Chapter 855: Exchange Rate Issues

[Chapter 855: Exchange Rate Issues]

Eric brought Cindy back to his regular apartment at the entrance of Sixth Avenue. It was just after 8 PM.

Following Eric inside, Cindy surveyed the unchanged living room and remarked, "I don't know why, but it feels a bit strange thinking of you living here all alone."

Eric hung his coat on the rack, made his way to the round table by the floor-to-ceiling window where his laptop sat, pressed the power button, and asked, "What's so strange about that?"

Cindy also hung up her trench coat, sat on the steps at the entryway to take off her knee-high boots, and thought for a moment. "Don't you feel it's a little lonely?"

As Eric typed in his startup password, he replied, "If I remember right, you should be living alone too, right?"

"I guess that's true," Cindy realized, pondering it over. She placed her boots down, slipped into some slippers, and walked over to the corner cabinet in the living room to grab a bottle of whiskey. "It's just odd; I feel differently about you living alone compared to how I feel about my own solitude."

"Interesting. Let me know when you sort that out," Eric said, feeling like the topic seemed somewhat familiar but didn't want to delve too deep. He logged into his work email and opened the box office report for Titanic from Los Angeles.

Cindy tilted her head, slightly distracted as she pulled open the mini fridge and turned to ask, "Do you want some ice?"

"I actually don't like drinking."

"That's quite a waste then. The liquor in your cabinet could probably buy a nice apartment in Manhattan," Cindy said, no longer seeking Eric's opinion. She added ice, brought over two glasses of whiskey, set one by Eric, leaned her chair closer, and asked, "Can I take a look?"

The email contained detailed box office numbers and some analysis for Titanic from the past few weeks. Most of this information would make it to the public media, so there was no need for confidentiality.

Eric nodded, shifting slightly aside, and casually picked up the glass of whiskey, taking a sip.

Cindy was initially excited at Eric's permission, but when she saw the rows of dense data tables and text on the 12-inch laptop screen, she suddenly felt dizzy and lost all interest.

After patiently sitting with Eric for a while, she stood up and said, "I think I want to take a shower, Eric. Want to join?"

Eric patted Cindy's small hand resting on his shoulder. "You go ahead; I'll wait a bit."

Once Cindy left, Eric directed his gaze back to the laptop screen.

...

Titanic's global box office hit an unprecedented peak during Oscar week and then began to decline. In the 15th week of its North American release, due to waning popularity, its weekly earnings rapidly fell below $20 million, landing at $18 million. The overseas box office didn't maintain the record of over $200 million weekly either; compared to the $236 million from the 14th week, the 15th week saw a 25% drop, earning $177 million.

In the following weeks, the drop in North American box office earnings widened, with the most recent week recording a total of $571 million, yet the weekly take fell below the $10 million mark, reaching just $9.3 million.

However, the overseas market experienced a relatively slight decline of around 20%. Over the last six weeks since the overseas market exploded during the 13th week, the total overseas box office surged from just over $400 million to a staggering $1.281 billion, pushing the film's global total to a towering $1.852 billion.

Although the North American box office saw a very low weekly income and was beginning to wind down, it meant that Titanic's North American earnings likely wouldn't vary much from its former release. Still, due to the completely different overseas distribution strategy used this time -- where many overseas markets launched during Titanic's peak weeks -- it sparked greater interest in potential audiences, leading to even better overseas earnings than before.

While the North American Titanic also witnessed a decline, it could not be matched by the same degree of impact because of the lack of confidence Fox had during its promotional phases and theater scale in its foreign strategy. When Titanic achieved box office and award miracles in North America, many overseas markets had already begun to finish their runs, making it challenging for Titanic's miracles to stimulate the market adequately.

At the same time, Eric noticed that due to the dissimilar distribution strategies, the overseas revenue recovery cycle was considerably more condensed, as overseas spectators interested in Titanic typically flocked to the theaters right when it opened. This was the main reason behind the film's miraculous $236 million overseas weekend take in the 14th week.

This factor also caused the overseas box office decline to outpace North America; in the 15th week, this relative high of 25% in decline meant Titanic failed to achieve another $200 million week.

Although the overseas earnings dropped to $68 million last week, the decline rate in the overseas market shrank to under 20%. This indicated that, after several weeks, the film had shed the trivial audience affected solely by award lights, while the local core fan base -- much larger compared to North America -- continued to show strength. It was expected that over the next two months, Titanic's overseas box office could still rake in around $300 million. Combined with North America's remaining ticket sales, the global total could likely reach the height of $2.2 billion.

Looking back to the end of last year, Eric had been influenced by a barrage of media pessimism and a general lack of confidence around him. He had only hoped that the film would at least break even.

Then, Titanic's North American earnings exploded, lifting Eric's anxious thoughts and leading him to anticipate achieving former box office numbers.

Around the Oscars, the film had collected months' worth of popularity, began a wide rollout, and even created an overseas miracle of $236 million in a single week. Eric couldn't help but think that perhaps Titanic's global box office could break the $2 billion mark.

Now, looking at Firefly's distribution department's ultimate prediction of $2.2 billion for the film's final box office, no thoughts remained in Eric's mind.

Perhaps, miracles ought to be beyond everyone's wildest expectations.

The email page displayed a thorough analysis of important overseas box office countries following the global box office forecast. Eric had lost interest in these details and scrolled down the page, intending to quickly skim through the rest of the email.

