Volume 3 Summer Rain Chapter 0363 Water Carrier
In North America, generally speaking, if a movie does well at the box office, according to the current situation, as long as it exceeds 10 million US dollars, the producers [production and distribution] can take about 60% of the box office;
If the box office is not very good, the producer can usually only take about 45% for the sake of the theater's own interests.
The cinema chain will have a minimum guarantee algorithm. When they vacate a theater to show a movie, they must ensure that their theater achieves a certain amount of revenue. Only after this revenue is achieved and the cinema chain breaks even can they discuss profit sharing.
If a movie is bad and the theater chain cannot break even, then sorry, the producer won't get a penny. Next time, when the producer wants to release his movie in theaters, the theater chain will have doubts.
For film production companies, as long as the box office is decent, they can get about 40%-45% of the box office share. This ratio depends on how much effort the distribution company contributes and whether it is strong.
Take "Paranormal Activity" as an example. The filming cost was only more than 10,000 US dollars, but the distribution cost of the distributor exceeded 20 million US dollars. After the box office revenue was achieved, it was obvious who should get the largest share of the box office revenue.
Moreover, the movie's claimed profit of over 13,000 times is pure nonsense. Without proper publicity and promotion, it is impossible for a movie to get high box office simply by relying on word of mouth.
Moreover, the reputation of "Paranormal Activity" is not that good. The distributor demonstrated what is called "water army marketing" and used massive positive reviews to cover up negative reviews.
This method will be promoted and developed in China, and even done more thoroughly. What is there to cover up? Wouldn't it be better to just delete the post?
Don’t delete?
Lawyer's letter of warning.
The high box office of "Paranormal Activity" can be said to be due to very little contribution from the producers, and it was purely due to the clever tricks of the distributors.
Usually, only directors and film studio owners with box office guarantees like Spielberg and George Lucas can get the highest proportion of box office share and also get a good share of peripheral profits.
20th Century Fox does not have the worry of fighting for profit sharing. After all, it is one of the Big Seven, so it can naturally get the highest box office share from theaters.
The project "Home Alone" is his own son, and there is no question of sharing profits with the production company. In the future, more than 60% of the box office revenue in North America will go into his own pocket.
Precisely because of this foundation, and the fact that he was extremely short of money, Nan Yi began to have evil thoughts.
The budget for "Home Alone" has been announced, and it will not exceed 12 million US dollars. Based on the total production cost and publicity and promotion expenses of 25 million US dollars, the global box office is estimated to be 300 million US dollars.
Generally speaking, the global box office share should be around 40%. 20th Century Fox's expected revenue is 120 million US dollars. After deducting expenses and operating costs, the net profit before tax is between 85 million and 90 million.
This project will be priced at a premium, and a principal-guaranteed film and television fund with a total amount of US$60 million will be issued through the Scarlett Fund, promising an annualized return of between 15% and 40%. Depending on the circumstances, the rate of return upon maturity will be the highest or lowest.
This is equivalent to borrowing a sum of money with a relatively high interest rate. Of course, it is impossible to use the money for film production. Instead, the money will be invested in high-risk and high-return projects.
"Film and television" is just an excuse. In fact, with Scarlett Fund's current popularity, it does not need any excuse. As long as it launches a principal-guaranteed fund, it will definitely be subscribed to.
Nan Yi needs this excuse to let the "leeks" know about the concept of film and television funds first. Once the principal-guaranteed film and television funds are redeemed, he can start a new business on Wall Street and launch a high-risk and high-return film crowdfunding project.
Give it a nice and tempting name, set a high premium, do not aim to defraud, pocket the difference from the funds raised, and invest the rest in the actual filming of the movie.
Suppose the cost of shooting a film is 100 million US dollars, and the valuation of 20% of the share is 40 million or even 50 million US dollars; if the crowdfunding is successful, the investor will have a book profit of 20 million.
With a total investment of 100 million, he only needs to pay out another 60 million to occupy the "long-term expected return" that originally required an investment of 80 million, thus saving 20 million invisibly.
If the investment fails, the investor can reduce his or her own risk; if the investment is successful, it depends on the ability of the accountant, which will increase the cost and reduce the rate of return on the crowdfunding funds.
Since 20th Century Fox already has the distribution capabilities, it can increase the publicity and promotion costs of crowdfunding projects and transfer profits from production to distribution.
As long as this "new business" maintains a relatively high success rate of return on investment, this model can continue. If 6 of the 10 films are profitable, the investors will be very happy.
