America: Starting with the acquisition of MGM

Chapter 84 The attitude of major TV stations

Dad doesn't know what he is going to do, but it doesn't matter, as long as he fully supports it.

He will understand when the results initially appear.

At the same time, Eric couldn't help but sigh that he was really lucky to have such a good father.

In Charlie Cooper's view, as long as his son wants to do something, even if it seems ridiculous, he is still willing to try.

The model Eric mentioned is naturally Netflix. China also has Youku, Tudou, Penguin Video and the like.

Although Netflix has been established for several years, the company is still in the video rental business and is competing with Blockbuster for the market, without caring about anything else.

Due to the limitations of the times, it has not realized the importance of streaming media platforms.

Then I'm sorry, I have to seize the opportunity.

As for investing in or acquiring Netflix, the first acquisition company will definitely not agree to it. After all, now that Blockbuster is losing ground, Netflix is ​​in a good situation.

If you're investing, you might as well do it yourself. How can other people's investments compare to your own?

But just as my father worried, once he really builds this platform, he will definitely be regarded as a thorn in the flesh by major TV stations.

It is conceivable that they will never authorize film and television dramas for themselves. By then, MGM will be faced with a situation where only its own film library can be used.

If you want to break the game, you can only continue to output high-quality content and increase user stickiness through high-quality works and price competition.

At the same time, Eric also needs to develop two complementary companies - Facebook and YouTube.

Neither of these two companies have emerged yet, so it's a good time to get started.

The former will provide strong social media support and traffic, while the latter can use MGM's new works for secondary creation and promotion.

After the accounts are interconnected, a trinity pattern is formed.

It can be supported by a chat software like WeChat or QQ later, but this is difficult to do with Microsoft's MSN and Google.

If you want to get involved, you can only wait until the overall situation is stable. Otherwise, if Google and Microsoft are stuck in technical support, you will have to wait.

Then there is Twitter. Its style is different from these three, and it cannot support each other for a while after it is launched. It can be put aside for a while.

The time came on March 10, during which time Eric flew to Oregon to visit the set of "Transformers". Everything was progressing normally, and Patty Jenkins was very reliable as the executor.

I also went to Weta Digital on site to check the progress of the special effects. The progress was not slow, and more than a third of it was almost completed.

The person in charge told him that more than half of the machines in the entire company were running for "Transformers", and even Peter Jackson's "Lord of the Rings 3" had been compressed.

He knew in his heart that what the other party said must be lies, but Eric still expressed his thanks.

You must know that the "Lord of the Rings" trilogy was launched at the same time. Even if the progress is different, I am afraid that it is now in the final stage.

Not everyone is as familiar with the plot as he is, and a bearded man will not fight an unprepared battle.

In terms of movies, the script for "Get Out" has been completed, and Ray Whannell specially went to Eric's house for him to review.

The two spent another whole day in the study revising, and the script was roughly finalized.

After that, we had to find a script doctor to add jokes that only the black community would tell, and add some racial ridicule.

Neither Eric nor Ray Whannell are proficient in this aspect, so they must find a black screenwriter. The film is expected to start official casting in half a month.

At AK Film and Television, the script for "Human Purge" has been completed. Eric asked them to start filming without even reading it, and the investment was set at US$4 million.

The director did not choose James DeMonaco from the original time and space. Eric found out that this guy is still just a screenwriter. Although he has been in the industry for a long time, he has no experience in independent production and cannot afford the courage to be a director.

This position finally fell to Anthony Ferrante, the director of "Sharknado".

His work this year has been determined. He will film "Purge" in the first half of the year and "Sharknado 2" in the second half of the year. He will gradually be deeply integrated with AK Film and Television.

In addition, the copyrights of copycat films "Chainsaw" and "Dragonfly Man" produced by AK Film and Television were also sold to local TV stations.

"Chainsaw" was sold to 42 companies, and "Dragonfly" was sold to 61 companies, with a total profit of about US$4.8 million.

The total cost of the two copycat movies was only US$1.5 million, with no publicity and distribution, and a gross profit of US$3.3 million.

In addition, as a small company, there are preferential tax rates and subsidy policies. In fact, the tax of this US$3.3 million only needs to be paid about US$100,000.

Even after deducting operating costs such as water, electricity, labor, etc., you can still get a net profit of between US$2.9 million and US$3 million.

