[Chapter 844: Taking Control of the Future]
Easter had just passed, and due to being too busy, Eric didn't make it back to New York to spend the holiday with the kids. However, he promised the won that he would return to East Hampton before April 10th, as the two little ones were about to turn four.
On a new Monday at a restaurant in Firefly Studios, Eric had breakfast with Katzenberg, discussing the recent buzz surrounding three animated films set to be released during the sumr blockbuster season.
"The Lion King 2 was greenlit at the sa ti as Paramount's Pocahontas last year," Katzenberg explained. "Even though it's been three years, the influence of the first Lion King is still strong. Roger Allers has taken three years to perfect this movie, and the animation quality will likely be just as impressive as the original. The best we can do now is make it difficult for Paramount with our promotions."
Katzenberg took a sip of his juice and continued, "I've spoken with Mr. Murdoch several tis. During the upcoming two months of promotion, Firefly's ABC network, Disney Channel, and all our TV platforms will not show any promotional material for The Lion King 2. Instead, viewers will only see ads for Finding Nemo and Ice Age. At News Corporation, platforms like Fox and Fox Family Channel will do the sa. We're also going to try to grab ad spaces for trailers on NBC and CBS. According to our projections, when all these plans are implented, Paramount's publicity budget may only achieve half of what it normally would."
Business competition was never warm and fuzzy. During the advertising push for Titanic at the end of last year, Viacom's MTV, which targeted a teen audience, outright refused to run trailers claiming there were no available ad spots. As film releases beca more widespread, the importance of marketing efforts for box office success beca increasingly apparent, especially with how significant a percentage of the total investnt budget had shifted toward marketing.
This ti, whether in retaliation for Viacom's actions months earlier or simply out of competitive necessity, it was crucial for Firefly to completely block The Lion King 2.
Viacom's best television asset at that mont was just MTV. Their Nickelodeon channel, aid at children, didn't even compare to Disney Channel in terms of audience size. Since the internet was just starting to gain traction, the mainstream thods for movie promotion still largely relied on TV trailers, print dia ads, and plastering posters on a multitude of public spaces. Among these, TV trailers were undeniably the most effective, especially for animated films, as a significant portion of their audience -- kids and teens -- often didn't read newspapers or magazines.
The joint ban from ABC and FOX ant that The Lion King 2 would lose at least half of its television advertising platforms in North Arica. With Viacom's television resources limited and facing competition from Firefly and Fox on external platforms like NBC, Paramount would have to pay a higher price for The Lion King 2's promotion, while the final marketing results would likely fall far short compared to Finding Nemo and Ice Age.
Once Eric finished his breakfast, he leisurely sipped on a cup of hot milk. After listening to Katzenberg's discourse, he asked, "Have you considered that Viacom might provoke the dia about The Lion King 2 being banned?"
"Of course. Our response is straightforward: unless necessary, we will ignore them. This way, we can avoid giving Paramount any opportunity to stir up the topic. We discussed this in last week's eting. If Viacom makes similar claims in the dia, no departnt at Firefly will respond publicly. Besides, we're operating within legal bounds. If anyone raises concerns, we have ample evidence to demonstrate that all our ad slots are already sold out," Katzenberg said, shrugging as he broke into a slight smirk. He added a vivid analogy: "If there's no opponent to challenge, a person throwing punches into the air just looks ridiculous."
Eric chuckled and said, "I guess after this, Redstone will be determined to make another play for NBC."
"GE won't sell NBC anyti soon. As for CBS, based on its current market value, Viacom would need over $30 billion to buy it. With cable networks steadily eroding market share from public television, even if that price dropped by half, I wouldn't consider it worthy. When we acquired ABC, if it weren't for our shares in ESPN and A&E, it would have started looking pretty bad by now."
Eric replied, "But Redstone isn't likely to see it that way. His perspective is still anchored to two decades ago, during the peak of public television."
He recalled that Viacom had invested a staggering $46 billion to acquire CBS but faced prolonged losses in the aftermath due to the pressure from the cable industry. Years later, to avoid being dragged down by CBS's underperformance, Viacom had to spin off CBS and other profitable cable channels like MTV.
Sumr Redstone was undoubtedly an ambitious person. However, perhaps due to the limitations of his ti, he often lacked foresight. While Viacom had grown increasingly massive during the dia consolidation wave, it later proved that both the acquisition of Blockbuster Video and CBS were disastrous decisions, causing Viacom to slide from a first-tier dia giant to a second-tier group in the new century.
