Chapter 312: Support for Blu-ray DVD

Scarlett Johansson had to leave to shoot a commercial for Moet & Chandon. Charles didn't stay at Lake Tahoe and play alone either.

They left Sacramento together and returned to Los Angeles.

At the same time, Capet Pictures began the process to acquire Netflix. Netflix's stock market value had fallen below $2 billion, and Capet Pictures already owned a significant percentage of Netflix's shares.

With support from Texas Pacific Group and Bridgewater Associates, Capet Pictures didn't lack funds. However, Netflix's board of directors would likely prefer a stock swap for the acquisition.

Netflix was splitting its DVD rental business to focus on online streaming, requiring capital to expand while building a rich content library.

Charles preferred a cash acquisition, but he knew the other party wasn't foolish. A stock swap was inevitable, and Charles was open to using Capet Pictures' stock.

"In the future, the DVD market will obviously be impacted by streaming services. Otherwise, Netflix wouldn't be making a big push into streaming right now," Charles chatted with president Donna Langley while sitting in his chair at Capet Pictures' Burbank headquarters.

"True enough, Hollywood's major home entertainment groups are keeping a close eye on streaming's impact. However, they remain confident and attentive to the DVD market, which still represents a significant profit source in film entertainment," Donna Langley said, still optimistic about the DVD market.

Charles smiled, "Don't worry. Netflix's unique internet algorithm will be a great asset for our foray into streaming!"

"What's the update on talks with Sony? If we support Blu-ray high-definition DVDs, all they need to do is help us set up distribution channels in Latin America, excluding Mexico and Brazil. That's not asking much."

Donna Langley laughed, "John Calley has verbally agreed to cooperate with us, but he wants the Transformers series and Iron Man series to be released exclusively on Blu-ray high-definition DVD."

John Calley was the chairman of Sony Pictures Entertainment, with Amy Pascal serving as co-chairman of Sony Pictures Entertainment and CEO of Columbia Pictures.

"An exclusive Blu-ray high-definition DVD release?" Charles tapped the table. Initially, they only needed to release Blu-ray high-definition DVDs first, and then they could release high-definition HD-DVDs six months later.

"Fine, we'll do an exclusive Blu-ray high-definition DVD release," Charles agreed, knowing that Toshiba would announce the discontinuation of the HD-DVD format early next year anyway.

Regular DVDs, coupled with Blu-ray high-definition DVDs, were sufficient for the home entertainment market. After all, releasing high-definition DVDs in two formats simultaneously increased costs.

Even stepping back, Capet Home Entertainment primarily focused on the North American or Western European DVD market. Many other regions sold DVD and television rights outright, so if local companies wanted to release HD-DVDs, it was their choice.

"Alright then, for certain regions in Central and South America, we'll form Capet-Columbia International Films to handle our respective film distributions!" Donna Langley's main task over the last couple of years was expanding Capet Pictures' international distribution network. In top markets, they aimed to establish an exclusive distribution system.

However, in many secondary or tertiary markets, they either partnered with local distributors or teamed up to create distribution systems.

This was simply to save costs. In contrast, the joint venture Universal Pictures and Paramount formed, United International Pictures (UIP), which even covered European markets, was obviously not viable.

Otherwise, Paramount wouldn't have left UIP to set up its exclusive overseas distribution system.

Yet small markets still saw Hollywood studios partnering to form joint ventures. For instance, there was Paramount-Capet International (Netherlands) Films in the Netherlands and Capet-20th Century Fox International (Ukraine) Films in Ukraine.

Belgium had Buena Vista-Columbia International (Belgium) Films, and Sweden had Buena Vista-20th Century Fox International Films, among others.

For major markets like the US, Canada, Mexico, the UK, France, Germany, Italy, Spain, Japan, South Korea, and Australia, Hollywood studios had their own distribution subsidiaries.

"By the way, with the dollar's current depreciation, let's avoid using it for international business transactions. Euros, pounds, and yen are all suitable currencies," Charles reminded.

"Don't worry, Anne already instructed the finance department. Euros and pounds are our primary foreign exchange currencies right now!" With the dollar weakening, the US stock market was down. The Nasdaq, S&P 500, and Dow Jones indexes were all dropping. As the Chief Financial Officer of Capet Pictures, Anne Depp wouldn't overlook this.

Charles nodded, "And regarding our animated feature division, get Chris Meledandri on board to head it!"

Hasn't Chris Meledandri already left 20th Century Fox? Capet Pictures now had the capital and channels; they needed a piece of the animation movie market.

In 2007, Capet Pictures achieved great success in movies and had new TV series premiering: Breaking Bad and Gossip Girl.

Following the hit shows Prison Break and The Big Bang Theory, these new series were highly anticipated.

Also this year, internet celebrity Kim Kardashian, who garnered widespread attention due to her sex tape, partnered with Capet TV for the reality show Keeping Up with the Kardashians.

Beyond movies, TV, and reality shows, Capet Records spent big to sign pop icon Britney Spears after her contract with Sony ended.

Additionally, country singer Taylor Swift, who released her first album last year under Capet Records, released two singles from her album this year. Her debut self-titled album Taylor Swift received a 5x Platinum certification from the Recording Industry Association of America!

With the onset of the subprime mortgage crisis, the final format war between HD-DVD and Blu-ray high-definition DVDs, and the looming threat of online streaming, the future seemed anything but stable for the DVD market.

Hollywood's biggest backers were Wall Street's capital investments. Economic downturns naturally led to decreased funding for Hollywood.

The importance of international markets was growing, and Capet Pictures' challenges were increasing!

*****

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