Monetizing Films on the Internet

Rumor has it that the Wachowski Brothers (The Matrix Trilogy, V for Vendetta), are planning on spending over 100 million on marketing their new film “Speed Racer”. The average spent on big Hollywood productions is around 30-40 million. They are more than doubling the average marketing budget! With a production budget already surpassing 150 million dollars, this pair is banking on Speed Racer to easily recoup all investment. This wishful thinking is prevalent in an industry where it seems everyone believes that throwing money at your content will garner you limitless profit potential. These studio suits could stand to learn a thing or two about distribution and marketing from independent production houses.

With the cost of producing and distributing any sort of digital content decreasing exponentially every day (cheap HD Camera, internet as distribution keystone), the studios need to learn from several successful independent films. Case in point, the hockey documentary “In The Crease”, a film with little to no budget and absolutely no support from the major studios, recouped all of its marketing and production budgets within 40 days of its release. How did they do it?

Films do not need 100,000,000 dollar marketing budgets to bring attention to the content. In The Crease was successful because they focused on their audience and did so in the cheapest ways possible.

Key points to "In The Crease" Success

“Their entire marketing program cost less than a single half-page in the New York Times”

They focused entirely on their niche market of hockey fans through specific marketing plans (ex. Advertised only in Hockey magazines) and did not care about getting movie reviews. Their target market does not care about reviews. Likewise, Speed Racer, although it can relate to a wide audience, has an anime fan base. The Wachowski Brothers should focus on this base through comic book, anime and convention advertising. Flooding televisions with 100 million worth of ads will bring the masses to the theater, but will they be able to turn a profit after spending so much on advertisements?

Lastly, the producers of In The Crease did not worry about the normal procedure of film distribution. The producers used createspace.com where anyone can upload a film and let the website handle all aspects of distribution. CreateSpace simply sends the content’s owner a check for however many copies were sold. There is no mass theatrical release, which is very costly. It is simply a direct to DVD operation where only the exact amount demanded is created. Now the studios still are not releasing their new content digitally, but this form of distribution is widely available. All it takes is for one studio to make the first move.

I highlight the example of In The Crease to act as a blueprint for major studios and their future distribution and marketing practices. If film studios continue writing blank checks for marketing and if they do not capitalize on the cheaper digital distribution, their complaints of piracy and loss of profit carries little clout in my book. If they have the ability to save money and do not realize this potential, they cannot complain about loss of profit that is out of their control.

In The Crease made all its investment back ($500,000) in 40 days. Studios should follow this example, but who has the guts to step up and be the first mover?

Will it be APPLE distributing Disney's library? (Steve Jobs is the largest single shareholder of Disney). Will is be Jeff Bezos at Amazon and his 'box'? How about createspace.com. Perhaps they will open their arms to the big studios (they have already shown their effectiveness). Only time will tell. Stay tuned for future updates on this story....

Indiana Jones Rocks My Tech Blog's World....

Drool if needed (The final poster was just released). Cinephiles enjoy responsibly.

What does it have to do with TECH? Absolutely nothing - Enjoy.

Globalization and “The Golden Compass”

WHERE OH WHERE DID ALL MY PROFITS GO?  

OH WHERE OR WHERE CAN THEY BE?

A movie you probably all did not see this past year is “The Golden Compass”. It resembled the Narnia franchise, but possessed agnostic messages instead of an allegorical theme similar to the Narnia films. Many blamed its lack of success in the US because of its message, but then the movie was released internationally and all theories were thrown out because it emerged as a box office sensation overseas. What went wrong in the US? Was it the message or something else entirely? (Many claim that the issue was in the marketing, but there is no way to be certain).

In the past, international markets were not seen as the breadwinner, but simply a way to make a little more money on top of the US totals. With globalization and the expansion of quality movie theaters around the world, the international market now can yield over 2/3 of a film’s entire profits. Some studios however have yet to realize this and lose out on huge profit potential.

New Line should be celebrating the success of “The Golden Compass” but cannot do so because they only kept the US rights to the film and sold off the international rights in hopes of making up the substantial loss they took on the film. The budget was $180 million and it barely made $70 million in the United States, while internationally the film grossed over $300 million. With venerable markets outside the US, no longer can companies point blame outside their own firm. Simply put, other companies took “The Golden Compass”, marketed it well and made a lot of money in the process. Sadly, New Line did not and just last week was forced to merge with Warner Bros due to lack of sales.