The two then shifted their conversation to the release strategies of other films for the sumr season. At last, Katzenberg hesitated and said, "Eric, regarding the recent digital music distribution rights, Barry Weiss and I had a talk, and he seed quite anxious. I also feel that your digital distribution strategy for Firefly Records has been a bit too aggressive."
Barry Weiss was a high-ranking official Eric had recruited from Sony's JIVE Records and currently served as the president of Firefly Records. Over the last two years, Barry had propelled the Backstreet Boys into the elite ranks of pop artists, even achieving global sales of over 20 million for their first album last year.
In addition to the Backstreet Boys serving as the cornerstone, other artists under Firefly Records had also made good use of the group's extensive dia resources and were developing steadily. Forr MMC (Mickey Mouse Club) mbers like Christina Aguilera, Britney Spears, and Justin Timberlake had all released successful singles last year after years of training, and Firefly Records was now moving forward with plans to create tailor-made albums for them.
Eric was thus quite pleased with Barry Weiss's recent successes.
Upon hearing Katzenberg's comnts, Eric felt no surprise. He said, "Jeffrey, I assu you've seen the digital distribution proposal I submitted to Firefly Records, right?"
Katzenberg nodded, "It seems akin to the phased release of films. There's a three-month physical album release window, followed by a digital release on Yahoo Music three months later. Though the window period might be short, it's acceptable. But the major concern is splitting the album into singles for individual sale six months after the album release; Barry believes this would severely impact album sales."
For many albums, unless one was a die-hard fan, most people typically only liked a song or two. Historically, record companies had leaned into this strategy to save resources and maximize profits; crafting an average song was undoubtedly easier and required less investnt than creating a classic track. Yet, splitting albums could lead to many diocre songs receiving no attention at all, posing a considerable threat to the longevity of the record company's business model.
"Jeffrey, let's set aside the rits of this proposal for now," Eric said, pulling out his frequently carried Fireflyer from his pocket. "You're undoubtedly familiar with this player, so let's run a hypothetical. If this player were developed by a company you personally owned, without any ties to the record industry, how would you promote it to maximize its outreach?"
Katzenberg had recently realized that the Fireflyer had the potential to outshine traditional portable music players.
Presently, Sony's Walkman remained the market leader with annual sales around 15 million units, with other CD players and MDs similarly hovering around that figure. In other words, the annual market capacity for portable music players was approximately 30 million units. If Fireflyer could seize this market completely, with the standard net profit margin for electronic devices being around 15%, a Fireflyer priced at $299 would yield about $45 in profit. An annual volu of 30 million units would bring in a profit of $1.35 billion -- enough to rank within the top 100 profit-generating companies worldwide.
Katzenberg was not one to be overly tied to a stringent moral code; given the enormous business possibilities embedded in this player, he would undoubtedly pursue the most advantageous promotional strategies possible -- even if it ant quietly allowing the spread of online pirated music. The record industry's survival would be of no concern to him.
In line with this reasoning, if handed the reins of Firefly Electronics now, he wouldn't hesitate to discard the interests of Firefly Records entirely. While Firefly Records had perford well in recent years, it contributed less than $100 million in profits annually. Even if it evolved to a big player among the five major record companies, it would still pale in comparison to the potential profits the Fireflyer could generate. After all, the value of the music industry couldn't hold a candle to the film industry; none of the top five record companies had an annual profit exceeding $1 billion.
Having worked together for so long, Eric thoroughly understood Katzenberg's character. After observing his mont of brief contemplation, he just smiled without saying anything else, as Eric could guess what he was thinking. Then he said, "This world is never short of smart people. The MP3 audio format was initially launched five years ago, and I can quite confidently speculate that traditional music device manufacturers must have harbored similar ideas for a player like Fireflyer during that ti. Yet, to protect their established players and their substantial interests in CDs and tapes, they instinctively would have sought to avert such projects. But that's not the worst outco. As I hypothesized earlier, if a similar player were produced by an electronics company with no connection to the record industry, they would certainly prioritize their interests over drama with record companies. They would need only a noble pretext: for instance, claiming that their player could only copy music from original CDs. After that, they could mass-produce and promote the product, with no qualms about where users obtained their music. Would you think they'd care?"
"And you?" Katzenberg suddenly asked, "Eric, do you care?"
Eric smiled, leaned back comfortably in his chair & replied honestly, "No, I don't care either."