However, when he reached the section analyzing the Japanese box office, a number suddenly caught his eye: 30 billion yen.

This was the distribution department's total box office expectation for Titanic in Japan.

Eric noticed this number not only because it exceeded the box office figure from the alternate timeline by a full $80 million but also because it was strikingly close to the all-time number one film in Japanese box office history, Spirited Away. However, converting that 30 billion yen using the current exchange rate put it at about $280 million. He remembered that historically, Spirited Away had a local box office of roughly $250 million.

But where did the extra $30 million come from?

Glancing back at the page, Eric quickly searched for another set of numbers: 107:1 -- that was the current exchange rate of yen to dollars.

In an instant, Eric understood many things.

In the alternate timeline, Titanic had opened in North America at the end of 1997, with the openings in Southeast Asian countries staggeringly close in time.

What time frame were we talking about at the end of 1997?

The financial crisis was rampaging throughout Southeast Asia.

From Eric's memory, currencies in countries such as Thailand, Indonesia, and the Philippines had nearly halved. Even Japan, feeling the effects of the greater economic crisis, saw its currency depreciate by around 20%. Such a devastated currency system clearly wouldn't bounce back to normal in the short term.

Hence, if he calculated based on that series of information, the historical exchange rate for yen to the dollar in 1998 was about 133:1. At that time, Titanic's $200 million box office in Japan would roughly convert to $250 million with the current rate of 107:1.

This recent difference of $30 million could likely be attributed to gains stemming from changes in the distribution strategy, rather than that unbelievable $80 million.

Realizing this, Eric promptly scrolled back up to examine the detailed overseas box office figures.

Aside from Japan, other Southeast Asian box office markets, including Korea, Hong Kong, Taiwan, Singapore, Malaysia, Thailand, and the Philippines, had already accumulated a box office total of $120 million, and with small forthcoming gains, it was anticipated they could add about $30 million more.

This indicated that, including Japan, the Southeast Asian countries and regions would ultimately contribute around $430 million to Titanic's global box office. Based on a foreign revenue share of 35%, Firefly could expect a cut of about $150 million from the total.

However, this depended heavily on the stability of the Southeast Asian currency systems.

According to the release scheduling in most of the Southeast Asian markets, if Firefly were to follow its usual settling steps, it would likely have to wait until September for the box office share. By then, the Southeast Asian economic crisis would have hit its peak. Due to currency exchange factors, Firefly's predicted global box office of $2.2 billion would inevitably be adjusted downward.

If that weren't particularly consequential, the most direct result would be that Firefly might lose over $50 million in share revenue due to the devaluation of currencies in Southeast Asia.

Even if Firefly was doing tremendously well, Eric couldn't simply let go of that $50 million.

Regaining his focus, Eric opened his drafts and started to write an email detailing his series of findings, hoping that Firefly's management would discuss and come up with corresponding solutions swiftly.

...

From the other side of the living room, the bathroom door opened, and Cindy, wrapped only in a towel, sauntered out, her long, pale legs on display, exuding charm.

After sitting back down in her previous spot, she tidied up her still damp hair. Seeing Eric intensely working away at the keyboard, she mischievously swung her legs and playfully scratched Eric's thigh with her toes.

Eric paused his typing, turned to look at her, raised the glass of whiskey, and finished off the last sip. He shook the glass towards Cindy and handed it over, saying, "Here, hold this."

The cube of ice had melted down to the size of a walnut, making a crisp clinking sound as Eric moved the glass.

Cindy took the glass, a smile forming on her lips, but her eyes held a hint of wateriness, her expression slightly sulky. "Not this again; that ice has soaked in the whiskey. You want to set my mouth on fire!"

"I just want to see what it would look like if you did," Eric chuckled as he glanced at Cindy's glass of whiskey, which was still half full, before returning to his typing.

Cindy looked at the ice cube soaking in her whiskey, shrank her neck in apprehension, and obediently picked up Eric's glass, pouring the ice cube into her mouth, her cheeks puffing up as she stared wide-eyed at Eric.

Eric ignored her deliberately cute act, finished writing the email, and CC'd it to Jeffrey Katzenberg, Frank Wells, and a few other executives before finally shutting down the laptop.

Once Cindy saw Eric was done, she blinked her eyes, spat the ice cube from her mouth into her palm. Its original sharp edges had smoothed out considerably. "Looks like this one's still a bit big."

Eric picked her up and carried her towards the sofa, laughing, "Aren't you someone who always liked things big?"

"Ugh, gross... wait..."

...

As Eric sent that email, some people in Los Angeles were still at work.

Before long, the phone rang with calls from Katzenberg and others.

After spending the weekend in East Hampton, Eric returned to Los Angeles on Monday. The first meeting he attended was to officially discuss the email he had sent.

"Based on the preliminary plans we agreed on," Katzenberg narrated in the conference room, reflecting on the weekend discussions, "we can utilize hedging strategies in currency exchange to cash in the earnings from various Southeast Asian countries ahead of time; however, this would certainly incur some losses."

Eric read through the document Katzenberg had drafted over the weekend, looked up, and said, "Have our summer blockbusters like Finding Nemo, and Bad Boys 2, as well as the year-end releases of Jurassic Park 3 and Rush Hour 2, already discussed distribution agreements with Southeast Asian distributors?"

*****

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