Modern Cinema Group is the newest Hollywood studio chartered to radically alter the way movies and television series are financed in a world of TV Everywhere. Within this new studio model, the world’s largest Video Service Providers (VSPs) are empowered to become profit participants within a co-operative structure designed to finance, market and distribute Hollywood-produced movies and television series.
Note: VSPs defined as: Mobile Carriers, Streaming Services, Satellite, Cable and IPTV.
As for these VSPs, the model allows them to compete more effectively against fierce competitors during a period when subscriber bases are expected to shift dramatically. The Modern Cinema Group business model focuses on two primary goals as follows:
At a high level, the model works as follows:
Example: AT&T/DirecTV is encouraged to co-finance movies with like-minded VSPs in the United Kingdom, South Africa, France and Japan with no fundamental threats to its own territories. The resulting partnerships allow for the perpetual development and distribution of Hollywood movies and TV shows, with production costs shared proportionately among the collective VSPs. This is all facilitated by a new studio based in Hollywood that is chartered to provide the resources and personnel necessary to accomplish these goals.
For their participation, the constituent VSPs receive the following:
For the benefits listed above, VSPs will be expected to contribute the following:
Financing: VSPs will collectively provide up to half of the production financing for each production. The other half of the production financing to be provided by Modern Cinema Group and its network of investment banks.
Marketing: VSPs will provide large numbers of ad “avails” (or ad spots) for each movie released, significantly lowering global P&A costs.
Distribution: VSPs to offer local and regional facilities and resources that significantly lower the cost of operating a global distribution infrastructure, therefore greatly reducing external distribution fees.
Social Media and Loyalty Campaigns: VSPs assist with social media-based marketing and promotional activities designed to increase local awareness leading to larger box office sales in aggregate. These activities to include interfacing to popular Apps and Loyalty programs in addition to other consumer-facing services (web sites and messaging facilities).
Therefore, the integration (or weaving) of a global VSP network into studio model can significantly increase the efficiency throughout the distribution supply chain as further described in the diagram below:
All in-house productions and most acquisitions will be expected to enjoy a full world-wide theatrical run. This means all movies will benefit from world-wide promotional campaigns. From there, VSPs enjoying both early release windows and longer periods of exclusivity for well promoted and high-profile titles.
Acting as its own global distributor, Modern Cinema Group plans to leverage facilities and resources from its VSP constituents in order to generate profit margins that are significantly larger than those of the incumbent international distributors. By leveraging such an infrastructure, equity owners enjoy larger gross profits as external distribution fees are reduced significantly. Although “in-house” distribution has its own associated costs and expenses, the gross profits are still higher than would be generated by selling distribution rights, and ancillary revenues to others.
One litmus test is as follows:
Such an efficient and leveraged infrastructure can be successful for “bad” movies… as well as good ones!
Modern Cinema Group is working now to create such a Co-operative and are actively reaching-out to industry constituents now.
Below is the fully integrated financing / production / distribution model: