Chapter 82 82. The attitudes of major TV stations

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

He will understand when the initial results 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 it.

The model that Eric is talking about 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 engaged in the video rental business and is competing with Blockbuster for the market, and has no time to take care of other things.

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

I'm sorry, I have to seize the initiative.

As for investing in or acquiring Netflix, first of all, the acquirer will definitely not agree. After all, Blockbuster is losing ground now, and Netflix is ​​in a very good situation.

If you want to invest, you might as well do it yourself. How can others compare to your own?

But just as my father worried, once he really created this platform, it would inevitably be regarded as a thorn in the eyes of major TV stations.

It is conceivable that they will never authorize films and TV series to themselves, and MGM will then be faced with a situation where it can only use its own film library.

If you want to break through, you can only continuously output high-quality content and improve user stickiness through high-quality works and price wars.

At the same time, Eric also had to develop two wings of the company that supported each other - Facebook and YouTube.

Neither of these companies has emerged yet, so it’s a good time to get in.

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 structure is formed.

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

If you want to get involved, you can only wait until the overall situation stabilizes. Otherwise, Google and Microsoft will block you from receiving technical support, and you will be in trouble.

Then there is Twitter, whose style is different from the other three. After it was launched, they were unable to support each other for a while, so it can be put aside for a while.

It was March 10th. Eric flew to Oregon to visit the Transformers crew. Everything was progressing normally and Patty Jenkins was very reliable as an executor.

We also went to Weta Digital to check on the progress of the special effects, and the progress was quite fast, with more than one third of the work already completed.

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

Although he knew in his heart that what the other party said was definitely a lie, Eric still expressed his gratitude.

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

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

As for the movie, the script for Get Out had been completed, and Ray Whannell went to Eric’s house specifically for him to review.

The two of them stayed in the study for a whole day to revise the script, and it was basically finalized.

Then I found a script doctor to add some jokes that only black people would say and some racial ridicule.

Neither Eric nor Ray Whannell are proficient in this area, so a black screenwriter must be found. The film is expected to start formal casting in half a month.

At AK Films, the script of "The Purge" had already been completed, and Eric asked them to start filming without even looking at it, with the investment set at 4 million US dollars.

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

The position eventually fell to Anthony Ferrante, the director of Sharknado.

His work for this year has been confirmed. He will shoot "The Purge" in the first half of the year and "Sharknado 2" in the second half of the year, gradually becoming deeply bound with AK Films.

In addition, the copyrights of the copycat films "Saw" and "Dragonfly" produced by AK Films were also sold to local TV stations.

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

The total cost of the two copycat films was only 1.5 million U.S. dollars, with no publicity and promotion, and a gross profit of 3.3 million U.S. dollars.

In addition, as it is a small company, it enjoys preferential tax rates and subsidy policies. In fact, it only needs to pay about US$100,000 in taxes on the US$3.3 million.

Even after deducting operating costs such as water, electricity, and labor, the net profit can still be 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 fast, it can be done in half a month or twenty days. However, the already rough quality will become even worse.

Eric’s target for AK Films is to shoot no less than 20 films a year, with no upper limit for more.

As long as I can get the traffic from popular TV series and movies, I will shoot them as much as I can.

As for DVDs and peripherals, forget about these copycat films. Only films of the level of "Sharknado" can enjoy such treatment.

To date, approximately 240,000 copies of the Sharknado videotape have been sold, and this number will continue to grow.

Eric's office at the MGM building on Wednesday.

As the head of the marketing department, Volvo is still very efficient. He schedules his work for Friday, but he always completes it ahead of schedule.

Volvo handed over the report.

"During this period, we have visited all the major cable TV stations and completed internal test screenings. The responses from all TV stations have been very good."

"They were all praising it, saying it was a groundbreaking TV show, everyone was praising it, and every TV station wanted to get it."

Volvo talked about his experiences in the past few days with a smile on his face. He was just a manager of a small film company before, and this was the first time in his life that he had experienced such a glorious thing.

Let Volvo sit down and Eric read the report carefully.

The first is AMC, the original broadcaster of The Walking Dead. They offered $4 million per episode for the first three episodes, and the rest will depend on the ratings.

The ratings are calculated based on cable TV stations, with the age range of 18-49 years old as the basis, and 4%.

For every 0.5 percentage point 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 in the quasi-prime time period, which is between 7 and 8 p.m.

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

After reading the agreement offered by AMC, Eric felt it was just barely acceptable and did not meet his expectations.

Although the algorithm based on ratings is fairer and acceptable to the 18-49 age group, the starting point is not low if it is based on 4%.

According to data from 2002, the total household population in the United States is about 290 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 250 million people.

