In two months seven films had been released. The only one that had truly caused Daenerys Entertainment a significant loss was Scream.
Moreover Scream had been a project taken over from Universal Pictures. The film had already been completed last year but had been held back until the slow January period this year precisely because Daenerys Entertainment had not held high expectations for its box office prospects. The loss had been entirely within expectations.
In addition to the small loss on The Lovers on the Bridge the other five films Hero, Reservoir Dogs, A Nightmare on Elm Street 4, Twin Dragons and The High Heeled Shoes had all been confirmed to turn a profit.
Such an opening was more than enough to prove the feasibility of Daenerys Entertainment's strategy of running three parallel labels.
After roughly skimming through the box office report in his hands Simon's female assistant came over to knock on the door and remind him.
Simon walked to the small conference room beside his office. Daenerys Entertainment CEO Amy Pascal group president in charge of distribution Mark Belford and the specific heads of the three studios Tom Pollock Danny Morris and Ira Deutschman had all arrived.
Everyone had already seen the corresponding box office data. The release results of the seven films over the first two months of the year had also completely dispelled their initial concerns.
This meeting was mainly to summarize the distribution results of the past two months.
Seven films three labels and beneath that each movie project actually had its own dedicated marketing and distribution team.
This distribution model allowed every team to focus more intently and precisely on completing the marketing and distribution of a single film.
At the same time this model also easily created internal competition between the distribution teams.
Simply put different movie projects inevitably differed in quality box office potential media reception and so on.
Therefore every marketing and distribution team would naturally tend to take on excellent films with promising box office prospects and reject inferior projects lacking box office potential.
In addition there were only so many hot movie periods each year and competition would arise there as well.
These were all very thorny problems.
Movies were an extremely expensive business. Even a bad film often meant costs in the millions.
In Simon's view what a marketing and distribution team should do was find every possible way to help each film achieve better box office results rather than being picky and chasing after films with greater potential.
The better the box office performance a distribution team achieved for a film the higher their salary and benefits would obviously be.
This point could not be changed.
However simply determining compensation based on a film's box office performance was clearly unsuitable if the goal was to reverse the teams' picky behavior.
Otherwise the team responsible for Reservoir Dogs' distribution could never compare with the team handling Wonder Woman which was about to be released in the summer schedule. The box office scales of the two films were worlds apart.
A more reasonable performance evaluation system was therefore needed.
The current Simon preferred to raise the problem. As for the solution the company employed so many people there was naturally no need for him to handle everything personally.
However this meeting had roughly produced a solution idea.
In the end it came down to ensuring the unity of Daenerys Entertainment's marketing and distribution teams rather than confirming an employee's or a team's performance based solely on the market performance of any single film.
After all when a movie became a box office hit the distribution team's contribution could not be ignored yet the film's success was absolutely not the distribution team's achievement alone. It could be said to be the result of the entire company's departments working together.
Therefore in the future when evaluating the performance of distribution department employees team factors might be considered but more weight would be placed on the overall performance of the entire department across all projects for the full year.
To prevent various small factions from forming inside the distribution department specific distribution team members would also not remain fixed long term.
Of course this approach would bring some drawbacks.
For example people who cooperated well with each other might not be assigned to the same group which would inevitably reduce work efficiency to a certain degree.
However such drawbacks were insignificant compared with Daenerys Entertainment's overall interests.
The entire Daenerys Entertainment should be one unified entity. This unity meant that any group of people under the company should be able to achieve good cooperation with one another. It was impossible to change a company's core culture just to accommodate a few individuals.
Besides the distribution team issue there was also the problem of cost control.
Simon had thought of this matter because of Reservoir Dogs.
Daenerys Entertainment had always placed great emphasis on cost control and Simon himself had set the example.
However a major film company could ultimately not haggle over every penny like a second or third tier small studio. For the same project various reasons often led to higher expenditures.
In his memory Reservoir Dogs had been produced for only 1.2 million dollars.
Yet this time with no major changes in cast or production specifications the new version of Reservoir Dogs had still cost 2.5 million dollars. Simon actually understood where the problem lay. For example in the original Reservoir Dogs Harvey Keitel had lowered his own salary to participate. This time with Daenerys Entertainment producing it Keitel naturally no longer needed to do so.
