The atmosphere in Duke's corner office was energetic and sharply focused, a pleasant contrast to the stressed calm of the previous months.
The success of the decentralized strategy and the resulting solvent status of Ithaca Production meant the executives could sit down and talk about the ucpoming strategies.
Duke sat at the head of the polished conference table, beside him sat David Chen, looking remarkably calm.
Across from them was Goldberg, the head of Distribution and Marketing.
The meeting wasn't about whether Easy Rider would work, Duke already knew it would be a success.
Previously he had to deal with doubts towards both Targets and Night of the Living Dead but the recent distribution success make it so that none of his employees was doubting him.
Now the question was how to best bring it to the audience, maximizing cash flow and minimizing risk.
Duke opened the discussion with the ki d of direct question that defined his management style.
"Gentlemen, the next major objective is the July 14th release of Easy Rider. But before we discuss the road ahead, Chen, run the numbers on the last film."
Chen, usually the picture of stiff financial formality, cut in eagerly.
He was happy, not outwardly enthusiastic, but satisfied with the sheer numbers of the data. He pushed a crisp sheet displaying the final revenue breakdown for Night of the Living Dead toward Duke and Goldberg.
"The NOTLD revenue sheets are, frankly, unbelievable," Chen stated calmly, tapping the paper.
"It's a micro-budget horror picture, a genre traditionally considered bottom-tier, yet the net profit margin is outperforming every other part of our business, on a percentage basis, right now."
Chen leaned into his key data points that defined the triumph.
"The cost to acquire each paying customer was virtually nothing. We spent almost zero on traditional advertising, no major newspaper buys, no network television spots."
"The audience found the film through word-of-mouth, regional horror fan newsletters, and college papers."
"That means the profits began immediately, without the usual lag of recouping a massive initial marketing budget."(Right now its around)
"The film also acted like a financial rocket for our Q4 cash position. Drive-ins and small theaters pay far faster than the major chains."
"The cash came in, cleared the accounts, and was immediately available."
Chen allowed himself a rare, genuine human moment of amazement at the unconventional success.
"I ran the numbers three times, Duke. On a major studio release, fifty cents of every dollar goes to marketing and overhead before we see a dime."
"With NOTLD, ninety cents of every dollar was profit. The economics are simply revolutionary relative to its budget."
The implication was clear.
The traditional Hollywood financial model was wasteful and slow, Ithaca had accidentally discovered a faster, cheaper path to profit.
Of course, Chen's concept that 'fifty cents of every dollar goes to marketing and overhead' needs to be understood within the historical structure of Hollywood accounting in 1969.
The conventional view that most people have that the studio don't see a dime until the production budget is recouped is very misleading.
It ignores the fundamental way the major studios structured their deals to ensure they were always paid first.(then and now)
For the traditional Hollywood studio, the high front charges for distribution fees and corporate overhead were how the studio actually made its money and covered its financial risks.
Think of those fees the bulk of that fifty cents of every dollar as guaranteed operating income. (Hollywood accounting is nuts and genius at the same time)
The studio saw its "dime," and more, from the very first dollar of box office revenue.
The moment money left the theater's cash register, a large portion of it was immediately earmarked to cover the studio's distribution costs for getting the film to the theater and overhead for keeping the lights on at the corporate offices.
The phrase "before the studio saw a dime" is better understood as "before the film shows a net profit on the books."
A film had to clear the high hurdle of the production budget, the advertising cost, and those fixed distribution and overhead charges.
Only after all these costs were paid could the project flip to "net profit."
This is the number that triggers the payout to profit participants, the directors, stars, and producers who had negotiated "net profit points" in their contracts.
Because of those high, front fees and aggressive internal charges, a film could be a massive cultural phenomenon and a huge box office hit for the studio, generating hundreds of millions of dollars in revenue.
Yet still be declared unprofitable on the back end.
This allowed the studios to legally avoid paying out net profit points to the participants.
This method of ensuring profit for the corporation while denying it to the creative talent has fueled countless lawsuits over the decades in which Duke lived.
Involving blockbusters like Forrest Gump to Harry Potter or even My Big Fat Greek Wedding.
Of coursen this is not specific to Hollwood.
Bollywood(India/Hindi), Kollywood(India/Tamil), Nollywood(Nigeria), Cantonwood(HK/Cantonese), Chinawood(China/Hengdian) all do the same stuff, some even more brazenly.
Duke nodded, picking up the data sheet and turning to Goldberg.
"Chen you need to read on Hollywood methods on accouting. Goldberg, explain the reason behind this success. Why did a black-and-white horror film with no stars became such a financial rocket?"
In his past life, he only knew that the film was successful, but he never really learned why.
