Chasing Stars in Hollywood

In two months, out of the seven films, only "Shout" brought significant losses to Daenerys Entertainment.

Moreover, "Shout" was a project inherited from Universal Pictures, completed last year and delayed until the cold January release because Daenerys Entertainment did not expect it to perform well at the box office. The loss was entirely anticipated.

Besides the minor loss from "The Lovers on the Bridge," the other five films—"Dance Hero," "Reservoir Dogs," "Hellraiser IV," "Twin Dragons," and "High Heels"—were confirmed to be profitable.

Such a start was enough to prove the viability of Daenerys Entertainment's strategy of operating three labels simultaneously.

After roughly browsing through the box office report, the assistant came to remind Simon.

Simon went to a small conference room next to his office where Daenerys Entertainment CEO Amy Pascal, Group President in charge of distribution Mark Belford, and the heads of the three production companies, Tom Pollock, Danny Morris, and Ira Deutchman, were already present.

Everyone had seen the relevant box office data, and the results of the seven films released in the first two months of this year had alleviated their initial concerns.

This meeting was mainly to summarize the distribution results of the past two months.

Seven films, three labels, and going forward, each film project had its own dedicated distribution team.

This distribution model allowed each team to focus and precisely complete the marketing and release of a film.

At the same time, this model could easily lead to internal competition among distribution teams.

Simply put, different film projects varied in quality, box office potential, and media reputation.

Therefore, each distribution team would inevitably prefer to handle films with promising box office prospects and avoid less promising projects.

Additionally, there were only a few prime release slots each year, which would also trigger competition.

These were very tricky issues.

Movies are an expensive business. Even a flop often involves millions in costs.

In Simon's view, the distribution teams should strive to achieve the best possible box office results for each film, rather than being selective and chasing more promising projects.

A distribution team's compensation would definitely increase with better box office results for the films they handled.

This could not be changed.

However, to eliminate the selective tendencies of distribution teams, it was inappropriate to determine compensation solely based on box office results.

Otherwise, the team responsible for "Reservoir Dogs" could never compare to the team handling the upcoming summer blockbuster "Wonder Woman," as their box office scales would be vastly different.

This required a more reasonable performance evaluation system.

Currently, Simon preferred to raise the problem, leaving the solutions to the company's numerous staff members rather than handling everything personally.

Nonetheless, this meeting also roughly discussed a solution.

Ultimately, ensuring the unity of Daenerys Entertainment's distribution teams was essential, and performance evaluations should not be based solely on the market performance of a single film.

A film's box office success owed much to the distribution team, but its success was undoubtedly the result of all departments within the company working together.

Therefore, in the future, the evaluation of the distribution department's performance might consider team factors but would lean more towards the overall performance of all projects handled by the department throughout the year.

To avoid internal cliques within the distribution department, team members would not remain fixed.

Of course, this approach had its drawbacks.

For instance, the efficiency of teams might be reduced if individuals who work well together were not assigned to the same team.

However, this drawback was insignificant compared to the overall benefits for Daenerys Entertainment.

The entire company should operate as a single entity, meaning any group of people within the company should be able to collaborate well. The company's core culture should not change to accommodate a few individuals.

Aside from the distribution teams, there was also the issue of cost control.

Simon was reminded of this issue by "Reservoir Dogs."

Daenerys Entertainment had always been very focused on cost control, with Simon leading by example.

However, a major film studio could not be as penny-pinching as a second- or third-tier production company. Often, the same project would require more expenses due to various reasons.

The original "Reservoir Dogs" had a production cost of only $1.2 million.

However, the new version, with no significant changes in cast or production scale, cost $2.5 million. Simon understood the reasons behind this, such as Harvey Keitel taking a pay cut in the original, but not needing to do so for Daenerys Entertainment's production.

Additionally, there were union issues.

For a project like "Reservoir Dogs," an independent film company with a low enough budget could avoid union work proportion requirements, saving a significant part of the budget. However, a major studio like Daenerys Entertainment, due to agreements with the unions, had to hire more union members.

For the same position, the salary standards for union and non-union members could sometimes differ by as much as double.

In Simon's view, some costs were unavoidable, but many others could be.

Often, these avoidable yet casually spent funds were due to the production team's laziness.

This mindset was understandable.

Daenerys Entertainment was very wealthy now, so spending a bit more was no big deal.

After an hour of discussion, Simon closed his file but did not announce the end of the meeting. Instead, he addressed Amy Pascal and the others, "I recently read an article about Walmart. In such a fiercely competitive retail industry, why do you think Walmart stands out?"

Everyone exchanged glances at Simon's somewhat sudden question.

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 directly from manufacturers, which not only saves costs but also allows them to offer lower prices to consumers."

"That's right, that's one aspect," Simon nodded. "But since you know this, don't you think other retailers would imitate it? Yet, Walmart remains the best."

Mark Belford opened his mouth but could not refute.

Seeing Simon still looking at everyone, clearly waiting for another answer, Amy Pascal had to say, "It should be their overall business strategy advantage. From product procurement to warehousing and logistics to sales management, Walmart is superior to its competitors. Blockbuster, under Nancy's management, has learned a lot from Walmart."

"Researching these thoroughly, competitors can follow suit," Simon shook his head again. "Like you said about Blockbuster, if a video rental chain can learn from Walmart, there's no reason other similar retail companies can't do the same."

Simon pressed on, and everyone had to offer their opinions.