In addition there was the union issue.
For a project like Reservoir Dogs if another independent film company produced it the sufficiently low cost would allow it to bypass union staffing ratio restrictions and thereby save a large portion of the budget. However for a major studio like Daenerys Entertainment union agreements made it difficult to avoid hiring more union members.
For the same position the salary standards between union and non union members could sometimes differ by as much as double.
In Simon's view some budgets could not be cut yet just as many expenditures could be completely avoided.
Many times these avoidable yet casually spent funds were the result of the main creative team taking shortcuts and being lazy.
Such thinking was easy to understand.
Daenerys Entertainment was so rich now. Spending a little more would not matter.
The discussion lasted an hour. Finally closing the file in front of him Simon did not announce the end of the meeting. Instead he said to Amy Pascal and the others "I recently read an article about Walmart. In an industry as fiercely competitive as retail why do you think Walmart was able to stand out?"
Faced with Simon's somewhat abrupt question everyone could not help exchanging glances.
However the boss's question could not be ignored.
Mark Belford spoke first. "Cost control is a big part of it. Walmart bypasses middlemen and purchases goods directly from manufacturers. This not only saves costs but also allows them to pass as much savings as possible on to consumers."
"That is one point," Simon nodded. "But since even you know this do you think other retailers would not imitate it? Yet the result is that Walmart is still the most outstanding one."
Mark Belford opened his mouth but had no rebuttal.
Seeing that Simon was still looking at everyone clearly waiting for the next answer Amy could only say "It should be an overall operating strategy advantage. From commodity procurement to warehousing logistics to terminal sales management Walmart outperforms its industry competitors in every aspect. The Blockbuster that Nancy is responsible for is learning from Walmart in many areas."
"As long as these are thoroughly studied competitors can follow suit as well," Simon shook his head again. "Just as you said about Blockbuster even a video rental chain can learn from Walmart. There is no reason other similar retail companies would not do the same."
Simon pressed on so everyone offered their own views one after another.
Only after everyone had spoken did Simon say "Actually everything you said is correct yet also incorrect. The article I read was about a very small operating detail of Walmart. During sales Walmart discovered a positive correlation between beer and diaper sales. After careful investigation they found that many consumers who bought diapers would often casually grab a six pack of beer as well. Inspired by this phenomenon Walmart placed the beer and diaper shelves closer together. The result was that sales of both products increased."
Everyone in the conference room was smart. As soon as Simon said this Amy spoke. "Simon you mean that details determine success or failure."
"Correct. Details determine success or failure."
Simon nodded. "Walmart's advantage over other retailers lies in the fact that they have been relentlessly and continuously adjusting their operating strategies through one seemingly insignificant operating detail after another. Little by little these accumulate into a huge advantage that leaves industry competitors far behind. I hope you will remember this point. Daenerys Entertainment has indeed developed very rapidly in recent years. However I absolutely do not want to see any of you lose your drive because of the achievements already obtained and turn a blind eye to certain problems within the company that you think may not be serious."
Everyone around nodded one after another.
Simon swept his gaze across them. "I hope you will truly do this and not just nod in front of me. I can tell you very clearly that Daenerys Entertainment can give you salaries and benefits far exceeding those of other executives in the same industry. At the same time if I feel that any of you have grown slack because you are satisfied with your current achievements I will not hesitate to dismiss you even if you have not made any mistakes. Daenerys Entertainment does not need employees who are content with the status quo. Moreover this applies not only to you but to the entire Daenerys Entertainment from top to bottom. You may pass my words on to your respective departments."
Hearing Simon's serious tone everyone in the conference room felt a chill.
The box office top ten list for the just ended year had been dominated by films related to Daenerys Entertainment. At the same time almost all of Daenerys Entertainment's businesses were thriving. If the executives present claimed they had not developed any complacency in their hearts that would be impossible.
Simon's words sounded like a warning to all of them.
Moreover given Simon's consistent display of dominance in Hollywood they knew very well that their boss meant what he said.
Daenerys Entertainment was already large enough. Unlike second or third tier studios that would fall into chaos without core executives the current Daenerys Entertainment would not experience major operational problems in the short term even if any one person left.
