Dancing with Elephants: Navigating Hollywood Studios

Lunch & Learn

April 22, 2016

https://www.linkedin.com/in/albert-chow-584a4a1

Albert Chow

Agenda

• Quick Intro to the Hollywood Theatrical Studio

• A Case Study for Basic Business Planning

• Valuing the Importance of Understanding Market Structures

• Q&A

Founders: Sean Parker & Prem Akkaraju

Concept (March 14, 2016):

• New theatrical releases to the home for $50 for 48 hour viewing

• Plan to give exhibitors $20 of the $50 fee

• Purchase secure hardware for $150

Case Study: The Screening Room

Movies at the Theater

Movies in the Comfort of Home

Response from Hollywood So Far…

“Have fun storming the castle”

Check the Boxes

Customer

Competition

Company

Product

Pricing

The Studio Landscape

Majors

Mini-Majors

Independents Over 50+ distributors of independent films releasing one or more

movies a year

The Value of Content

High Value

High Demand

Low Value

Low Demand

Theatrical

ReleaseHospitality

Digital

& Home

Video

Pay Per

View &

Video on

Demand

Premium

Channels

Networks

& CableSyndication

At the Heart of Studio Motivation

$11.2 Billion Domestic Box Office (2015)

$39.1 Billion Global Box Office (2015)

Protect, Maintain (and hopefully Grow)

… and their Core Fears

• Cannibalization of Existing Business

• Piracy

Understanding the Value Chain

Studios

Talent

(Content)

Support

Exhibitors

(Distribution)

Agency

Producers /

Directors

Technology Legal Other

Movie Theaters

Enlisting Advocates in the Ecosystem

If you don’t already have (or even if you have) your own industry relationships:

• Enlist and co-opt key skeptics and opponents

• Advocates amongst leading suppliers of your suppliers

• Previous industry executives and leadership

• Critical gatekeepers

Disruptive Technology & Hollywood

“The Rule of 3”

End of the Day: Economics need to Work

Price point: $50 for 48 hour viewing window

Suggested share to Exhibitors Plus 2 tickets: $20

Remainder: $30 to be shared between studios and company

Additional 1 time: $150 box price point

40% to Exhibitors. Healthy

but if free tickets thrown in

not so much

Studios typically take

anywhere from 50 – 90% of

the ticket price. Not

enough revenue to be

interesting

Poll taken and sweet spot

was $35 and no new box

Basic Business Planning Takeaways

Focus on Core Business Frameworks

Customer

CompetitionCompany

Product Price

Place Promotion

Another for the Toolkit: Porter’s Five Forces

• Add to your toolbox if its not already there

• Key to financing often is beyond just your company or tech:

• Market Size• Market Structure• Incumbent Strength &

Weakness • Microeconomics

In Closing

Importance of Market Structure in your business planning

• Assess where the power exists (e.g. Suppliers, Buyers) and how concentrated or segmented is it?

• What is their respective psychology and motivations?

• Do you or your company have the right credentials? If not do you have supporters that do?

As an Entrepreneur it’s never a question of if…

but when and can you afford the time & investment to change the landscape?

Select resources for those with Hollywood Aspirations

• Both Creative Artist Agency (CAA) & William Morris Endeavor (WME) have venture investment entities

• Manatt also has a venture investment entity

• Disney has a formal accelerator in conjunction with TechStars

A small sample set of the various Venture Oriented

initiatives in Hollywood

Thank you

https://www.linkedin.com/in/albert-chow-584a4a1

Albert Chow