Chapter 112: Seeking Real Cases

A month after its release in theatres, the heat surrounding 'The Blair Witch' began to fade. Like all news events, it couldn't hold the public's attention forever. Most people have a tendency to prefer the new over the old, and Hollywood always has an abundance of news to grab attention. 'The Blair Witch' was becoming a thing of the past.

After grossing another $5.21 million in its fifth weekend, the film's daily earnings dropped to around $1 million.

However, with a cumulative North American box office of $138.9 million, 'The Blair Witch' steadily reached the $150 million milestone.

The box office revenue was just the beginning of the film's earnings. Offline operations were being prepared.

The disc pressing and videotape production had already begun. Michael planned to launch them into the market during Halloween. The offline distribution department had long-standing collaborations with chains like Walmart and Blockbuster. Seashore Entertainment's stability over the years heavily relied on videotape revenue.

Michael invested in acquiring Seashore Entertainment not only for its theatre distribution capabilities but also for its comprehensive offline channels.

Since the advent of videotapes, film distribution was no longer limited to theatres.

No one understood better than Michael that the next decade in Hollywood would see a DVD boom. DVDs could sustain Hollywood companies to a large extent.

Michael spent a day discussing with Garcia and Terry, the head of offline distribution. Seashore Entertainment planned to lay the groundwork for DVDs early and establish long-term partnerships with several disc-pressing factories.

DVDs and related discs had a more promising future than traditional videotapes. DVDs would soon surpass videotapes.

The main reasons were profit and cost. A regular DVD, even if produced in high-labor-cost areas like North America, would only cost 50 cents to press. Launching it into terminal sales would cost just $3 to $5.

Legitimate DVDs typically sold for around $20, and deluxe, commemorative, and limited editions often sold for over $100.

Additionally, DVD picture quality was generally superior to that of videotapes.

Hollywood was entering a crazy blockbuster era, where these films' most significant selling point was special effects. Showing these effects through traditional videotapes would be challenging.

For 'The Blair Witch,' there was almost no space for merchandising operations. Besides videotapes and DVDs, TV broadcasting was another primary source of offline revenue.

Seashore Entertainment had begun initial talks with TV stations about the broadcast rights for 'The Blair Witch.'

Hollywood films granted TV broadcast rights in two main ways: selling the rights for several years or charging per broadcast, with the first broadcast being the most expensive.

For example, Tom Cruise's 'Mission: Impossible' had a first-broadcast licensing fee of $8 million, with each subsequent broadcast costing nearly $4 million.

Licensing by a number of broadcasts could also be packaged. Film companies would use one or two blockbuster films as the core, paired with some regular films and unsellable flops, creating a broadcast rights package to sell to TV stations.

This was common practice, allowing flop films to recoup as much cost as possible while effectively diluting the profits of hit movies.

Due to limited funds during the acquisition, Michael separated Seashore Entertainment's film library, which was eventually acquired by Lionsgate. Currently, Seashore Entertainment has no other film rights. Michael initially planned to transfer several videotape films without TV broadcast rights from Sands Entertainment to Seashore Entertainment and bundle them with 'The Blair Witch' for a TV broadcast rights package.

Michael provided the plan, and Seashore Entertainment's offline distribution department would handle the execution.

Fortunately, 'The Blair Witch' did not involve sharing profits with cast or crew members. Michael's Relativity Entertainment had bought out all rights, so there was no concern about profit-sharing and no need to dilute the film's pure profit deliberately.

With offline operations on track and various aspects handled by dedicated personnel, Michael shifted his focus to other areas. 'Final Destination' had entered the editing stage, with Jessica Felton joining the crew to oversee the editing.

Paul Greengrass personally handled the editing of 'The Kingsman.'

Of course, Michael retained final decision-making authority.

The release dates for these two films were also set. Final Destination will be released in early December, and The Kingsman in mid-November, both distributed by Seashore Entertainment.

"I plan to hold a premiere for 'Final Destination,'" Michael said in a modest meeting room filled with senior executives from Sands Entertainment and Seashore Entertainment. He sat at the head of the long conference table. "Seashore will be responsible for planning."

Garcia spoke honestly, "We've never held a premiere before; we have no experience."

For the past decade, Seashore Entertainment has only bought small independent productions from overseas for North American distribution. It has never engaged in the high-profile marketing method of a premiere.

