Chapter 522: The cash flow of the old film library

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"Mr. Morris, I have been very sincere. MGM is the most prestigious film and television company in Hollywood, from its establishment in 1924 to the present, we have won a total of 170 Oscars, at the peak of which there are Greta Garbo, Charlton Heston, Clark Gable, Katharine Hepburn, Gary Grant and other great actors who shine in Hollywood history, is the undisputed symbol of American cinema and Hollywood, and dominates the major film and television companies. ”

"Although we are now experiencing difficulties for the time being. But MGM still has more than 4,500 feature films and more than 10,800 TV episodes, including the famous animated "Cat and Mouse," the enduring franchise "007," and "The Wizard of Oz," "Gone with the Wind," "Rocky," "Singin' in the Rain," "Modern Times" and other cult classics, and its vast library of films generates about $530 million a year. So, even if there is no external capital, we can still operate normally. ”

After a pause, Gary Barber said with a confident expression, "If it weren't for the sincerity of Mr. Guo and Matrix, I wouldn't have agreed to meet today. Also, the matrix isn't the only one we work with. Sony Columbia, Twentieth Century Fox, and other investment institutions that are already interested in the film and television industry are all potential collaborators. ”

Guo Shouyun frowned slightly, in fact, the main purpose of his acquisition of MGM was the film library. For all Hollywood studios, the huge film library is their 'invincible little treasury' and a stable source of finance, which can ensure that they can provide stable cash flow in the event of a crisis.

And the methods of developing the film library are also diverse in Hollywood.

First of all, upgrade and re-screen. For example, in the 80s of the last century, Hollywood studios began to convert black and white films into color re-screenings, and in 2002, IMAX developed an image technology that can convert traditional 35mm films into 70mm film through digital processing. With the deepening of the commercialization of IMAX screening, some classic films such as "Beauty and the Beast", "Apollo 13", "The Lion King" and other films have been converted into IMAX format and re-entered the theater for distribution.

The most famous of all these movies is "Titanic", Paramount and Twentieth Century Fox spent $18 million to transform "Titanic" into 3D mode, re-released on the 100th anniversary of Titanic's silence, and achieved a good box office, just in China alone, the box office revenue is close to 1 billion Chinese dollars.

In addition, the cost of converting the film to 3D mode is relatively low, and it is expected to decline further as technology advances. For example, in 2002, the cost of converting an old movie to 3D was $100,000 per minute, but now, for the same amount of time, the cost has dropped to $25,000 per minute. So, using 3D technology to convert those popular old movies in the library is a surefire business.

Secondly, television rebroadcasts and audiovisual distribution.

Because the big screen can accommodate a limited number of films, most films do not have the opportunity to be re-screened in theaters on a large scale. But they can still create market value through other distribution channels that can accommodate more films. For example, television, which became popular in the 1960s, videotapes in the 1980s, DVDs in the 1990s, and Blu-ray discs since the new century, each time a new distribution method appears, it will set off a boom in the development of film library resources.

In the forties and fifties of the last century, after television appeared on the stage of history, it was once regarded as an enemy by Hollywood studios, but after a run-in, television became an important source of income for studios, and in the seventies and eighties of the last century, with the development of new television networks such as cable television and satellite television, some specialized movie channels, such as HBO, Shotime, Movie Channel, Sundance Movie Channel, independent film channels, etc., have emerged, and the demand for film broadcasting is increasing. The studio's library resources are also full of endless business opportunities.

Time Warner, for example, launched This TV, a television service in 2002, which provides broadcasters around the world with round-the-clock access to their film and television libraries, with a share of the ads. The service quickly gained popularity with local television stations, which proliferated with channels, and is now available to nearly 80 million U.S. households.

In addition, audio-visual distribution is the most important way for Hollywood to develop film library resources, although in recent years American movie DVDs and Blu-ray discs are generally in a downward trend, but the situation of library movies in audio-visual distribution is better than that of new movies, because those who like old movies are often film fans with higher education and income levels, and they buy audio-visual products of library movies with the purpose of collecting, and their consumption is relatively stable.