Katzenberg followed up, "Then why do it?"
Eric pondered for a mont before responding, "Because I want to gain the initiative, or to put it more bluntly, I rely wish to beco a rule-maker, rather than sitting stagnant, waiting for others to establish the rules -- or worse, to be replaced. So, Jeffrey, if you dedicated more attention to Yahoo, you'd notice that they're already developing an MP4 video format based on MP3. If the IT industry continues developing in accordance with Moore's Law, it won't be long before Hollywood faces a similar situation as the record industry now does. At that point, the simplest way to survive better would be to beco a rule-maker rather than futilely criticizing others or blindly resisting erging technologies."
Katzenberg had always admired Eric's extraordinary insights into the film and investnt industries. However, he often thought Eric lacked a commanding presence that a leader should possess, being overly gentle and lacking aggression in various matters.
But now, in that little restaurant at Firefly Studios, Katzenberg suddenly realized that Eric's vision was far broader than he had previously comprehended. Not only did he have a grasp on the present, but he even intended to control the future.
Katzenberg also recognized that maybe he was rely a pawn in Eric's ambitious strategy for the future, that pawns ultimately couldn't see the entire chessboard layout. They could only observe everything within their designated paths and arrogantly point fingers at the moves made by the player.
Would he willingly remain a pawn?
Katzenberg asked himself, but his inner self quickly provided an answer: Why not?
How many people in the world dared to claim they were not pawns? Countless people might go through their entire lives never encountering the opportunity to play with those making the moves. Yet now, he not only had that opportunity but could consciously collaborate with the player to create the future -- far luckier than those who lived their lives without purpose.
"Eric, I have a decent relationship with Geffen. Perhaps I can give him a call to invite him to the Fireflyer launch in San Francisco on April 2. What do you think?"
David Geffen's record label had once been a significant subsidiary under Warner Music Group, holding music rights nearly equivalent to Firefly Records. Katzenberg and David had always been good friends; when Geffen first left Ti Warner, Katzenberg had even suggested to Eric that they acquire Geffen's record company, which Eric had declined.
Eric was unsure about the quick shift in Katzenberg's mindset in such a short ti, but since he was willing to extend an invitation, Eric wouldn't refuse.
"Sure! If he's open to it, we can all gather then."
After finishing breakfast and chatting about a few other things, Katzenberg needed to head to the Burbank headquarters for their weekly eting, and the two went their separate ways.
...
Eric also had a busy day ahead.
In the morning, he would review the rough cut of Jurassic Park 3 and discuss the subsequent post-production effects with director Joe Johnston and the digital post-production team. Lunch was scheduled with Jerry Bruckheir and Michael Bay to discuss the disaster film project The Day After Tomorrow. This project couldn't be delayed any further; Eric planned not to personally direct it, and the company couldn't continue waiting. Coincidentally, Michael Bay had just completed Bad Boys II and was looking to try his hand at working on special effects instead of pursuing Bad Boys III, leading Jerry Bruckheir to suggest handing The Day After Tomorrow over to Michael Bay's directorship. In the afternoon, Eric would attend the final round of auditions for the lead role in Fox's Dark Angel. Eric no longer had much interest in appreciating or even hunting beauties through auditions. He didn't need such complicated routines to get any woman he wanted now. But since he took the initiative to take on this job, he had to show his face symbolically.
Given that Jurassic Park 2's box office results were nearly on par with the first film, and Joe Johnston still insisted on negotiating for a higher salary for Jurassic Park 3 despite having a prior choice option agreent, it had taken them three months of negotiations to reach an agreent on the salary. The writing of the third film's script and the assembly of the team hadn't been nearly as seamless as the second part. Thus, the planned two-year production schedule extended to two and a half years, putting the release of Jurassic Park 3 in the holiday season at the end of the year.
Jurassic Park 3 only just wrapped shooting right before the Oscars, with Jerry Bruckheir still serving as producer. Originally scheduled for noon, Michael Bay, wanting to grasp the post-production process better, had actually arrived at Firefly Studios in the morning accompanied by Jerry Bruckheir to sit in on the discussions about Jurassic Park 3's post-production plans. Eric was very content with Bay's attitude. After completing the morning's work, his doubts eased, and he decided to let Michael Bay handle the making of The Day After Tomorrow. When lunch ca, they directly discussed the production plans for The Day After Tomorrow.
*****
spatreon/Sayonara816.
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