"The Golden Compass" is nothing but a microcosm of the new age of cinema.  It clearly shows the secret of profitably when releasing a big-budget film in today's market -- international box office receipts.  With digital distribution on everyone's mind in the business (I hear it constantly mentioned at the Gersh Agency), companies can synchronize their release dates with a 'click of a button.'  With this ease of distribution, companies like New Line can stop outsourcing their international movie rights and focus their energy on effectively marketing their film.  Now, of course the main reason film rights are sold is due to a company's inability to market effectively in many culturally different territories.  It spreads a company's resources very thin when you have over 50 territories in which you are releasing your film.  But this excuse will not exist for much longer.

The world as we know it is shrinking.  Technologies are available that allow just about any information or content to be shared instantaneously from any points on Earth.  With these technologies gaining usage around the world, companies will be fully able to realize the potential of their film and garner all the profits for themselves.  "T.G.C." US flop could of been the result of a terrible marketing campaign, lack of interest from the American public or simply was bad timing (our market was slightly over saturated with fantasy epics ex. "Stardust", "Narnia", "Harry Potter", "The Last Mimzy").  One this is certain, "The Golden Compass" should be used as a case study for film distributors everywhere.   This domestic flop/international dynamo showcases that if you do not make your money in the US, it is not the end of the world.  

Stay Tuned for updates on the writer's strike, the future of product placement and how the world of independent films is paving the way for truly talented individuals to display their work to the world. 

Hollywood Stock Exchange

E-Hollywood Commerce with a fun twist

Everyone and their mom want to play the stock market. Some, however, do not simply want to play, they want to succeed in the market. I needed to succeed in the market so I could pay for my student loans. I attend the ninth most expensive private university in the United States and the only idea I came up with to pay for these loans was to sell all I had, open a Scottrade account and risk it all on Apple Inc stock. Luckily that turned me a healthy 300% profit in one year. I read books on day-trading, but my foundation of stock trading came from a website I used since I was a kid – hsx.com.

HSX stands for Hollywood Stock Exchange and it is where anyone can open an account and trade fictitious stocks for movies either in theaters or in production. The best part is that with this website, people can learn about the concept of options, mutual funds and regular stock purchases.

Notice the image above. The stock price of Indiana Jones IV is similar to how the stock price of Apple Inc is priced. Apple's stock will be priced based upon future profitability and the same is for my Indiana Jones IV stock. The price of stock at hsx.com is determined by the total domestic box office a film garnishes in its first four weeks of release in the United States (International box office receipts are not factored into a film’s stock price). For example, if Indiana Jones IV makes 250 million dollars in its first four weeks, the price will be 250 hsx dollars. Currently, Indiana Jones is selling for 270, meaning that you think the movie will make 270 million in the first 4 weekends of its release. To the left is an image of how you trade. Similar to investment sites, you have options ranging from selling, buying, shorting or covering a stock.

This site is perfect for anyone interested in getting a free tutorial in stock trading and doing it in an environment based on the entertainment industry. I hope to be a literary agent in Hollywood one day, so I keep up to date with all future movie releases through this site (amongst others). A side note - through this site I have learned some interesting statistics about the finances behind the film industry as well. One of my favorite personal discoveries from this site is that on average, you can estimate a movie’s overall gross based upon its first weekend sales – the average total cue is 2.9 times the 3-day opening weekend gross – *this is a generalization that does not apply to all films. This equations comes into play after the opening weekend of a film. If Star Wars makes 50 million from Friday-to-Sunday, then the stock price will be adjusted from whatever it closed at Thursday night to the new total of $145.

This site showcases how the technology used in online stock-trading can be used for educational purposes. Through HSX.com I have learned the basics of financial markets all while keeping up-to-date on movie releases in a fun and effective way. With social sites and fantasy sports sites becoming more and more popular with audiences online, I think HSX is presented with an opportunity to evolve into a destination for people looking for a fun way to keep up with the industry while learning some of the vocabulary used in investing.


BELOW IS A SCREENSHOT OF MY ACCOUNT AT HSX.COM







I started my first account in 6th grade with the upcoming release of Pearl Harbor. My account name is even PEARLHARBOR1 and out of the over 1,000,000 accounts, I am just under the 2500 player in regards to my overall rank (my rank is 2339). I strongly recommend this site to anyone who wants to experience Hollywood from an investor’s prospective.