Made In Hollywood

In recent years, ancillary markets, particularly video and DVD sales, have accounted for an increasingly significant proportion of a film's revenue. Major Hollywood studios have responded to this shift, the most notable change being the cessation of selling multi-year video distribution rights. Instead, they have either expanded or established their own video and DVD distribution divisions to maximize profits.

Warner Bros. already had such a department, which has now been expanded into a subsidiary exclusively responsible for distributing Warner Bros. and its partners' DVDs and videos. With the vast platform of Time Warner at its disposal, this subsidiary has no issues with production capacity or distribution logistics.

On August 13, 1998, The Matrix concluded its North American box office run at $327.58 million, breaking the previous R-rated box office record of $325.79 million held by Saving Private Ryan.

On the same day The Matrix left theaters, its DVD and video versions were officially released in North America. Though its sales didn't reach the staggering heights of Titanic, they were impressive enough to make other companies envious.

Within the first four days of release, The Matrix generated $23.54 million from video sales, $28.02 million from standard DVD sales, and an additional $58 million from 580,000 copies of the $199 ultra-deluxe commemorative DVD set. Combined, these formats brought in a total of $63.1 million in revenue.

Meanwhile, Duke Studios concluded negotiations with NBC Television Network, which purchased the film's North American broadcast rights for the next three years at a total price of $20 million.

A blockbuster film with strong ancillary sales can generate staggering profits. Warner Bros. and Duke Studios were undoubtedly the biggest winners of the summer. In comparison, Godzilla, released around the same time, was still struggling to push its North American box office past the $95 million mark to reach $100 million.

Disney's Armageddon fared better, with a North American gross approaching $150 million. Considering international and post-release revenues, profitability was not an issue. Director Michael Bay, dubbed the "Little Explosion Maniac" by the North American media, seemed to be returning to his previous path.

However, in terms of ancillary revenue, even if you combined Armageddon, Godzilla, and the earlier-released Deep Impact, and multiplied their total by five, they would still fall short of The Matrix.

Given the phenomenal success of The Matrix, a grand celebration party was inevitable.

On the one-week anniversary of the film's DVD and video release, Warner Bros. spent a fortune to host a celebration party at a private Malibu club. Duke, who had already traveled to New Zealand for work, returned to North America specifically for the event.

At the party, Duke was naturally the focus of everyone's attention and praise. After mingling with the guests, he finally managed to retreat to a quiet corner, only to find Jeff Robinov, CEO of Warner Bros., sitting across from him.

"Duke."

Jeff Robinov, familiar with Duke's personality, got straight to the point. "Have you ever considered merging Duke Studios into Warner Bros.?"

Duke pondered for a moment before asking, "Jeff, is this your personal opinion?"

"No, no..." Jeff Robinov waved his finger. "I'm here to represent the views of the entire Time Warner company."

Duke remained silent, deep in thought.

Jeff Robinov continued, "We propose a stock swap. Warner Bros. would exchange an equivalent value of its shares for your shares in Duke Studios."

"So, Warner wants 100% ownership of Duke Studios?"

Jeff Robinov nodded immediately in response to Duke's question. "Exactly."

Duke crossed his arms, resting one hand under his chin, and thought for a moment. He quickly understood Warner's intent, which was straightforward and directly tied to The Matrix, The Lord of the Rings trilogy, and the Harry Potter series.

The Matrix was a financial juggernaut and clearly the start of a franchise.

Though The Lord of the Rings trilogy was touted as the most challenging fantasy adaptation to produce, its steady progress had evidently bolstered Warner's confidence.

The Harry Potter series, meanwhile, was already gaining explosive momentum thanks to aggressive promotion by the Harry Potter Studio.

Warner clearly aimed to bring the rights to these three franchises entirely under its control, even offering Duke more shares in Warner Bros. to achieve this.

Should Duke consider Warner's proposal? He had to deliberate carefully. Duke lacked both the ambition and the capability to expand Duke Studios significantly. Trading his studio for a stake in Warner Bros., allowing him to continue benefiting from these franchises' success, seemed more advantageous than disadvantageous.

However, The Matrix had only released one installment, and both The Lord of the Rings and Harry Potter were still in the preparation stages. Warner would not offer sufficient compensation at this stage. The timing was not right.

"Jeff..." Duke smiled. "I'll need some time to think about it."