Michael, also inexperienced in holding premieres and worried about messing up the first attempt, suggested, "Let's hire an agency to handle it."

Hollywood had many agencies capable of providing comprehensive services for films, including premieres and even editing promotional trailers.

The most typical example of this was Warner Bros.'s release of 'Suicide Squad' in the past life. The film was poorly made, and Warner Bros. had realized this early on. They hired a professional company to handle the promotion. This company condensed the film's few highlights into the trailer, causing a sensation and leading to an explosive first-weekend box office.

Although audiences later realized the trailer contained the only highlights, leading to widespread criticism, it did not prevent 'Suicide Squad' from achieving commercial success.

Thomas, the head of theatrical distribution, asked, "Will 'The Kingsman' also have a premiere?"

"No," Michael directly rejected the idea. "This film's cast has no star power so that a premiere wouldn't attract much attention."

The actual cost of 'The Kingsman' was only $10 million, and all the actors, including director Paul Greengrass, were Hollywood newcomers. Spending hundreds of thousands on a premiere was not cost-effective.

Michael then addressed David Villa, the head of marketing, "The marketing for 'The Kingsman' should target minority groups, with a preliminary budget of $3 million. The main focus of our marketing efforts should be 'Final Destination,' for which I'll allocate an $8 million marketing budget."

Following the tremendous success of 'The Blair Witch,' Seashore Entertainment's confidence in Michael's abilities had grown significantly. David Villa responded, "I'll have a detailed plan for you next week."

Michael thought for a moment and said, "We need to get creative with the marketing for 'Final Destination.' I have an idea."

Everyone in the conference room turned their attention to Michael.

"Spread rumours online that 'Final Destination' is based on real events," Michael suggested, still within the realm of "viral marketing," but more ethical than 'The Blair Witch's' campaign. "Fabricate a plane crash..."

He hesitated, feeling it was inappropriate. The controversy surrounding 'The Blair Witch' had been enormous, and using similar tactics might backfire.

Michael quickly took another approach and said, "Robert, this task is for you. Find cases of people who escaped disasters, especially plane crashes, only to die unexpectedly later. Provide these to the marketing department for promotion."

Robert scratched his chin and said, "I remember reading about such a case in a newspaper years ago."

George Clinton, who had worked in the media industry, added, "In the 1970s, the men's basketball team of Evansville University perished in a plane crash. Only one player, who was ill and didn't travel, survived, but he was hit and killed by a drunk driver two weeks later."

Hearing this, everyone in the conference room felt a chill down their spine.

Michael, unaffected, said, "Search thoroughly; there must be more cases."

He remembered reading an online post titled "Final Destination in Real Life" in his past life. He had only skimmed it and forgotten the details.

Michael asked George Clinton, "When will 'The Kingsman' complete post-production?"

George replied, "By early October at the latest."

"Keep a close eye on Paul Greengrass," Michael then asked his CFO, "Mary, what's our financial status?"

Mary checked her notebook and said, "Once the North American box office revenue from 'The Blair Witch' comes in, our financial situation will improve significantly, providing ample funds for the marketing and distribution of 'Final Destination' and 'The Kingsman.'"

Michael made a decision, "The marketing and distribution funds for these two films will still be borrowed from Relativity Entertainment by Seashore Entertainment, with a distribution commission of 30 percent. No, make it 40 percent!"

The typical distribution commission in North America was 30 percent, but within the same group, the commission could be as high as 40 percent.

This was a classic case of shifting profits within the same entity.

Initially, the left hand's profits were to be shared with investors, but with the right hand extracting higher commissions, the left hand's profits naturally decreased.

"Just the box office commission?" Garcia tentatively asked, "Should we separately account for the marketing and distribution costs?"

Everyone's dark side was evident.

Michael was weighing the pros and cons, particularly the potential impact from Abu Dhabi.

If it were just a private foundation, he wouldn't hesitate. However, the Abu Dhabi Investment Authority, being a state entity of the UAE, gave him pause.

Even an Arab country wielded considerable power.

Relativity Entertainment wasn't Warner Bros., a company with such strength and heritage that it could make blockbusters like 'Harry Potter' appear unprofitable...

"Let's tentatively set the distribution commission at 40 percent," Michael said, not making an immediate decision.

There was still time before the films' release, and he would wait to see the specific circumstances later.