[Chapter 928: 4200]
Caroline and lanie brought most of their collected materials onto the plane in recent days. After hearing their suggestions, Eric asked them to present the information. The three delved deeper into discussion.
With the North Arican film market thriving in recent years, by 1997, the total number of screens in North Arica had surpassed 36,000, an increase of almost 10,000 from a decade earlier. This significant growth in the number of screens inevitably led to market saturation and intensified competition, resulting in the smaller cinema chains being absorbed and consolidated by the major players.
As of now, the top three North Arican cinema chains, Regal Entertainnt, AMC Theatres, and Cinemark, had expanded over the years and operated over 14,000 screens, making them the most comrcially valuable cinema groups in the country. While other smaller, arthouse, or regional chains still had far more screens combined than these top three, they faced various challenges such as inconvenient locations, outdated equipnt, and insufficient film resources, making it impossible to compete with these cinema giants.
For Firefly Group, trying to acquire smaller chains instead of targeting the top three would be less viable than starting from scratch to build a chain of cinemas. Even the top three chains faced issues to so extent due to years of over-expansion. Despite Regal Entertainnt having over 7,000 screens, it had the worst operating conditions among the top three and faced bankruptcy risks in the coming years.
On the surface, Regal Entertainnt seed to be an ideal acquisition target for Firefly Group. However, if Firefly really pursued that and gathered those 7,000 screens, especially those positioned in pri locations in major North Arican cities, the rest of Hollywood would be concerned. The other two chains had around 3,000 to 4,000 screens each, but Firefly would still face antitrust issues if they attempted to get involved.
...
In the study, lanie presented so data to Eric, saying, "Eric, look, the top three cinema entertainnt groups all have multiple sub-brands. Take Regal Entertainnt; it has three sub-brands: Regal Cinemas, Edwards Theatres, and United Artists Theatres. We could actually adopt this sub-brand operational model and partner with one of the top three chains. I think Regal would be best. A few years ago, after a major rger, it expanded to over 7,000 screens, but due to rising debt and chaotic managent, it has suffered losses in recent years. Our goal should be to select so screening rooms from their chain and create a sub-brand dedicated to showing 3D films through investnt and shareholding."
Eric's main reason for entering the cinema industry was to promote 3D films in advance and find a new profit growth point for the Firefly system. At the sa ti, he aid to lead the promotion of 3D movies.
Historically, the spread of 3D films had been quite chaotic. During the earlier phases of Avatar, nurous Hollywood blockbusters already had 3D versions, but the supply of 3D films remained scarce compared to North Arica's massive movie market. Without enough 3D content, the number of 3D screens in North Arica couldn't develop, and the inadequate supply of 3D films further discouraged studios from creating 3D versions of their films.
However, after Avatar, driven by huge profits, major film companies and cinema chains in North Arica rushed to produce 3D films and adapt cinemas for 3D. This rush naturally led to mixed quality in both the 3D content and theater systems, with many films and venues exhibiting poor quality, leaving viewers increasingly resistant to this format.
Once the quality of 3D films and theater projection systems t the standard, the visual experience of 3D films could be truly breathtaking. Furthermore, it could entice audiences, increasingly inclined to watch films on television or online platforms, to return to theaters.
What Eric wanted to achieve was to set 3D film promotion on a healthy developntal path, rather than allowing it to get misused by cinemas and studios overly focused on profits while using substandard projection systems and subpar conversion sources, which would ultimately doom this new film format.
After patiently discussing with lanie and Caroline, Eric finally declared, "So, this sub-brand will be called RealD."
Both won looked puzzled. "RealD?"
Eric nodded. RealD was actually the most popular 3D film projection system in the original tiline.
The primary issue with 3D film projection typically revolved around brightness. Unlike 2D films, 3D films would significantly diminish brightness during projection via the 3D projector, large screen, and 3D glasses. The brightness of movie screens is asured in a specific unit called FL (foot-Lamberts). Traditional 2D films, without many attenuation factors, easily maintained a brightness of 14FL, while 3D films typically retained only around 4.5FL after three levels of reduction. Many cinemas even deliberately reduced brightness to prolong the life of their projector bulbs, resulting in even further reduced brightness, which created a terrible viewing experience for audiences.
Confronted with the confusion in the 3D film market, later on, RealD not only developed a dedicated RealD projection system but also established a set of RealD certification standards. The most crucial rule stated that theaters showing 3D films must maintain a brightness of no less than 6FL.
At this mont, Eric planned to establish a comprehensive 3D film certification standard from the very outset. He researched RealD's status and found that the company had not been established yet. Therefore, he took the na without hesitation.
"RealD ans 'real 3D,'" Eric clarified to ease the won's confusion. He picked up a nearby pencil and wrote the newly coined term RealD on the blank space of his docunt. "Not only this sub-brand, but I also hope that the Digital Domain's developed 3D film projection system will use this na. We need to set a 3D film projection standard ahead of ti. In the future, cinemas wanting copies of Firefly system's 3D films will have to pass our certification."
lanie, understanding Eric's point now, nodded enthusiastically and said, "That's a good approach!" She thought Eric's motivation was mainly to monopolize the 3D film market.
Caroline also appeared to believe Eric harbored such ambitions, as evident from the guilty look on her face.
However, Eric did not actually intend to monopolize anything.
