Bab 260: Chapter 260: Timing the Setup
Nancy Brill rolled her eyes at Simon Westeros as Arlence chuckled uncontrollably again, and the three of them headed to a meeting room next door.
Seated, Nancy flipped to the last page of the document she had and showed it to Simon, saying, "According to this statistical result from the analysis team, of the revenue from video tape rentals and sales in Blockbuster stores, the top 100 North American box office films in the past year only account for 37% of the total revenue. Since distributors take a higher share from popular new releases, the gross profit margin from this segment is even lower, at 29%."
Simon, looking at the document in front of him, noticed Angela Arlence leaning over to see it too. He slid the folder towards her and asked Nancy, "What are you getting at?"
Nancy pointed at the key data with her slender index finger and explained, "These numbers show that the 80-20 rule, where 20% of the popular films account for 80% of box office revenue, doesn't apply to the videotape market. In fact, as Blockbuster continues to expand and diversify its content, the opposite is true. The 20% of films that contribute 80% of box office revenue only bring in 20% of the profits in the videotape industry."
Simon recalled some vague memories that seemed to confirm this and looked up at Nancy, waiting for her to continue.
Nancy added, "The proportion of North American households owning VCRs was only 2% in 1980, but it's now close to 70%. Industry forecasts predict that in a few years, over 80% of North American homes will have a VCR. Additionally, the value of the North American videotape industry is rapidly increasing. Just three years ago, it barely exceeded the domestic box office, but last year it reached $8.3 billion, almost double the box office revenue. Although the North American videotape market will saturate in the coming years, its total revenue will still be about 2.5 times that of the domestic box office. The global potential of the videotape market should be comparable to North America's."
After listening to Nancy, Simon nodded and asked, "So, what's your point?"
"My suggestion is for the company to enrich Daenerys Entertainment's film library through acquisitions. The rapid rise of the videotape industry means many classic films still have untapped commercial potential at home. For instance, Universal's 'E.T. the Extra-Terrestrial' was released in 1982, and its videotapes only came out last October. In just six months, its global sales have exceeded 11 million units. I believe Orion Pictures is a suitable acquisition target. They own rights to hundreds of high-quality film and television works. By accumulating a collection of outstanding films and leveraging Blockbuster's retail channels, we can regularly promote these titles through marketing campaigns, much like Disney re-releases its classic animations."
Despite the success of films like "Run Lola Run" and "Pulp Fiction," Orion Pictures' decline continued, but as Nancy pointed out, the quality of the film rights they held was indeed high.
The company, in over a decade, not only released award-winning films like "Amadeus" and "Platoon" but also owned rights to commercial hits like "Terminator," "RoboCop," and "First Blood." Woody Allen's recent films were also in collaboration with Orion.
Orion's predicament was complex. Eagerly pursuing growth to match traditional Hollywood studios and blindly expanding, they released more films, leading to inconsistent box office performances. The executive team, skilled in film production but not in management, left the company's financial system in disarray, with unpredictable production costs. The overall downturn in the entertainment industry also played a part.
Orion's lesson was clear. If not for the success of several hit films last year and the steady revenue from reality TV shows, Simon would strictly limit the expansion of Daenerys Entertainment.
Moreover, Simon's strict financial control over Daenerys Entertainment, his emphasis on marketing, and his cultivation of company culture were all efforts to avoid repeating the mistakes of companies like Orion.
Back in the meeting room.
Simon strongly agreed with Nancy's suggestion to expand the film library of Daenerys Entertainment.
In the early 1980s, Hollywood studios didn't value their film libraries highly. When Michael Eisner joined Disney in 1984, he valued Disney's film library at only $200 million.
However, with the rapid rise of the videotape industry, even the 1950 Disney classic "Cinderella," released just a few years ago on videotape, sold over 7 million units, bringing in over $200 million in revenue for Disney and skyrocketing the value of its film library tenfold.
In the original timeline, the success of "Sleepless in Seattle" unexpectedly boosted the sales of a 1950s romance film, "An Affair to Remember," mentioned in the movie, leading to an unexpected sale of 2 million videotapes – a windfall for the distributor.
