Chapter 170: 170: The Envy-Provoking Flame Movie

Rustling—As September approaches, the summer is fading away, and students are gradually returning to school, leaving the beaches of Santa Monica much quieter. In this pleasant seaside city, numerous film company headquarters dot the landscape, among which Flame Films has recently been in the spotlight.

Inside the headquarters of Flame Films, the employees in every office are busy amidst laughter and chatter, imbued with happiness. The generous benefits and the bright future of the company make them thoroughly satisfied with their jobs; and with the company’s earnings gushing this year, they already know that the year-end bonuses will be substantial.

Regardless of whether “District 9” receives any Oscar nominations or awards, it is already a massive success for Flame Films. Its production cost was 100 million, with the actual figure being just over 97.83 million, and the global marketing costs, including prints and other miscellaneous expenses, totaled around 60 million, bringing the total cost to 160 million—not cheap by any standards. However, it seems rather trivial compared to the global box office take of 606 million in just three weeks.

The highest-grossing R-rated film in history! The return of the money­grabbing chairman! How much money can “District 9” make for Flame Films? With a global box office of 700 million, Flame Films could pocket at least 300 million; the anticipated hot DVD sales, given the film’s excellent reputation, coupled with the fact that cult fans enjoy collecting DVDs, not to mention the soundtrack CD sales, television rights revenues, and so on… Another drool­worthy treasure trove.

However, the pity is that this is a treasure trove, not a mine; once it’s emptied, there’s nothing left. Because the people at Flame Films know that the money­grabbing chairman has said there won’t be a sequel to “District 9,” at least not for the time being—perhaps they might consider it in ten years. Everyone is unfazed by this; it aligns with the chairman’s penchant for novelty.

It’s just like at the beginning, when everyone thought he would continue directing “High School Musical” and establish his title as the “miraculous Baby Director” with a trilogy. However, things developed in an unexpected direction.

In three years, the ‘miraculous baby’ had become the ‘miraculous Mr.’ TIME magazine’s cover slogan represented an attitude: “Wang Yang, welcome to the club of great directors officially!”

What does it mean to be a great director? If we’re talking about power, it’s having absolute control over directing a film: casting decisions, script details, filming methods… and most importantly, final cut privileges. The decision of what the theatrical version of a movie looks like when it’s released in cinemas is in the hands of the producers, who entrust the scissors to the producers, editors, or even the male leads with clout.

The directors participating in the cutting process often can only grumble helplessly and angrily, “Buddy, listen to me, my version is better!” and then the producer would say, “Great! Fantastic! Put it on the DVD.” Is a director’s cut always better? Not necessarily. There have been instances where theatrical versions were panned while director’s cuts became classic, as well as the reverse.

Regardless, great directors hold the final cut privilege, deciding both the theatrical and director’s cuts. There aren’t many in this echelon—Steven Spielberg, James Cameron, Coen Brothers, Quentin Tarantino, Tim Burton… and those directors who have final cut rights on every film they make can be counted on one hand in Hollywood.

Wang Yang’s case is special, of course. As the sole investor, producer, and director, every film he makes, regardless of the cost, is an “independent film, and he has always enjoyed the privileges of a great director.

But what ‘great director’ status needs most is recognition from the media and the public: a definitive classic in film history. “Paranormal Activity” and “High School Musical” will go down in film history, representing the years 98 and 99, but they are not qualified enough; “The Pursuit of Happyness” and “Juno” are not unparalleled and lack uncontrollable ‘big scenes.’ “District 9” cleared all the obstacles.

Praise from critics, an 8.8 score on IMDB, placing in the top ten movies of all time, a global box office of 600 million, recognized as a sci-fi classic unseen for years… and a personal total box office of 2.1 billion, averaging 420 million per film. Wang Yang is now recognized by film fans as a great director despite his young age, yet he is also the greenest, least convincing, and most likely to be kicked out of the club.

Lacking a second classic? Lacking various directing awards? Being too young, possibly facing a sudden downfall, turning into a ‘one-hit wonder’? Going through a personal crisis like Robert Downey Jr. did, followed by a later awakening and resurgence? These were all possible reasons. For the media and the public to solidify his title as the ‘ miraculous Mr.’, he still had a very long road ahead of him.

Meanwhile, the film that earned him the nickname ‘miraculous baby,’ “High School Musical,” was taken over and concluded by Sara Schulman. The first movie grossed 411 million globally, the second 221 million, and the third 257 million; the trilogy amassed a box office of 889 million US dollars, with significant ancillary revenues. It had been a stable mine for Flame Films in the past few years.

However, after the trilogy’s conclusion, this mine seemed to be depleted. A long-term profitable franchise is crucial for a film company and something many independent film studios depend on for life, clinging to that series for years, like “High School Musical,” until it’s no longer effective or is utterly ruined.