And how long does it take to make a movie of this type?

The answer is about a month. If it's faster, it can be done in more than half a month and twenty days. However, the already rough quality becomes even worse.

Eric's target for AK Film and Television is to shoot no less than 20 films a year, and there is no upper limit for more.

As long as I can get traffic from popular movies and TV series, I'll shoot them hard.

As for DVDs and peripherals, don't even think about copycat movies like this. Only at the level of "Sharknado" can you enjoy this kind of treatment.

So far, the video tape of "Sharknado" has sold about 240,000 units, and this number will continue to grow.

Wednesday, Eric's office, MGM Tower.

As the head of the marketing department, Volvo's work efficiency is still so high. He sets a Friday, but he can always finish it ahead of schedule.

Volvo handed over the report.

“During this period we visited all the major cable stations and completed internal test screenings, and the response from all the stations was very good.

"They were all praising it, saying it was a groundbreaking TV series, and everyone was generous with their praise. Every TV station wanted to win it."

Volvo talked about his experiences in the past few days with a smile on his face. He used to be a manager of a small film company. This was the first time in his life that he had experienced such a glorious thing.

Having Volvo sit down, Eric flipped through the report carefully.

The first is AMC, the original broadcaster of "The Walking Dead". Their offer is US$4 million per episode for the first three episodes, which will depend on the ratings.

The ratings are calculated based on cable channels, taking the age range of 18-49 years old, and based on 4%.

For every 5 percentage points increase, the price of each subsequent episode will increase by $1 million, with no upper limit.

In terms of broadcast time, AMC is willing to broadcast it in a quasi-prime time period, that is, between 7 pm and 8 pm.

If the effect is good, it will be adjusted to the prime time period.

After reading the agreement given by AMC, Eric felt that it was barely enough and could not meet his psychological expectations.

Although the algorithm based on ratings is relatively fair and acceptable to people aged 18-49, if it is based on 4%, this starting point is not low.

Judging from the data of 2002, the total household population in the United States is about 900 million, and the total number of households is about 97 million, of which the number of cable channel subscribers is about 85 million households and about 500 million people.

Among them, the total population in the 18-49 age group is about 1.5 billion, and the total population in the 18-49 age group who subscribe to cable channels is about 95 million.

The 4% share of the 95 million people is 3.8 million people.

In other words, when "The Walking Dead" is broadcast, at least 3.8 million people must watch it at the same time to reach the basic standard.

And if you want to improve it to a higher level, you need to increase the ratings by 5.

Calculating this, when the ratings reach 5% and 4.27 million people watch at the same time, subsequent episodes of "The Walking Dead" can get a price of US$5 million per episode.

When the ratings reach 5% and 4.75 million people watch at the same time, subsequent episodes of "The Walking Dead" can get a price of $6 million per episode.

This data may make many people wonder why it is necessary to use the 18-49 age group as the statistical standard, why not use the entire age group?

The answer is no, because when it comes to advertising, in the eyes of advertisers, the 18-49 age group has the greatest consumption potential.

Businessmen will invest high amounts of advertising fees for this age group. As for other age groups, cuts in half are mild, and severe cuts to 30% are normal.

And some people may wonder, isn't it true that cable channels don't sell ads, but rely on paid subscriptions to live?

But this understanding is actually not comprehensive. To be precise, cable TV stations are divided into two types: basic and advanced.

Basic cable stations will still sell advertisements, and AMC is a basic cable station, so even if users have to pay, it will still insert advertisements.

The price is that the subscription fee is lower than that of premium cable stations. In 2003, a subscription to AMC channels cost $99 per month.

Premium cable stations, on the other hand, have pure content and no advertisements at all, but the subscription fee is more expensive.

HBO, FX, Starz, etc. are all premium cable stations.

Take HBO, which is the most powerful and has the largest number of paying users, as an example. In 2003, subscribing to it cost $99 per month.

The difference between the two is 4 US dollars, and the difference is the advertising fee.

In addition, in the United States, subscribing to cable channels is not as simple as many Chinese people think.

In China in 2003, there was almost no one in the country that could not watch the Central Television, which was similar to public television stations such as ABC, CBS, and NBC.