After everyone had spoken, Simon said, "Actually, you're all right, but also not entirely. The article I read was about a very small detail in Walmart's operations. Walmart found that the sales of beer and diapers were positively correlated. After a thorough investigation, they discovered that many customers who bought diapers also picked up a pack of beer. Inspired by this phenomenon, Walmart placed the beer and diaper shelves closer together, resulting in increased sales of both products."

In a room full of smart people, Amy quickly grasped the point and said, "Simon, you mean that details determine success or failure."

"Exactly, details determine success or failure."

Simon nodded. "Walmart's advantage over other retailers lies in its relentless effort to continuously adjust its business strategies through numerous seemingly insignificant operational details. These incremental adjustments accumulate into a significant advantage, leaving competitors far behind. I want you to remember this. Daenerys Entertainment has indeed grown rapidly in recent years, but I absolutely do not want to see you lose your drive because of the current success and overlook some issues you might consider insignificant."

Everyone nodded.

Simon looked around and said, "I hope you will truly implement this, not just nod in agreement. I can tell you very clearly that Daenerys Entertainment can offer you salaries far exceeding those of your peers, but if I feel you are becoming complacent with your current achievements and are slackening off, I will not hesitate to fire you, even if you haven't made any mistakes. Daenerys Entertainment does not need employees who are content with the status quo. This applies not just to you but to everyone in Daenerys Entertainment. You can convey my words to your departments."

Hearing Simon's serious tone, everyone in the conference room became alert.

Given the company's dominant position in last year's box office rankings and its flourishing business ventures, it was impossible for the senior executives not to feel a sense of satisfaction.

Simon's words felt like a warning to each of them.

Moreover, given Simon's consistently strong stance in Hollywood, they were well aware that their boss meant what he said.

Daenerys Entertainment had grown large enough that it wouldn't fall into chaos if any one of its senior executives left, unlike some second- or third-tier studios.

With its strength and high salaries, the company could attract plenty of suitable replacements in Hollywood for any vacant position.

Therefore, Simon had the confidence to make such statements.

After the meeting, Simon continued his work for the day and then discreetly flew to San Francisco with his assistant.

The next morning.

After breakfast, Simon left the Woodside mountain villa for Egret's headquarters in the valley below.

Following a regular meeting on Amazon's online store and cloud computing development, Simon met with Nancy Brill, who was in San Francisco.

Nancy had arrived the previous day to discuss the development of Blockbuster's online rental platform.

Recently, Amazon's online store launch caused a stir due to the chaos from the booming book sales, prompting Simon to have Nancy provide some logistics and warehousing advice for the online store.

The petite executive was enthusiastic about the task and was inspired to plan the development of Blockbuster's online rental platform.

Of course, this wouldn't be a purely online rental model like Netflix but an online rental solution combined with physical stores.

In the plan, after launching the online platform, users could rent or purchase

 the videos they wanted directly through the platform and then go to a designated physical store to pick them up.

This online order confirmation and in-store pickup model might seem redundant but was not.

When users rented or bought videos, there was an inevitable selection process.

Compared to visiting a store to choose videos, placing orders through the online rental platform could save a lot of time and allow users to more directly view information and recommendations for various films on the platform.

Of course, this was just one aspect.

The most crucial point was that the online rental platform, like Amazon's online store, could offer users a much richer variety of video content.

Blockbuster's physical stores usually only had a few hundred square meters of space, providing up to thousands of video options for users.

However, the planned Blockbuster online rental platform could offer tens of thousands of video titles.

Apart from a batch of hot-selling movie and TV resources, most content wouldn't appear in physical stores because there simply wasn't enough space. Nancy planned to establish more large storage centers in major North American cities to store these video resources while expanding Blockbuster's logistics team.

Users placing online orders would have a dedicated logistics team deliver the videos to the designated store for pick-up.

Compared to Netflix's direct-to-home mail-order model, this approach could save a significant portion of the budget.

For Blockbuster, developing an online rental system had multiple benefits. It would allow the company to enter the internet domain early, avoiding being preempted by competitors and laying the groundwork for future transitions. Additionally, an online rental model offering richer content could promote Blockbuster's membership system.

Simon had discussed Blockbuster's membership system with Nancy a long time ago.

Over the years, although some value-added services had been introduced, it ultimately boiled down to simple discount models, which were more suitable for frequent users but not very attractive to most ordinary users.

Next, the launch of the online rental platform, with a substantial increase in available content, would undoubtedly enhance the appeal of Blockbuster's membership.

Even for basic sales performance, establishing an online rental platform would allow Blockbuster to guide users to consume more content through page recommendations and email ads, which would be much more effective than clumsy in-store promotional activities.

The entry barriers to the video rental industry were quite low, and competition had become increasingly fierce in recent years.

With the advantages of the online rental platform, the larger Blockbuster's membership base, the more stable its industry position would be.

Of course, developing the online rental platform would be very costly in the early stages. However, once a sufficient scale was achieved, the average cost would naturally decrease.

By establishing an online rental platform and capturing the internet concept early, Blockbuster would also benefit from its stock price in the upcoming internet boom.

In summary, aside from the potential high costs in the early stages of operation, developing Blockbuster's online rental platform would bring many benefits to the video rental chain.

Of course, Nancy Brill did not plan to accomplish everything in one go. The Blockbuster online rental platform would initially launch services in the relatively prosperous core metropolitan areas of the East and West coasts of the United States, just like Amazon's online store. After gaining enough experience, they would gradually expand to other regions.

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