Heads Up Hollywood

In Tang En's view, Michael Ovitz's ideas were too traditional.

Michael Ovitz believes that the reason why he was able to attract investment for the film is because he is in charge of the film crew, and he can use the signboard of a big director and a big star to persuade investors to invest in the film.

He can even change the director or lead actor according to the investor's preferences, or provide an outstanding role for the investor's "Xiaomi".

Through this way of controlling the crew members, they can obtain the approval of investors, and then fulfill their service commitments to the film company, and complete a series of all-round packaged services such as stars, crew members, and investment.

This kind of thinking is of course correct. Movies are the creation of stars, but they are not a way to make big money. The reason why many rich people invest in movies is often not for making money, but for favors, face, image promotion, or to please their little girlfriends.

This kind of thing is very common in the enlightenment stage of the film market.

For example, in Hollywood in the past, there was a very popular BD relationship.

B is sugar_Baby, and D is sugar_Daddy. To put it bluntly, it is the relationship between godfather and goddaughter.

However, with the change of the social atmosphere and the maturity of the film market, this kind of relationship has almost disappeared in Hollywood, and only survives on the fringes of the entertainment industry. This type of girl usually has a specific title called "Wannabes", which refers to people who want to become stars but have not yet achieved it.

On the other side of the big developing country, with the vigorous development of the film market, the "sugar daddy" culture was gradually born, and "Wannabes" appeared, that is, "peripheral women".

Tang En has a vision that transcends the times. His vision is naturally broader and more accurate than Michael Ovitz. He knows the financing mechanism that should exist in a correct, healthy, rational, and mature film market.

It is definitely not relying on big stars or peripheral women to guide investment!

Tang En said with a smile: "Michael, I think... your thinking is narrow."

"Um?"

Michael Ovitz was not very happy.

Tang En is unmatched in film production, which he admits, but when it comes to the company's strategic vision, he has never been convinced by anyone.

Otherwise, at Disney, he would not have had a violent conflict with Michael Eisner, and he would have just followed his orders.

Tang En said slowly: "Michael, the times have changed, and the box office appeal of stars to movies is gradually weakening. The old method of attracting investment through the names of big stars and big directors will gradually lose its effect."

Michael Ovitz's tone was not very good, "Can't celebrities? Well, then tell me, besides celebrities, what else can attract investors?"

"Of course it is enough interest!" Tang En replied immediately without hesitation.

Michael Ovitz said lightly: "Yeah, if you can see enough returns, then the whole world must rush to invest in movies. The point is, most of those investors are laymen. They don't understand movies and have no stars." How do you convince them? With one mouth? "

Tang En laughed loudly and said, "Of course you can't open your mouth. Even if you have the eloquence of President Reagan, you can't do it!"

Michael Ovitz frowned, looked deeply at Tang En, and narrowed his eyes, "Listen to your tone...is there a way?"

"certainly!"

Tang En raised his chest proudly, showing indescribable confidence.

Michael Ovitz said dubiously: "If you can really solve this problem, it will point out a clear direction for Hollywood to move forward. The whole Hollywood will thank you, and Disney's problem will be solved."

Tang En said with a smile: "I'm still young after all, so I can only come up with a general idea. For specific details, I need you to help improve it and contact investors."

Michael Ovitz waved his hand, "Of course, this is not only helping you, but also helping AMG."

As soon as Tang En reached out, he asked the secretary for a carefully prepared document and handed it to him, "The first set of data shows that in 1975, the average production cost of American movies was 5 million US dollars. In 1987, this figure reached 2000 US dollars. In 1999, the average production cost exceeded 40 million U.S. dollars, and the marketing cost also reached 15 million U.S. dollars. It is conceivable that this figure will continue to grow in the next few years, and it is no longer possible for investors to only look at If you get the names of a few movie stars, you will take a huge risk to participate in the investment.”

Michael Ovitz flipped through the materials provided by Tang En, with a heavy expression on his face, "With the substantial increase in budget costs, even if the overseas market conditions remain the same, it is impossible to raise enough budgetary funds through pre-sale of copyrights."

"That's right, that's the truth!" Tang En snapped his fingers, and a smile appeared on his face immediately, "The second statistic is good news, the internal rate of return of the film company."

"Internal rate of return?"

A bit of surprise flashed in Michael Ovitz's eyes.