Because it was powerful enough and the pay was high enough there were always sufficient candidates in Hollywood who could fill any executive position.
Therefore Simon also had the confidence to say these words.
After the meeting ended and he finished the rest of the day's work Simon quietly flew to San Francisco with his female assistant after getting off.
The next morning.
After breakfast Simon left the hillside villa in Woodside and headed to Ygritte Company headquarters at the foot of the mountain.
After the regular meeting on the progress of the Amazon online mall and cloud computing development Simon also met with Nancy Brill who was in San Francisco.
Nancy had come to San Francisco yesterday for the development of Blockbuster's online rental platform.
A while ago when the Amazon online mall had opened and chaos had erupted because of the explosive book sales Simon had asked Nancy to come over and provide some suggestions on warehousing and logistics for the online mall.
The petite female executive had thrown herself enthusiastically into the work. Afterward she had been inspired and planned to develop Blockbuster's online rental platform as soon as possible.
Of course at this stage it was definitely impossible to achieve Netflix's completely storeless model of pure online rental. Instead it would be an online rental solution combined with physical chain stores.
In the plan once the online platform launched users could directly rent or purchase the video tapes they wanted through the online platform and then go to the designated physical store to pick them up.
This model of confirming orders online and then picking up at a physical store might seem somewhat redundant but of course it was not.
Users inevitably went through a selection process when renting or purchasing video tapes.
Compared with personally going to a physical store to choose video tapes placing an order directly through the online rental platform not only saved a lot of time but also allowed users to view film information and recommendations for similar titles more intuitively on the online rental platform.
Of course that was only one aspect.
The most critical point was that the online rental platform like the Amazon online mall could provide users with far richer film and television content resources.
Blockbuster's physical chain stores usually had interior spaces of only a few hundred square meters and could offer at most a thousand or so video tapes for users to choose from.
The planned Blockbuster online rental platform however could offer tens of thousands of film and television titles.
Of course aside from a batch of hot selling movie and television resources most of the content would not appear in the physical stores because there simply was not enough space. Nancy planned to establish more large scale warehousing centers in major North American cities to store these video tape resources while also expanding Blockbuster's logistics team.
Users would place orders online and a dedicated logistics team would deliver the video tapes to the designated physical stores for the users to pick up in person.
Compared with Netflix's direct to door mail order model this approach could save a large portion of the budget.
For Blockbuster developing an online rental system would on one hand allow it to enter the internet field early avoid being preempted by other competitors and lay the foundation for future transformation. On the other hand the online rental model that provided richer content could also be used to promote Blockbuster's membership system.
Simon had discussed Blockbuster's membership system with Nancy very early on.
Over the years although some value added services had been launched in the end they had still not escaped a simple discount model. This model was often more suitable for high frequency consumers and did not hold particularly high appeal for most ordinary users.
Next once the online rental platform launched and the selectable content increased dramatically it would undoubtedly greatly enhance the attractiveness of Blockbuster memberships.
Even for the most basic sales performance after establishing the online rental platform Blockbuster could guide users to consume more content through page recommendations email advertisements and other forms. This would definitely be far more effective than the clumsy advertising and promotional activities in physical stores.
The threshold for the video tape rental industry was truly too low and competition in recent years had grown increasingly fierce.
Relying on the advantages of the online rental platform the larger the membership scale Blockbuster accumulated the more solid its industry position would become.
Of course in the plan the early stage of launching the online rental platform would definitely be very capital intensive. However once a sufficient scale effect formed the average cost would naturally decrease.
Establishing an online rental platform and locking in the internet concept early would also greatly benefit Blockbuster's own stock price in the coming internet wave.
All in all aside from the possibility of burning money during the early operation phase the development of Blockbuster's online rental platform would bring far more benefits than drawbacks to this video tape chain company.
Of course Nancy Brill did not plan to accomplish everything in one step. In the short term Blockbuster's online rental platform would only promote its services in the relatively prosperous core metropolitan areas on the American East and West Coasts just like the Amazon online mall. Once sufficient experience had been accumulated it would then expand gradually to other regions.