Not just videotapes – these films from the library could also bring in substantial returns through re-releases, remakes, and cable TV broadcasts.
Essentially, the film libraries owned by major Hollywood studios were akin to treasure troves.
After closing the document, Simon said, "I'll seriously consider this, Nancy. You can bring important data reports from the analysis company to my office in the future. Now, show me the film data database you've been preparing."
Nancy didn't press Simon further on this matter. She was aware of Daenerys Entertainment's current financial situation. Although the company's cash flow was strong, it wasn't yet sufficient to acquire Orion. Her suggestion stemmed from her belief that Simon was continually earning significant profits in the Japanese financial market, which should be enough in due time.
After this discussion, the three went to the third floor.
Here was where the team for the film data database was located.
Nancy's planned film data database wasn't a traditional paper archive but a computerized electronic file.
"The work of compiling film data was assigned to some efficient students in Los Angeles as part-time workers, saving a lot of costs," Nancy led them through the office area, visiting the SUN workstations in the machine room on the third floor. Coming out of the machine room, Nancy couldn't help but complain to Simon, "Following your request, we used Oracle's database software, and it's been a disaster. Larry Ellison is a real charlatan. Not only is the software always buggy, but every time our technicians call for a solution, he makes excuses saying they've already identified the issue and are working on it. I think if we hadn't complained, he wouldn't even know how bad his software is. He's even trying to get some orders for Blockbuster's database software, calling me all the time."
Simon didn't expect his executive to see through Larry Ellison so easily and nodded in satisfaction, saying, "Well, sometimes it's the charlatans who succeed."
Walking alongside Nancy, she glanced at him disdainfully as if categorizing her boss.
Angela Arlence, walking on the other side, noticed the subtle interaction between them and found it quite interesting.
Although she had only had lunch with Simon, Angela could feel the indifference and detachment he usually had towards others. But towards Nancy, he showed a clear indulgence.
Like the recent Blockbuster matter.
Angela thought that without approval or authorization, she would never dare to interfere in the management of a subsidiary like that. She believed Simon wouldn't appreciate such behavior from his executives. But Nancy, without making a fuss, 'appointed' herself as a senior operational consultant for Blockbuster, and Simon simply laughed it off.
The three entered an office, and Nancy called an on-duty employee to demonstrate the database's details.
Simon had previously given Nancy a memo based on the model of the IMDB website, but the film data database before him was nothing like IMDB.
This database was created for one purpose – practicality.
Hence, it lacked the anecdotes, reviews, and message boards Simon had mentioned in his memo. The film data only listed story summaries, genres, core creators, box office data, media ratings, and other relevant information that could aid Daenerys in its analysis.
Besides, although the database had a graphical interface resembling a web browser, the film data was text-only, without a single image.
Beyond the basic film data, the team responsible for creating the database also planned to develop a comprehensive analysis software by regularly integrating feedback from Blockbuster's end data management system.
In short, Nancy Brill had no intention of replicating a public service like IMDB. Her goal was clear: to combine these resources to achieve her initial report's objective of improving Blockbuster's operational efficiency, reducing management costs, and enhancing competitiveness.
In comparison to the convenience of analyzing user behavior directly from the backend in the era of big data, the methods currently used by Daenerys seemed primitive to Simon. Yet, this approach was already far ahead of its contemporaries.
Listening to Nancy explain how last month's release of "Pet Sematary" boosted Stephen King's horror film sales and how Blockbuster responded quickly based on terminal feedback data, Simon once again thought of "An Affair to Remember."
One of Daenerys's key roles was to promote more refined allocation of film resources at a speed far surpassing its competitors.
It was easy to imagine that if "Sleepless in Seattle" was released in a few years as planned and boosted "An Affair to Remember" videotape sales, Blockbuster, using feedback from Daenerys, could quickly complete the purchase and distribution of the videotapes.
When the industry hadn't even reacted, Blockbuster could seize the largest share of the potential demand for 2 million "An Affair to Remember" videotapes.