During the initial phase of 3D film promotion, by controlling the quality and projection standards, Firefly system could naturally enjoy exclusive profits for quite so ti, given its technological edge and cinema resource advantages. But in the highly open movie markets of Europe and Arica, other companies would rush to catch up once they saw Firefly profiting, so monopolizing the 3D film market was hardly feasible for Firefly.
Moreover, Eric didn't wish for Firefly to permanently hold onto these profits; monopolizing them for too long would surely dampen motivation for progress. Introducing competition was the best way to maintain long-term vitality for the Firefly system.
...
Before they knew it, several hours had passed, and when dinner ti arrived, Eric kept his promise to personally prepare the food. anwhile, Caroline and lanie stayed in the study to continue organizing the results of their discussions. Eric planned to discuss the detailed execution plans with the managent team in Los Angeles after the plane landed.
Not only did the RealD projection system and certification standards occupy their discussion, but Eric and the won also outlined a plan codenad "4200."
Eric aid to establish 2,000 certified 3D screens for Firefly Group in North Arica and overseas within the next two to three years, representing the 4,000 in "4200." The remaining 200 would involve another IMAX cinema plan.
Currently, there were only 54 IMAX screens across North Arica, located mainly in museums or science centers in major cities, and worldwide, fewer than 100 IMAX screens existed.
After watching an IMAX docuntary at New York's natural history museum two years ago, Eric had contacted IMAX Canada to urge them to accelerate the technical research and developnt for converting standard 35mm films to IMAX films, as previous IMAX films were limited to about 40-50 minutes in duration.
According to the data Caroline and lanie obtained from IMAX a few days earlier, the digital mastering technology (DMR) they had been developing would allow for normal-length films to be converted to IMAX films by next year at the latest.
Given that Gravity was set to be produced, Eric certainly would not pass up the opportunity to showcase this space epic's visual grandeur through IMAX projection.
Thus, as he aid to build 4,000 3D screens, he also planned to establish 200 IMAX theaters in North Arica and abroad.
...
After landing in London, Eric held a video conference with the Firefly managent team on Kensington Gardens Boulevard to discuss the plans for RealD and 4200. Those present in Los Angeles, including Jeffrey Katzenberg and Frank Wells, couldn't help but be taken aback by what they heard.
In Eric's plans, the RealD projection system required developnt in Digital Domain. This ant abandoning the current single-unit 3D projectors for a dual-projector system that could significantly increase brightness while reducing viewer dizziness. This led to potential reconstruction costs of up to $300,000 per 3D screening room. While this cost seed reasonable for a single screening room, modifying 4,000 screening rooms worldwide would necessitate an overall investnt of at least $1.2 billion, not to ntion the substantial ongoing operating costs.
Similarly, constructing 200 IMAX theaters from the ground up, even at a cost of $2 million each, would still be an expenditure of $400 million.
In summary, to promote 3D and IMAX, Firefly Group would need to invest no less than $1.6 billion with the additional operating costs expected to be substantial as well.
Though $1.6 billion wouldn't suffice to buy Regal Entertainnt, the leading cinema chain in North Arica, it could easily cover the acquisition of AMC, the second, and the third-ranking Cinemark chain. Eric had intentionally suppressed Firefly Group's expansion for the past two years, which ant those executives like Katzenberg who wanted the company to keep growing were holding onto their frustrations. However, when presented with Eric's ambitious expansion plans, they couldn't help but beco apprehensive.
Was investing $1.6 billion in an uncertain market for 3D and IMAX truly worth it?
What if it failed?
Eric understood Katzenberg's concerns perfectly. This mindset was also a major reason why, for many years, 3D and IMAX could not be widely adopted; no company was willing to pour $1.6 billion into a project without a clear market outlook. After all, if the major Hollywood studios did not perform well, their collective profits over several years might not even reach $1.6 billion.
Given that Eric had invested heavily in the Nasdaq market in recent years, Firefly's current surplus was certainly not more than $1.6 billion and might even drop below $1 billion.
To be fair, had he not clearly seen the future, Eric wouldn't dare to rashly risk $1.6 billion on the two plans. Money didn't co easy, and he had never thought about throwing money away.
In the study of his Kensington Gardens villa, Eric sat in his office chair, watching the hesitant and advisory expressions on Katzenberg and the others who were far away in Los Angeles through the video conference. He tapped the table decisively and stated, "Everyone, this is my decision. What you need to do now is to take imdiate action. First, within two years, I want to see a complete RealD projection system and better 3D conversion technology developed in Digital Domain.
Second, starting now, negotiate with the major cinema chains across North Arica and overseas to secure the renovation contracts for 4,000 3D screening rooms I need. Once Digital Domain completes the developnt of the RealD system and we have the films to provide for the 3D theaters, I want to see these 4,000 screens retrofitted with 3D projection systems worldwide within three months.
Third, continue to push IMAX to accelerate the developnt of DMR conversion technology. If they need funds, then provide them; if they cannot continue running, we should purchase them. anwhile, you all need to acquire land in major cities worldwide so that while completing the renovation of 4,000 3D screens, I also want to see 200 IMAX theaters constructed. Are there any questions?"
After Eric finished speaking, his eyes fixed firmly on the Firefly Group executives hundreds of miles away in Los Angeles through the high-definition cara.
Katzenberg and the others had never regarded Eric as a domineering boss. Yet, this ti, despite the distance of thousands of miles and through the video screen, they could still sense his determination.
Exchanging glances, they no longer raised objections and began discussing the substantive issues that needed to be resolved to execute this plan.
*****
spatreon/Sayonara816.
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