Chapter 368: Expanding Sources, Reducing Expenses

"This year's marketing budget has been reduced by 20% to cope with the economic crisis," announced in the meeting room at Capet headquarters as the new budget report for the year was released.

CFO Annie Depp presented the budget allocations for different businesses. Although a significant amount had been cut from film marketing, bank support for film projects also diminished.

"Next, we also aim to reduce the production budget for film projects. This year, we have ten films slated for release. For next year, about ten films are already in the pipeline. Except for the French film The Intouchables, Capet Pictures doesn't have any projects with a budget below $30 million," she explained.

"Although our performance last year was impressive, we acquired Netflix and signed several online streaming deals with other movie groups. This increased our spending on film projects. The subscriber growth for Netflix hasn't hit our expectations. Additionally, we also acquired shares in companies like Dolby and IMAX," she added.

Annie Depp detailed everything, and Charles felt a pang of concern. Was he really spending that much?

Then Annie Depp shifted her tone, "Although our expenditures are high, investing in international distribution channels is essential. Netflix's paying subscribers can continually provide cash flow. The specific format for Blu-ray DVDs also enables us to distribute high-quality Blu-ray DVDs, reducing production and promotion costs.

Moreover, our company's brilliant performance in the past two years has demonstrated the strong cash-generating capacity of the home entertainment market," she continued.

"So, Capet Entertainment is doing much better than other movie companies. After we join MPAA as a formal member next year, the increased influence will benefit us," she concluded.

After Annie Depp finished, the newly appointed COO Michael Lynn spoke, "All movie companies are expanding sources and reducing expenses, mainly focusing on reducing expenses."

"Reducing the number of movie productions and cutting marketing costs are key strategies. Traditional TV, newspapers, and posters are the primary targets for budget cuts, while online promotions through Google, Facebook, Twitter, etc., are much cheaper," he stated.

"In terms of production budget, negotiations between the Producers Guild and the actors' union are not going smoothly. However, everyone agrees that in the economic downturn, we can't offer high pay as before!" Michael Lynn said.

Donna Langley asked, "Didn't the Producers Guild plan to strike an agreement with the Screen Actors Guild-American Federation of Television and Radio Artists first?"

Michael Lynn nodded, "The Screen Actors Guild-American Federation of Television and Radio Artists is the second-largest actors' union and has quite an influence. However, the primary focus of negotiations is still on the largest actors' union, the Screen Actors Guild."

The Screen Actors Guild is the most influential in these negotiations. Although it has fewer members compared to the Screen Actors Guild-American Federation of Television and Radio Artists' 90,000 members, it is much more dominant.

"The recent Writers Guild strike caused at least $2 billion in economic losses and left 40,000 behind-the-scenes workers unemployed in California. Does the Screen Actors Guild dare to strike again?" Charles grumbled in frustration.

Actor strikes are much more impactful than writers' strikes. The Golden Globes' cancellation this year wasn't due to a lack of scriptwriters; it was because almost 100 nominated actors chose not to attend in support of the writers' strike. That was the main reason the Golden Globes were canceled this year.

If the actors' union strikes, almost all film projects and award ceremonies would be canceled, causing unimaginable losses.

The economic losses due to the actor strike in 2023 resulted in estimated economic losses of over $6.5 billion to the California economy.

Michael Lynn sighed, "The situation largely depends on the progress of the negotiations. Currently, the Directors Guild and Writers Guild have signed new labor agreements with the Producers Guild. Once the Producers Guild reaches an agreement with the Screen Actors Guild-American Federation of Television and Radio Artists, the last hurdle will be the Screen Actors Guild."

...

Back in his office, Charles handed over Peter Jackson's project, District 9, to Henry Winster. The $30 million budget wasn't too high.

"Boss, this is the marketing cost report for Thor," Phyllis Jones handed Charles a file.

"The marketing budget for Thor is indeed high, exceeding $60 million," said Charles, leaning back in his chair. A 30-second Super Bowl ad alone costs $3 million!

There were also ads on ABC, NBC, CBS, Fox, along with newspapers, magazines, and billboards.

"Making money isn't easy," Charles said, feeling overwhelmed after a long day of meetings.

Understanding his mood, Phyllis Jones closed the office door and started massaging Charles' head from behind.

"By the way, isn't Roland Emmerich's movie 10,000 BC a flop?" Charles recalled seeing ads for it.

"Pretty much. 10,000 BC was released on the 7th last month. Its North American box office is just $92 million, unlikely to hit $100 million. However, the international market has brought in $150 million so far," Phyllis Jones responded.

"The film's investment was $105 million, and its reputation isn't good either. Warner Bros. certainly won't meet their expected profits!" she added after some thought.

Considering Roland Emmerich's past films like Independence Day, Godzilla, The Patriot, and The Day After Tomorrow, which were all known for their grand special effects and thin storylines, he had a significant setback this time.

"However, Roland Emmerich has started another global disaster film similar to The Day After Tomorrow, this time based on the Mayan prophecy about the year 2012. I think it's called Goodbye Atlantis," Phyllis Jones mentioned.

"This time Roland Emmerich is collaborating with Sony Columbia," she said, making Charles realize it was none other than 2012.

It's currently called Goodbye Atlantis, but near the release, they would rename it to 2012 to bank on the end-of-the-world hype.

When Sony Columbia took Hancock from Warner Bros, Charles couldn't secure it.

Now Sony partnered with Roland Emmerich for 2012 first, which upset Charles.

"This movie has significant investment. Can Roland Emmerich manage only with Sony?" Charles wondered, deciding to pursue it.

"Contact Roland Emmerich and see if we can get the international distribution rights. North American rights will surely go to Sony, and Japan is probably out too. Let's go for other international markets," he instructed.

International markets were crucial for Roland Emmerich's disaster films. Charles wasn't sure about their pricing, but he didn't think it was worth pursuing if it was too high.

*****

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