After all, who can guarantee that every investment will be successful?
Although crowdfunding for hit films will reduce Nan Yi’s own income, it also greatly reduces the risk. If it is a low-cost movie, the project can even be started at zero cost.
If crowdfunding can achieve a virtuous cycle, 20th Century Fox can launch more low-cost projects such as youth films and horror films, which have a high probability of making a big profit with a small investment.
As the company's annual profit increases, it can provide employees with better benefits and enhance employee cohesion. The company will also enter a virtuous circle, and its valuation will become higher and higher. When the time is right, it can be listed.
If everything could be completed before 1989, the company could be sold to a Japanese upstart. Red Sofa would be separated from 20th Century Fox and develop rapidly by standing on the shoulders of giants.
In the 1990s, they made money by making movies. In the 21st century, they were able to engage in capital operations. In the first decade, they defrauded several waves of Middle Eastern capital. In the second decade, they could target the restless Chinese media capital.
Global capital allocation?
I let you serve, I let you serve, let the meat rot in your own pot, and don't even think of escaping with a single cent.
"Ali, Alibaba, Alibaba is a happy young man..." After thinking through the problem, Nan Yi hummed a song happily.
"Mars, Mars, magical Mars, one day, I will meet you, the ugly Martians pretending to be kind." Nan Ruoyin also hummed the song, then touched her stomach, "Dad, I'm tired and hungry, we should eat."
Nan Yi frowned and said, "It's still early. It's only a little after six o'clock. Dad gave you the opportunity to be exposed to these things and to have a job at a young age. You should be grateful. Don't worry, we will go to eat at ten o'clock and work overtime."
"But I'm hungry." Nan Ruoyin said unwillingly.
"Hey, be patient for a while, work hard, and you will be rewarded." Nan Yi flipped through the documents in his hand and said, "If you are really hungry, just eat some biscuits."
"It's not tasty when it's dry, Dad. I'm still young and I can't go hungry."
"Okay, okay, you people born in the 1970s are really a lost generation. You can't even stand such a little hardship." Nan Yi closed the documents in his hand and sorted them out again.
"Dad, you're talking nonsense. The people born in the 1980s are the lost generation. We born in the 1970s are the sun at six o'clock in the morning, full of vitality and flowers about to bloom."
"Oh, when the people born in the 1980s grow up, they will fight back and say that you people born in the 1970s can't keep up with the times and are out of date."
"Dad, can I say that you people born in the 1960s are out of date?"
"No, haven't you heard what the song says? We, the people born in the 1960s, are the new generation of the 1980s. Kid, this is our era, and your era has not yet come. Wait until dad retires, and then you can take over the baton of power."
"Hmph, I don't believe it. The power will be passed down to males and not females. The baton of power will definitely be passed to my younger brother. Besides, I..." Nan Ruoyin said dejectedly.
Nan Yi stroked Nan Ruoyin's head and said, "Silly girl, don't think too much. You are dad's biological child, so you must have a share of the Nan family's assets. However, it is not the time to think about inheritance yet. We have to make this cake bigger together. The bigger the cake, the more you can get."
"Well, thanks, Dad."
"What are you thanking me for, silly girl." Nan Yi hugged Nan Ruoyin and walked out of the glass house. "What do you want to eat?"
“French baked snails.”
"Snails are so cute, how can we eat snails? Let's go eat roasted rabbit."
"No, bunnies are cuter. When I'm done eating snails, I'll go hold a sign to protest against eating bunnies."
"Okay, Dad supports you. We are going to start raising rabbits. Once eating rabbits becomes illegal, the price of rabbits will skyrocket. Even if we raise a small number of rabbits, we can still make a lot of money.
In this world, illegal businesses definitely make more money, and privileges that are enjoyed by only a small number of people are particularly precious and valuable. "
"Like what?"
"What's the good example? If you see something that has a very high threshold and becomes mandatory or compulsory, then you can basically judge that it is definitely not any better.
In a pool, at the beginning there are few people drinking water and many people carrying water, so those who drink water can drink more; when one day there are more people drinking water and fewer people carrying water, then those who carry water can carry more water, and after a few years, those who drink water can still drink their fill.
But when the day comes when these water carriers can no longer carry water and have to become water drinkers, they look around and find that there are no new water carriers coming. What should they do then?
OK, here is a daily question: if you were the one managing this pool, how would you solve this problem? "
"Dad, I'm really hungry. Can I think about it after I'm full?"
"No problem, just think about it slowly."