Tang En said with a smile: "The internal rate of return, that is, the return rate of the film. Even though Columbia Pictures has been losing money in the past few years, the return rate of the film has never been lower than 14%. Especially in 1997, because of the release of "Men in Black" , "Air Force One," "As Good as It Gets," "My Best Friend's Wedding" and more, with a 23% internal rate of return!"

Columbia Pictures has been losing money since being acquired by Sony.

But this does not mean that the films produced by Columbia Pictures have been losing money!

Columbia Pictures has been losing money year after year because of the difference in management styles between the United States and Japan, which has led to a surge in operating costs, as well as the salaries of more than 10,000 employees in the global distribution department.

Since Columbia Pictures was acquired by Sony, many original partners of Columbia Pictures have turned to cooperate with other film companies.

As a result, Columbia Pictures maintains a huge global distribution department, but does not have enough films to distribute, and naturally cannot make ends meet.

However, although the film revenue is not as good as Warner, Fox, Universal and other companies, it has not been bad.

Michael Ovitz didn't quite understand what Tang En meant, "What does this mean?"

Tang En waved his hand, "Don't worry, listen to me. In the past few years, the films of 20th Century Fox and Warner have been the most successful in the box office market. I have a detailed internal rate of return form for Fox in the past 5 years. You You can take a look. In 1995, the lowest, the internal rate of return reached 17%, and in 1997, the highest, because of the release of "Titanic", the rate of return was as high as 36%!"

Michael Ovitz frowned, not understanding Tang En's intention at all.

Tang En's voice was a little raised, and his expression was a little excited, "Michael, didn't you notice? If the film company's operating costs, employee salaries, and the film's expenditures on project approval, cut in half, cooperation and breach of contract are eliminated, then the film company The rate of return will be the most enviable investment industry in the world!"

"But... How is it possible to avoid these operating costs?" Michael Ovitz asked in a deep voice.

Tang En said with a smile: "Of course it's impossible to exempt the company's operating costs. But the investment you brought in for the film company is aimed at the film, not the film company, right?"

Michael Ovitz's eyes suddenly lit up, as if realizing something.

Tang En struck while the iron was hot, and continued: "No film company can guarantee that all the films it produces will make money, but the internal rate of return of each film company has good data. What does this mean?"

Michael Ovitz quickly said: "This shows that the film projects that make a lot of money are used to fill the loss-making film projects. This kind of large-scale film output is the root of the film company's excellent internal rate of return."

"That's right, that's the truth!"

Tang En slapped his hands and looked very excited. He had always been afraid that Michael Ovitz was a stubborn old man, and his half-assed views could not persuade him.

Now it seems that Michael Ovitz's vision and vision are really superior.

In a few words, Tang En let him understand the truth behind it.

Michael Ovitz also looked excited. Tang En's proposal, like the hand of God, opened a new window in his life for him.

In the past, he believed that big stars were the foundation for attracting film investment.

So after building a "one-stop shopping" service for the AMG brokerage company, they have been digging some big Hollywood stars to join them.

However, the relationship between Michael Ovitz and Disney is cold, and there is almost no possibility of cooperation. As a result, first-line stars are not willing to join AMG, which naturally shatters his idea of ​​attracting investment for the film company.

But Tang En's words...

It made him finally understand the truth that a movie star is not the biggest guarantee for investors' favor at all, it is the film company's excellent, excellent and surprising internal rate of return!

If you only invest in one movie, even if you have the biggest director and top superstar joining, there is still a risk of investment failure.

But adopting a large-scale investment similar to that of a film company, investing in 20 films in a row, using profitable projects to make up for loss-making projects, after this large-scale investment, even Columbia Pictures, which is the bottom of the six major companies, after one year, You can also get a minimum return on investment of 14%!

When you are lucky, it can even exceed 20%. If you encounter movies like "Titanic" and "Spiderman", the rate of return will even exceed 30%!

With this document provided by Tang En, Michael Ovitz successfully found the ultimate trump card to attract investors!

But Dunn hadn't finished his calculations yet, and his next sentence almost made Michael Ovitz cheer with excitement——

"You know, I have some friends on Wall Street. According to the data provided by Merrill Lynch, the internal rate of return that Wall Street hedge funds seek is usually between 12% and 18%. will face a loss of more than 20%. In contrast, large-scale film investment is the business with the lowest risk and the highest return!"