"Of course!" Jeff Robinov said solemnly. "No matter what, Warner will respect your decision."

After Jeff Robinov left, Duke considered the matter for a while longer before deciding to postpone it until a more opportune moment.

A tall figure passed behind him and took a seat across from him, handing him a glass of champagne.

Charlize Theron smoothed her long hair and said, "I came here specifically to thank you."

Duke clinked glasses with her. "You look more beautiful and confident."

"That's all thanks to you." After Duke drank his champagne, Charlize downed hers as well. "Without you, there would be no Charlize Theron as she is today."

"How does it feel to be a superstar?" Duke asked with a smile.

"Absolutely amazing!"

Charlize set down her glass and signaled a waiter to bring two more glasses of champagne. "I've never felt this good in my life."

"Everywhere I go in North America, I'm met with countless fans, both men and women, screaming for me," she said, leaning in slightly. "Even in the Far East, the cheers and screams haven't diminished."

In The Matrix, Duke had ensured that Neo's screen time was prioritized to maintain the film's balance. Still, Trinity's role had been significantly expanded compared to the original, particularly with the gun-fu and fight scenes specifically tailored to Charlize Theron's physique. These were undeniable crowd-pleasers.

One of the many changes brought about by The Matrix was the elevation of Charlize Theron to the same superstar status as Keanu Reeves.

For some at Warner Bros., Duke's return from New Zealand presented a rare opportunity to discuss collaborative projects in person. Doug Walter approached him soon enough.

"Duke, how long will your new project take to complete?" he asked.

"Starting in September: two months for preparation, two months for shooting, and two months for post-production and promotion," Duke replied after some thought. "It'll definitely be done before next year's Oscars."

"Summer release?" Doug Walter pressed further.

Suppressing the urge to roll his eyes, Duke said, "Come on, Doug. This is just a small-budget film. It'd be completely drowned out in the competitive summer season."

"I think your small project can compete with other directors' blockbusters."

Doug Walter turned to Charlize Theron. "Don't you agree, Miss Theron?"

"I think Mr. Walter has a point," Charlize said earnestly. "Who would dare underestimate you now?"

"Hardcore Lord of the Rings fans..." Duke spread his hands helplessly. "Ever since news leaked, many hardcore fans have opposed my decision to adapt the series for the big screen, fearing I'll ruin their beloved fantasy classic."

Doug Walter shook his head. "Every era has its traditionalists. They never understand that only by looking forward can one achieve success."

"Didn't you hear?" Duke said with a wry smile. "Some hardcore Lord of the Rings fans are organizing a protest in New Zealand."

"They can't stop you from succeeding."

Doug Walter had just finished his sentence when someone whispered something in his ear. He nodded to Duke. "I have something to handle. Excuse me for now."

With the area slightly quieter, Charlize Theron and Duke continued their conversation over drinks.

"The Matrix just finished its North American run," she remarked curiously. "And you're already preparing a new project?"

"Just a small project to hone my skills," Duke said casually.

Since mid-August, when he arrived in New Zealand, Duke had been assembling a team to prepare for the project. Warner Bros.' approval had come at the end of last month, with an initial $8 million budget and accompanying financial supervisors and production managers quickly put in place.

His return was not just for the celebration party but also to sign a director's contract with Warner Bros. For such a small production, Duke had only taken a symbolic $500,000 fee to minimize the project's upfront costs.

Of course, a performance-based, tiered revenue-sharing agreement was essential. As with The Matrix, the maximum revenue share could reach 20% of the global box office and 15% of ancillary income.

However, even with confidence in his abilities, Duke dared not guarantee the success of the new project.

At this stage, Duke held stocks in Apple, Yahoo, and Microsoft, was a major shareholder in Victoria's Secret and Warner Bros., and possessed a personal fortune in the billions. His six completed films had grossed nearly $3 billion worldwide. Even a failure, whether on a small or large scale, would hardly affect his standing in Hollywood.

Moreover, to ensure the Lord of the Rings trilogy's success, using a multi-narrative small project as practice was a necessary choice.

As the party wound down, Duke and Charlize Theron exchanged no words. Instead, they tacitly boarded the same car and headed west toward Burbank.

"Have you heard, Duke?" Charlize asked. "Sony Columbia Pictures is planning to cancel the Godzilla sequel and temporarily shelve the franchise."