In 2002, library films generated $2.1 billion in distribution revenues, accounting for 44 percent of total U.S. film and video distribution revenues, 10 percentage points higher than in 2001.

For Hollywood studios, re-releasing old movies can generate higher profit margins, especially Blu-ray discs, which often sell for more than $20, while a more successful movie can sell 100,000-200,000 copies. In order to increase revenue, studios began to increase the number and variety of old films released, and also carried out special topic planning or promotions, such as distribution kits, commemorative editions, etc. For example, in 2001, Universal Pictures celebrated its centennial and used it as an opportunity to restore some of its most famous films, which were released on Blu-ray Disc, including "All Quiet on the Western Front," "Spartacus," and 1983's "Scarface," which generated nearly $20 million in revenue.

Finally, new opportunities for online development.

With the growth of Internet users, video sites like Netflix provide a new market for studios' library resources. Netflix alone pays more than $1 billion a year to major Hollywood companies, and most of its tens of thousands of films come from the Hollywood library.

And Hollywood's major studios are increasingly aware of the value of online development in the long-tail market of film libraries. For example, Hulu, which was jointly founded by Time Warner and Matrix last year, and Prime Video, which Amazon is already planning, are among others.

In addition to online screenings, some companies are also targeting the online entertainment app market to tap the value of their film libraries. For example, under Guo Shouyun's suggestion, Ruby Company and Matrix have jointly developed a game system, by selecting some classic movie clips, allowing technicians to erase the main characters through the computer, and users can synthesize their own image into the movie clip scene, and perform with the original characters of the movie, users can say the original lines of the movie, and can also say the lines created by themselves, the game software is also equipped with an electronic teleprompter, Location prompt, users can try as many times as they want to get the desired result, and upload the combined video to social and video sites such as Facebook and YouTube.

In order to use these features, users need to pay $169 for a dedicated camera and buy movie clips for $1.99 or $2.99 each, with the original copyright owner receiving a cut of each download. Through this innovative development method, Ruby has gained the most desired user stickiness and increased advertising revenue, while Matrix's revenue from the old film library has increased by a large chunk.

Officially recognizing the increasing value of the old film library, Guo Shouyun plans to swallow MGM and its Lianyi in front of Sony Columbia and other consortia. If the deal goes through, the matrix, which sits on Universal, MGM and United Arts, will have a vast library of more than 9,600 feature films and nearly 20,000 TV episodes. In the last century, he already owned three of the eight major Hollywood movie giants, but the cash flow from the old film library reached $1 billion every year.

In addition, the matrix that owns the rights to many popular movies such as the Marvel Universe, Pixar, the "Pirates of the Caribbean" series, the "Harry Potter" series, the "National Treasure" series, the "Hobbit" series, the "Transformers" series, the "Fast and Furious" series, etc., also owns the brightest future of Hollywood.

If Hollywood's No. 1 and world's No. 1 old film library represents the past, and Marvel, Harry Potter series and other popular films represent the future, then the matrix will be the most glorious film and television company in the past, present and future, and this result will not change for at least 30 years.

Of course, if you want to achieve this grand goal, you need to take down the seemingly stubborn MGM CEO in front of you.

"I admit that MGM and United Arts' film libraries do have a lot of value. But that only means you have a good past. When it comes to production capabilities, MGM can only be considered second-rate in Hollywood now. The failure of "The Wind Whisperer" is the best example of this. ”

Guo Shouyun's unscrupulous words to reveal the scar stung Gary Barber. However, Guo Shouyun did not give him a chance to speak.

“… After the failure of "The Windwhisperer," MGM's debt has climbed to a staggering $2.73 billion. Interest on debt payments alone is close to $200 million per year. While you can get about $530 million in revenue from the library, you don't have much to invest in the production of new movies after paying off interest and some debt, as well as deducting some working capital. After a pause, looking at Gary Barber, who had an ugly face, Guo Shouyun smiled faintly, "And as far as I know, MGM has a debt of more than $640 million due in July next year." I wonder how Mr. Gary Barber will repay this loan?"

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