Among them, the total population in the 18-49 age group is about 115 million, and the total population in the 18-49 age group who subscribe to cable channels is about 95 million.

And 4% of 95 million people is 3.8 million people.

That is to say, when "The Walking Dead" is broadcast, at least 3.8 million people must watch it at the same time in the same period to meet the basic standard.

If you want to raise the level to a higher level, you have to increase the ratings by 0.5.

To put it in perspective, when the ratings reach 4.5% and 4.27 million people are watching at the same time, the subsequent episodes of "The Walking Dead" can be priced at $5 million per episode.

When the ratings reach 5% and 4.75 million people are watching at the same time, the subsequent episodes of "The Walking Dead" can be priced at $6 million per episode.

This data may make many people wonder why we have to use the 18-49 age group as the statistical standard. Can't we use the entire age group?

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

Businessmen will invest high advertising fees for this age group. As for other age groups, cutting them in half is the lightest punishment, and in serious cases, a direct cut to 30% is normal.

Some people may wonder, aren’t cable stations supposed to not sell advertisements but rely on paid subscriptions to survive?

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

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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 must be lower than that of premium cable channels. In 2003, a subscription to the AMC channel cost $8.99 per month.

Premium cable channels are pure content, with no advertisements at all, but the subscription fees are more expensive.

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

Taking HBO, the most powerful and largest paying network, as an example, in 2003, it cost $12.99 per month to subscribe to it.

The difference between the two is $4, which is the advertising cost.

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

In 2003 in China, almost everyone in the country could not watch CCTV-1, which is similar to public television stations such as ABC, CBS, and NBC.

However, if you do not install a satellite signal receiver, commonly known as a big pot, you can only receive the central channel and some local channels in the province by relying solely on an antenna. It is almost impossible to watch channels from other provinces.

This big pot was what many Chinese people at that time called cable TV stations and cable channels. The whole process only required paying once, no matter whether you got the set-top box from formal or illegal channels.

But this is completely different in the United States, where the media business is well developed. In 2003, there were already more than 100 cable channels in the United States.

As for the audience, you have to pay for the channel you want to watch. If you want to watch AMC and HBO dramas at the same time, you must subscribe to both.

If you still want to watch the works of FX and Starz, you have to continue to pay for the subscription.

Well-known cable TV stations all have their own unique skills, which attract viewers and force them to pay for their desires.

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

Therefore, among the 85 million households that subscribe to cable TV, the weight of each station is not the same.

The strongest HBO released data in 2002, which showed that it had exceeded 40 million subscribers.

AMC has about 25 million households, Starz has about 22 million households, Shoutime has about 20 million households, and FX has about 28 million households.

At the same time, just because viewers subscribe to your channel doesn’t mean they will watch all the programs on the channel. They may only watch one or two.

Any drama on cable TV that can reach a 5% viewership is considered rare.

Once you understand this logic and look at the agreement offered by AMC, you will understand why Eric is not very satisfied.

He continued to look through the report. FX's conditions were better than AMC's, and Shoutime's were much better than AMC's. It turned out that high-end cable TV stations were more discerning.

The best offers came from HBO and Starz.

The former is willing to buy the entire season at $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 $10 million.

If this goal is achieved, HBO will have to 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 $120 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 offered by Starz is 7 million US dollars 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 3 million US dollars per episode, which means a total of 120 million US dollars, which is exactly the same as "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 that its boss would ask this question, Volvo obviously did some research.

"I personally prefer to work with Starz."

"reason."

Volvo organized his words and said: "Choosing it, we can earn an extra $14 million, I think this is the biggest reason. As for the conditions for attracting 5 million new subscribers, I don't think it's a problem."

"Starz currently has only 22 million subscribers, and its market share is second to last among several cable giants. In fact, everyone knows that the smaller the base, the easier it is to increase."

"The reason why many TV stations fail to develop is often not because of funding, but because of the lack of good ideas."

"Starz is like this, it just lacks a hit drama. When this drama appears, it will be easy to attract subscriptions, just grab it from other channels."

"On the other hand, given HBO's current size, I don't think it's easy to get 3 million new subscribers. Even Band of Brothers only attracted more than 3 million new users in the end."

“That was 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 get ready to sign the deal."

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 that Eric's decisions were always correct.

Seeing his surprised look, Eric didn't explain too much. He waved his hand and asked Volvo to go out. He had his own considerations.

Once MGM’s own video website is established, it will definitely need to create hit programs to attract audiences.

According to MGM's current filming plan, "Transformers" will have to wait until next year to be released on the platform, so "The Walking Dead" will undoubtedly be the hit this year.

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

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

After all, once the video platform is stable, the entire DVD business will be significantly affected, and this piece of meat will be more painful to cut.

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(End of this chapter)