(some of my favorite films are not that profitable passionate films. Speaking of it, i cried watching Like Crazy(2011) last week, Good movie)
Goldberg, clad in a rumpled corduroy jacket and looking like he'd just stepped out of a college lecture hall, understood this kind of things completely.
Goldberg began, his voice casual but insistent. "The film succeeded not by winning over the establishment like the New York Times critics, or prestige cinema owners but by appealing to the counterculture and youth audience directly."
Goldberg laid out his ideas.
"Horror, especially raw, graphic horror, is seen as inherently anti-establishment. It's cheap, it's rebellious, and it's subversive. Horror seems like it would be a great medium to mkae a political film."
"We also didn't went to those expensive downtown palaces. The Drive-Ins and late-night city theaters are the venues that youts go to the most."
"They're accessible, they're cheap, and the atmosphere is informal. They were able to build genuine, explosive word-of-mouth without us spending a dime on studio ad buys."
Goldberg introduced the key concept that tied the aesthetic to the financial victory, "Cultural Talk over traditional marketing spend."
"The old guard spends millions to tell people a movie is good. We let the audience tell each other," Goldberg explained.
"These kids don't read the same papers or watch the same news shows as the critics. They're listening to James Brown or The Rolling Stones, they're wearing denim, and they're talking to their friends at the diner."
"When NOTLD hit those youth channels, it created it's very own little grassroots supporters," he concluded.
"That vouche from these youts is fast, cheap, and it's the only one that matters for what we're trying to launch right now."
Goldberg smoothly transitioned to his bold, unorthodox proposal for Ithaca's new project, Easy Rider.
"We have proven the channel works," Goldberg said, leaning forward. "So, I say we use the NOTLD distribution model, the 'Drive-In Blueprint' for Easy Rider."
Chen frowned, instantly recognizing the immense, career-risking nature of the proposal.
"You can't be serious. You want to premiere Easy Rider at drive-ins? Hooper wants to make it have a go with awards."
Goldberg ignored Chen, speaking directly to Duke, whose expression remained neutral but whose fingers were drumming rhythmically on the table, indicating deep concentration.
"I am entirely serious. I propose we skip the prestige cinema strategy for the initial rollout. Our plan is to target the Drive-In Circuit first, mirroring the NOTLD release pattern, but on a massive, calculated scale."
Goldberg hammered home the justifications.
"Easy Rider is the ultimate counterculture film, motorcycles, drugs, freedom, alienation. It belongs in these venues."
"Premiering it in a velvet seat in Manhattan, surrounded by old critics who will hate the aesthetics is a mistake. The audience for this film is the drive-in audience."
"At the same time, the drive-ins and independent cinemas are eager for a new Ithaca film after the NOTLD success."
"They see us as the source of profitable, cutting-edge genre fare. They want to book Easy Rider immediately, giving us unprecedented leverage on terms and payment speed."
"And at last, it drastically lowers the initial massive marketing spend required for a traditional big film debut."
"We can rely on the grassroots word-of-mouth to build initial steam, mitigating the early financial risk before the July 14th deadline. We make our money back fast, then expand to the prestige cinemas once the cultural buzz is undeniable."
Duke listened, his fingers drumming a final beat. This strategy was unorthodox, dangerous, and brilliantly logical. It aligned the film's rebellious spirit with its path to the audience.
Chen interjected one final, calm plea for caution. "Wouldn't we be risking cheapening the film? Premiering a film twice directly at drive-ins could risks branding us as B-movie producers, which could hurt our refinancing talks."
Goldberg countered quickly, dismissively "The people who love this film aren't reading the old critics David."
Duke finally spoke, his voice quiet, drawing all attention to the decision. "Chen, you are concerned about the financial mechanism. Goldberg, you are concerned about the best distribution method. We need both not one."
He summarized the situation, stating the reality of their position.
"We have the opportunity to prove that a focused, culturally aware distribution strategy can be a viable, cost-effective alternative to the 'old studio' rollout."
"If Easy Rider works through this channel, we will have created a permanent competitive advantage."
Duke knew this film would succeed both artistically and financially.
Duke's decision was immediate and final.
He greenlighted the plan.
"Goldberg, I want the Drive-In Blueprint. We are prioritizing the counterculture and youth market."
"We need to have the prints sent to every viable youth theater and drive-in across the country two weeks before we even talk to any of the major chains."
---
Latr chapter i know but i'm going through a rough patch this week.
dw ill be ok in about a couple of days(still will be posting, the AO3 fanfic writer curse wont get me)
Check out Like Crazy, its a great film if you ever had a long distance relationship.
Imma go to sleep, Bye