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by rebootthesystem
3533 days ago
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Yeah, you are right. It's easy to forget what happens before someone writes a $100M check, funny as that may sound. Distribution is/was it's own mafia. Back around the turn of the century (how cool does that sound?) I was CTO of a startup in Holly-weird that, among other things, back then, aimed to be a combination of what today might be Youtube and Netflix mashed together in a strange way. The CEO had been CEO of one of the major film studios for over a decade before coming on-board the startup. Side note: I was in awe of how easily he could raise money with what amounted to total bullshit. We had many, many conversations over coffee about the industry and how it worked. I remember thinking that distribution was a particularly disgusting, dirty, mafia-like sounding affair. I don't know how it is now, back then this "mafia" had a lot to do with the difficulty in opening theaters up for digital distribution. To this day I remember the surreal board meetings where I'd explain on the whiteboard that the financials for what they wanted to build simply did not make any sense (connectivity and streaming were outrageously expensive back then) and the need to pivot. Nobody listened. Total echo chamber effect due to the other high-flyers who were involved. They believed their own bullshit. Damn the numbers. Ultimately they burned through an obscene amount of money before they realized I was right. |
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Problem arises when, on the operating level, you have to 'keep it real'. BS echoes still and people need time in order to snap back to the real world, stop believing their lies, and get something done. It's a wonderful chaos, but that's how it works. It's not any different in 'normal' business, this is jus amplified because people are well-versed in agitprop.
Distribution is still kind of like that, it got M&A over the years so the octopus is bigger, less fragmented.
If anyone is thinking of disrupting this and is reading this. Here's a thought you need to solve. It's simple to understand. Let's say I'm holding rights to 100 movies. Average, Hallmark type of movies, nothing special. Each distributor (who sells to TV and cable stations) or TV stations themselves out there are willing to pay me $10,000 (ballpark, but not far out) for a right to show that movie for three years (also ballpark) in one or up to several small countries. That's $10k for three years, per movie, per country (or several smaller). That's a $1m potential to fully unload my library to one area over three years. Let's say there are 20 areas in the world where I can unload my full library and more (lots) which will take a partial library (I and them deal with multiple titles only, it's easier that way for both and one title gets out only if it's special). That's, roughly, $20m over three years for my library. Every three years. Forever. Each station for each (unlimited, but it varies) showing sells advertising and recuperates my cost and they earn something back.
For you to disrupt that, if you go global, you would need to offer the same amount (at least) on your shaky non-established platform for my library (and others). TV/cable/distributors won't touch my library anymore because now it's global and they lost exclusivity. Why so? That makes it harder for them to sell advertising for some reason, that's what they say at least.
For you to offer a platform where you offer me a share of revenue will not work. Why? Because those TV/cable/distro give me cash, secure cash, predictable cash, each and every cycle. With your offering I would have to take care of marketing (or you would) in order to push my old library of movies to viewers.
That's what you need to solve. Secure stream of cash for library holders which is at least equal to their realised potential and upwards. How you secure that stream? That's what you need to solve.