However, if you do not install a satellite signal receiver, which is commonly known as a cauldron device, you can generally only receive the central set of channels and some local channels in the province simply by relying on the antenna. It is almost impossible to watch channels from other provinces.

This big pot was what many people in China called cable stations and cable channels at that time. The whole process only required one payment, regardless of whether you got the set-top box from formal or illegal channels.

But this is not the case in the United States, which has a developed media business. In 2003, there were more than 100 American cable channels.

For viewers, they have to pay for whichever channel they want to watch. If you want to watch AMC dramas and HBO dramas at the same time, you must subscribe to both.

If you still want to watch FX and starz’s works, you have to continue to pay for subscriptions.

Well-known cable channels all have their own specialties, and the viewers have to pay for their desires.

However, it is impossible for an average family to subscribe to all channels and will only choose a few that they like.

Therefore, among the 85 million households that subscribe to cable TV stations, each station occupies a different proportion.

The most powerful HBO released data in 2002 and has exceeded the 40 million subscription mark.

AMC has around 25 million households, Starz has around 22 million households, Shotime has around 20 million households, and FX has around 28 million households.

At the same time, just because the audience has subscribed to your channel, it does not mean that they will watch all the programs in the channel. They may only watch one or two.

Any cable drama with a ratings of 5% is enough to become a rarity.

After understanding this logic and looking at the agreement given by AMC, you can understand why Eric is not too satisfied.

He continued to look through the report. FX's conditions were better than AMC's, and Shotime's was much better than AMC's. As expected, high-end cable stations were more knowledgeable.

The ones with the best conditions are HBO and Starz.

The former is willing to buy the entire season at a price of US$8 million per episode. If it can bring more than 3 million new subscribers to HBO after the end of one season, HBO is willing to pay MGM another US$10 million.

Equivalent to reaching its goal, HBO will spend a total of $106 million to purchase the first season of "The Walking Dead" from MGM.

Although the price is not as high as the US$200 million of "Band of Brothers", it is the work of the great director Spielberg after all, and there are a large number of stars involved. "The Walking Dead" is far behind in this regard.

The condition given by starz is US$7 million per episode. If it can bring more than 5 million new subscribers to the channel after the end of the season, starz is willing to make up the difference of US$3 million per episode, which is a total of US$200 million, just in time to catch up. Ping "Band of Brothers".

Looking at the intentions of the two TV stations, Eric was a little hesitant. He looked at Volvo and asked, "What do you think? Tell me your opinion."

Knowing its boss was going to ask this question, Volvo had obviously done its research.

"I personally prefer to cooperate with starz."

"reason."

Volvo organized the language and said: "If we choose it, we can earn an additional 14 million US dollars. I think this is the biggest reason. As for the conditions for attracting 5 million new subscribers, I think this is not a problem."

"Starz currently has only 22 million subscriptions, and it has the second-lowest market share among several cable giants. In fact, everyone knows that the smaller the base, the easier it is to improve."

"The reason why many TV stations fail to develop is that funding is often not the most important thing. The lack of good ideas is the core problem."

"That's the case with Starz. It just lacks a popular drama. When this drama appears, it's easy to attract subscriptions. Just grab it from other channels."

"Looking at HBO, with its current size, I think 3 million new subscriptions is not easy. Even "Band of Brothers" only attracted more than 3 million new users in the end."

"That was back in 2001, and as HBO has grown, that number has only become more and more difficult to achieve."

After Volvo finished speaking, he looked at Eric, and then heard an unbelievable decision from the latter.

"Choose HBO and prepare to sign the agreement."

Volvo seemed not to understand, and opened his mouth to ask, but seemed to feel that questioning the boss's decision was not what a qualified subordinate should do, and Eric's decision was correct every time.

Seeing his surprised look, Eric waved Volvo out without explaining too much. He had his own considerations.

When MGM's own video website is established, it will definitely need to create hit programs to attract viewers.

According to MGM's current shooting plan, even if "Transformers" is released on the platform, it will have to wait until next year, so "The Walking Dead" can undoubtedly serve as this year's hit.

Since it is a hit, it must be known to more people, so HBO's basic base is obviously larger than that of Starz, and its advantages are stronger.

For future considerations, it might not be a bad idea to give up the $14 million.

After all, when the video platform is stabilized, the entire DVD business will be significantly affected, and this will be even more painful to cut.

Please vote for me and ask for rewards.