Furthermore, as consumers gradually realized that Blockbuster always provided what they wanted in a timely manner, it would become their first choice for buying or renting videotapes, thus enhancing its competitiveness subtly.
Ultimately, the adage "the devil is in the details" applies to business management as well.
Simon spent an afternoon at Daenerys Analysis Company headquarters. Besides confirming the value of his investment, he was inspired by the film data database and realized it was time to lay the groundwork for the internet.
In fact, Simon had already begun his internet-related ventures.
Most tech companies held by Westeros Corporation were closely linked to the upcoming internet era.
Apart from publicly traded firms like Microsoft, James Redfield had recently invested in Cisco, holding a 15% stake, and had successfully pushed for a 25% stake in Quantum-Link, now renamed American-Online.
Cisco and American-Online, one a network equipment provider and the other a network service provider, were well-positioned to support the rise of the internet.
What was missing now was a network content provider and a concept to unify these three elements into a global internet.
If he remembered correctly, Tim Berners-Lee, the father of the internet concept, would officially propose the World-Wide-Web (WWW) concept this year.
Then, the electronic computer network, brewing since the 1960s, would take off.
On Monday, Simon asked Jennifer to collect various data related to computer networks.
Having secured network equipment and service providers, his next step was to gain a foothold in network content.
…
Burbank.
Renée Russell drove away from Universal Studios, feeling nauseous at the memory of the nearly seventy-year-old director's insinuations during her audition.
He had no decision-making power yet sought benefits.
Did he think she was easy to fool?
Today was May 12th, another Friday.
A week had passed, but the details of that night had become clearer in her mind.
And she couldn't shake off a strong sense of resentment, feeling it especially as she touched the Gucci Floral scarf still tied around her neck.
She had thought that night's experience would improve her situation in Hollywood, but things remained the same.
Cursed little man.
Scum!
Devil!
Daenerys Entertainment's "Who Wants to Be a Millionaire" season two contract renewal was in the headlines, but a TV show on the front page?
However, she was surprised to see Daenerys Entertainment losing $80 million on the new contract.
Her mood lifted.
Ordering another dessert, she decided to celebrate, pushing concerns about her figure aside.
She read the article thoroughly over her coffee.
A simple quiz show making $250 million? It seemed like robbery.
Daenerys Entertainment still earned more than ABC, even with an $80 million concession.
$170 million.
She fantasized about what she would do with $170 million but quickly dismissed the thought as unrealistic.
She had always been practical. Raised by a single mother, she had few unrealistic dreams. Dropping out of school at 16 to work and support her family, she accidentally became a successful model but was always haunted by the pressures of life. At 30, realizing her modeling career was over, she hastily tried acting.
Starting in small community theaters and taking acting classes, she landed a small role in a TV show two years ago, finally seeing some progress.
But she knew age was her biggest disadvantage.
Last month, her first film, "Major League," about baseball, was released. She played a woman foolishly returning to a playboy, something she would never tolerate in real life. If she encountered such a man, she would first beat him up, then call the police.
Right.
Like the man she met last Friday.
No, he doesn't count.
"Major League" did well, earning over $30 million in a month.
And she got more auditions.
But they left her disgusted.
Used to the industry's dark side, she would normally not react so strongly. It must have been because of last Friday's experience.
Sigh.
That damned little man.
Lost in thought, she finished her coffee and the paper, barely touching the dessert.
As evening fell and she was about to leave, her pager beeped.
Checking it, she saw her agent urgently asking her to call back. She headed to a payphone, feeling a strange anticipation.
The call was from Simon Westeros, asking her to come to an address in Beverly Hills at 8 PM.
Her agent sounded excited.
She felt a mix of excitement and resistance.
She wasn't the kind to come running when called.
But since he remembered her, she decided to go. But tonight, she would not let him have his way again. Men never value what comes too easily.
After the call, she hurried to her car, planning to change at home for the occasion – for courtesy's sake, as she was dressed for an audition.
She wouldn't fall for him again.
That doesn't count.
Tonight was different.
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