Chapter 99: Movie Overseas Revenue and Sequel Plans

[Chapter 99: Movie Overseas Revenue and Sequel Plans]

"Thanks. Oh, speaking of videotapes, I have an idea. I'm planning to edit two versions of the videotape: a regular version, same as the movie, and a director's collector's edition. The collector's edition will include scenes cut due to the movie's runtime limit, plus some behind-the-scenes footage, including the dance training process and a segment where I perform a highly challenging dance."

Linton went on to describe the street dance filming process.

"You're a genius, that's fantastic. Just with this move, the base transfer fee for our videotape rental and sales rights will increase by two million dollars. More importantly, it will bring in more rental and sales revenue, increasing our share as well. Get the director's collector's edition edited as soon as possible; it will be a powerful bargaining chip when transferring the videotape rental and sales rights.

I didn't expect you to be so amazing. The dance scenes in the movie were already cool, and you could dance even cooler. But for those difficult dance scenes, it's best to add text warnings to prevent viewers from trying them and injuring themselves, which could cause legal trouble."

"Okay, I'll do that quickly. This week, I'll focus on helping Daniel push the song B What You Wanna B on the charts, and next week I can finish the edits. By the way, when will the overseas revenue be settled?"

"Overseas revenue settlements are complex. Mainly, the release times vary by country and region. Some countries might not release the film until six months later. Each market has different copyright protections. In countries with strong protection, like Japan, the UK, France, and Germany, we can earn good revenue from TV broadcasts, videotapes, and merchandise. In countries with weaker protection, like Southeast Asia, income might come mostly from box office only. Typically, settlements happen one year after the North American release."

"Wow, that's complicated. The settlement takes that long?"

"We don't have a choice. Overseas markets are just that complex. There's an industry standard approach: usually the seven major Hollywood studios buy full rights of the film's overseas markets based on North American box office results, paying the production company a one-time fee. You could consider that."

"Is that so?" Linton asked Robert beside him.

"Yes, that's indeed the industry's common practice for overseas rights." Robert replied.

"That sounds like a good idea. How is the buyout price calculated?" Linton asked Levitt.

"Based on the movie's box office, genre, North American merchandise sales, and the star power of the lead actors. Generally, the buyout price for overseas rights ranges between 25% to 40% of North American box office revenue. Since the Soviet Union dissolved at the end of last year, our market expanded a lot, so the buyout price increased by five percentage points. Now it's between 30% and 45%."

"That's quite a range. How do you pin down the exact percentage?"

"It's normal. The higher the box office, the higher the percentage. Action, sci-fi, and horror movies, which are hot for videotape rentals, get a higher percentage. The stronger the merchandise appeal and the bigger the star power, the higher the share, too."

"Based on your guess, what percentage would suit Step Up?" Linton asked while using Soul Induction.

Levitt felt dazed for a moment and couldn't help but say honestly, "Given Step Up's performance in North America, Universal might offer just over 42%."

"Thanks. We'll discuss it and get back to you."

"Sure. You can also look up historical deals for other movies. No rush; there's still over a month until the movie leaves theaters. I have another suggestion: since Step Up is doing so well, should we start the sequel soon?"

"So soon? I thought Hollywood sequels usually come out about every two years?"

"Correct, series films typically release sequels every two years, but Step Up is different. Its success isn't due to the story -- that's fully told already, so no copyright protection. The second movie won't be the same story, and even the lead actors will be replaced. We're only using themes of youth, dance, romance, and inspiration, so audiences will find it fresh without getting tired of the style. Moreover, because of Step Up's huge success, many studios have announced youth dance movie projects. Without copyright protection, if too many jump in, the genre might drown in poor films. So, I think we should rush the sequel."

Levitt clearly had thought this through deeply. Since Universal profited big from Step Up's release, they naturally wanted Linton to start sequel production quickly.

"Alright, I'll discuss it and start preparations soon. But can the release terms for the sequel be more favorable?"

"Absolutely. I've reported to the board; we can offer Universal's best terms: 20% distribution fee in North America, 25% overseas, no other changes. How's that?"

"Okay, that works." Linton nodded in satisfaction.

"Also, can Universal invest in producing the sequel?"

"Since the sequel will have a new director and new leads, the budget won't exceed ten million dollars. We can handle that ourselves." Linton gently declined.

"What? You're not directing? Can the new director guarantee quality?" Levitt was shocked.

"Don't worry, I won't gamble with my money. Though I'm not directing, I'll write the script and serve as co-producer to oversee quality."

"This is a huge sequel and a gold mine; profits could reach hundreds of millions. Be careful not to mess this up. I still suggest you direct it yourself."

"I understand and will arrange things carefully. But I really don't have time. I already have plans for next year -- writing, directing, and starring in an action movie."

"You have a new film planned? Good. Get me the script and project plan soon. Universal would love to collaborate, including investing and distributing."

"The new movie's budget won't be large -- around 35 million. But let's be clear: if you invest, you must not interfere with creative control. Otherwise, just distribute it like we did with Step Up."

"Bring me the script and project plan, and we'll discuss details later. I have no issues, but the final decision depends on the board."

"Okay. But the project won't start until year-end. I need to finish Daniel's work in the second half of the year: release two singles."

"Haha, understood. You're Universal Records' golden boy... no, more like Universal's treasure now. Daniel just became president and really needs you to guarantee performance.

Also, Universal plans a Step Up celebration party on the evening of September 5. Naomi, Halle, and Tyra's promotions will be done by then. Is that okay with you?"

"Sure, I'll be there on time. Do you need me to do anything?"

"It's mainly for promotion and networking. You just have to handle some media interviews. As a new big director, you'll also attend to actors and agents' enthusiasm. There will be a lot of beautiful women there."

Levitt smiled knowingly and said, "You know what I mean."

*****

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