Luxury brands have a high profit margin. Just in the US, one week's sales gross profit is likely more than what Gucci could earn from the documentary's box office.
As the president of Gucci's American division, Angela Ahrends could directly feel the boost "The Mark of Gucci" brought to product sales.
The end of the year is typically a sales peak season. Without "The Mark of Gucci," weekly sales in North America would usually hover around $5 million, enough for Gucci's American division to exceed this year's $150 million sales target.
Now, influenced by "The Mark of Gucci's" release, sales at Gucci stores have significantly increased.
The American division originally estimated December sales to be between $20 million and $25 million. Now, it's expected to reach $40 million, far exceeding expectations and pushing Gucci's total sales in the US to $170 million for the year.
Due to Gucci's rapid performance improvement, many media outlets have been discussing the Gucci family's seemingly unprofitable deal early this year.
Based on Daenerys Entertainment's $170 million purchase for 63% of Gucci's shares, the company was valued at only $270 million at the time. Less than a year later, many media outlets believe Gucci's value has surged to $1 billion.
After discussing these points, Ahrends and Doichman started discussing the promotional matters for "The Mark of Gucci."
Half an hour later, as Ahrends was leaving Doichman's office, Madonna, dressed in a black short trench coat and black long boots, exuding a queenly vibe, came around the stairway corner.
Naturally, Angela Ahrends knew Madonna, and after warmly greeting each other, Madonna said, "I was going to call you tonight, Angela. That black metal
buckle tote bag that was just released, could you find one for me? They're out of stock here in Los Angeles, and the boutique in New York also said they don't have it. It's really annoying."
Ahrends explained, "That's a limited edition launched recently, only 100 available. North American boutiques received 30, and they were gone by last weekend. However, I can have someone bring one from Europe for you."
"Thank you, Angela, you're the best," Madonna said, clinging to Ahrends' arm, then asked, "But if it's selling so well, why not produce more?"
Ahrends laughed, "If we produced more, it wouldn't be a limited edition. These 100 tote bags are numbered; there won't be one more or one less worldwide."
Madonna, of course, understood the concept of limited editions and was just making a casual joke.
After finalizing, Ahrends left without ever discussing the price.
The tote bag Madonna requested was priced at $2,999, ten times the price of some of Gucci's basic handbags.
In the handbag sector, Gucci couldn't compare with the "king of handbags," Hermès, whose high-end bags were around $1,000. The $2,999 tote bag was Gucci's cautious attempt to reach a higher market segment, hence only 100 were produced.
To avoid potential embarrassment from unsold stock, these 100 tote bags were distributed for sale across North America, Europe, and Asia.
The trial was clearly successful.
The 30 tote bags released in North American boutiques were quickly sold out by last Saturday morning. Nearly a week later, celebrities like Madonna were still seeking them, indicating the bag's promotional success.
Gucci had also gifted several of these limited edition tote bags to female stars closely collaborating with Daenerys Entertainment for street photography promotions. Madonna, despite attending Gucci's recent show, was not among them.
However, Madonna's proactive request did not make Ahrends hesitate. Gifting the tote bag to the pop star would undoubtedly benefit Gucci's brand promotion.
Madonna didn't come to Burbank without reason.
After Ahrends left, Doichman and Madonna sat down in his office.
"Madge, regarding the documentary about your concert tour next year, Highgate Pictures can take on the project. However, the $2 million upfront payment and 40% profit share you proposed, unfortunately, I cannot agree to."
Madonna had mentioned the idea of producing a documentary about her global tour next year to Simon in Milan.
Simon was lukewarm, but Madonna kept it in mind.
After "The Mark of Gucci's" success last week, Madonna had her agents initiate preliminary discussions with Eira Doichman. She's a savvy woman and understood that after "The Mark of Gucci's" success, Daenerys Entertainment would likely be open to another similar documentary.
Moreover, with "The Mark of Gucci," Hollywood would easily attract investment for such documentaries. However, due to a certain young miracle-worker, Madonna was firmly convinced that partnering with Daenerys Entertainment was the right choice.
"Eira, 'The Mark of Gucci' should bring in about $50 million in box office revenue, and that's just in North America. I believe my concert documentary has the same potential, so $2 million upfront and 40% profit sharing is very reasonable."
Eira Doichman shook his head, "Music documentaries and fashion documentaries are different. You certainly know about 'Moonwalker' by Michael Jackson four years ago. MGM had high hopes with 906 screens, but it only made $4.21 million at the box office."
Madonna looked at Doichman and smiled, "Eira, MGM is in decline. It's hard for them to do anything right, and everyone knows that."
"Alright, Madge, I'll be direct about the terms Highgate Pictures can accept," Doichman didn't want to waste time on unproductive discussions and said, "For this documentary, we're looking at a preliminary budget of $3 million. We have two options. One is similar to the partnership model with Gucci for 'The Mark of Gucci,' where Gucci covered half of the investment and the promotional costs, hence they received a corresponding share. Highgate Pictures would take a 15% distribution commission from all revenue channels."
Madonna knew Gucci didn't expect to profit from "The Mark of Gucci," aiming instead for brand promotion, hence the substantial investment. She had seen the budget figures in recent newspapers. A total of $10 million for production and promotion, with Gucci contributing $7.5 million. She wasn't willing to take that risk.
"And the second option?"
"The second option is your proposed upfront payment plus profit sharing. Daenerys Entertainment will cover all production and promotion costs, but I can only offer you $500,000 upfront plus 20% profit sharing."
Madonna's initial proposal of a $2 million upfront payment was roughly equivalent to buying the documentary's rights. Doichman reducing the upfront payment to $500,000 essentially matched Madonna's current pay scale.
After thinking it over, Madonna said, "One million dollars, 30% profit sharing."
Doichman shook his head, "At most 20%."
Madonna caught Doichman's hint, "Okay, one million dollars, 20% profit sharing."
"Madge, what I meant was $500,000 plus 20% profit sharing. You need to understand, if you don't choose the first option, Highgate Pictures has to bear all the investment risk."
Madonna insisted, "One million dollars plus 20% profit sharing, that's my bottom line. Eira, if you don't agree, I'll look for another film company to partner with."
Doichman looked troubled and hesitated before reluctantly standing up to shake hands with Madonna, "Alright, Madge, we have a deal."
Madonna stood to shake hands with Doichman and then sat back down, feeling she might have settled for less if she had persisted.
Usually, Doichman was known for his ultimatums in the industry—take it or leave it.
This time...
Suddenly thinking of a certain individual, Madonna immediately regretted not pushing harder.
Indeed, she should have persisted.
Though regretful, Madonna did not go back on her word. One million dollars upfront plus 20% profit sharing was likely the best deal Highgate Pictures could accept.
Upon reflection, Madonna realized she couldn't expect the same box office level as "The Mark of Gucci." With "Moonwalker's" failure as a precedent, achieving a North American box office of $10-20 million for the documentary would result in millions in earnings for her, a significant income.
And while she didn't have high hopes, who's to say it wasn't possible?
Her team predicted next year's concert tour would gross over $50 million, with her taking 40%, equating to $20 million.
If the concert documentary, under Simon Westeros's management, performed as well as "The Mark of Gucci," just 20% of the documentary's total revenue could match the income from the concert itself.
This was the fundamental reason Madonna did not pursue other Hollywood film companies that might offer more upfront payment.
Though shrewd, Madonna also possessed the necessary adventurous spirit.
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