In the case of major companies, Warner Brothers is working on the “Harry Potter” series; Sony just ruined “Men in Black,” but they have “Spider-Man”; 20th Century Fox has the “Star Wars Prequel,” ” each have their own aces, with New Line boasting “The Lord of the Rings” and “Rush Hour”; Dimension has “Scary Movie” and “Scream,” and they are holding on to “Spy Kids” for dear life…

X-Men”… Independent studios

But Flame Films lacks such a powerful and enduring series, excluding the animated “Ice Age” from the equation. However, “The Hangover” might become Flame’s new gold mine. Although it’s not premiering until this Christmas, the entire company has great confidence in it and the money­grabbing chairman, discussions of a sequel are already underway, although the chairman still won’t direct the follow-up.

Even without a series of films, Hotfire Films has had a terrifying performance this year with “Sweetheart,” “Ice Age,” and “District 9”; another distribution brand, FM Company, also performed well, launching several low-budget films that made a tidy profit on the silver screen; and in the rental and rights market it currently focuses on, there were plenty of surprises, the biggest being “Death Illusion,” which they had acquired at the Sundance Film Festival in 2001.

Like “Memento,” this suspense thriller was well-received but initially attracted little attention due to its $6 million production cost. Peter Wilkes, FM’s investment director, boldly purchased this film for a hefty $8 million, in line with the company’s philosophy of “don’t be afraid of losses; be bold in trying.” It had a limited release in 150 theaters last Halloween in November, but the results were disappointing, with only $1.2 million in ticket sales over four weeks.

Originally, everyone thought this was sure to be a loss, but once it entered the video rental and sales market, its sales gradually climbed month by month, and by the summer, it became quite a hit. This caught FM Company’s attention, and they re-released it in foreign theaters, where it has now garnered $6.5 million in box office. Accounting for all aspects of the project, it has already created over $7 million in profit for FM and continues to grow.

Actually, I didn’t expect the box office to be this good.

In the elegantly furnished chairman’s office, Wang Yang, dressed in a T-shirt and shorts, sat behind his desk twirling a pen, looking at Mark Slant in a black suit sitting opposite and said, “I thought a global take of $400 million would be great, given that it’s quite oppressive.” Mark Slant, looking exceedingly pleased, heh’d and replied, “My boss, if you were 32, or if we had released it in May, that would be the $400 million.” Wang Yang nodded with a smile.

These two factors were indeed important, or else “District 9” would have received high praise but not its current box office success.

Effective viral marketing and the “Magic Yang” brand’s popularity caused a first-week box office akin to that of big commercial hits like “Spider-Man,” also helped by the fact that it had no competitors in August. Had it coincided with films like “Spider-Man” or “Star Wars: Episode ,” it would inevitably have split the fanbase; and then the high first-week box office, high reviews, and the miracle of being 22 sparked the “masochistic flock effect.”

Yang, now many companies are envious of us, and that’s not necessarily a good thing,” said Mark Slant, his tone turning serious. “Previously, these guys could restrain themselves, but you know, the success of ‘Ice Age’ and ‘District 9′ is just too tempting. I’m not saying they can prevent us from making movies, but in terms of promotion and distribution, we need to maintain good relations with those big media conglomerates, we need allies.”

He paused, looking at Wang Yang, seemingly with a grave tone, “We need to share some benefits with them.”

Sharing benefits meant co-producing films, handing over certain distribution rights to them—domestic, international, DVD, etc., allowing them to earn a distribution fee layer. That’s business; when you quietly rake in a fortune, others temporarily ignore you, but when you consistently make a fortune and break through their psychological tolerance, you have to return to the game rules; you can’t always keep all the profits to yourself.

Let them eat shit!” Wang Yang scornfully snorted; not all media companies are involved in filmmaking! He twirled his pen, thought for a while, and then smiled playfully, “Is anyone interested in Annie Fletcher or Sarah Schulman’s movies? How about co-producing with them?”

These two female directors’ screen debuts were produced by Hotfire Films, and the relationship between the three is naturally deep. The company is now preparing to work with them again on two new films. Although producers and scripts are not yet final, Annie Fletcher will definitely shoot a dance film and Sarah Schulman will shoot a youth-themed film, either set inside or outside a school, and Jessica is very likely to take the lead role.

If you were the screenwriter and producer, then they would be interested; otherwise, not so much. What would be the difference between that and their own investments?” said Mark Slant, shrugging helplessly. Seeing Wang Yang take a hard stance, he understood some of the chairman’s thoughts and calmly said, “They want Magic Yang; they want you! They’re envious of you, Mr. Magic.”

It’s hard not to make other film companies jealous. Not counting the quietly developing FM Company, since its establishment, FF Company has released the “High School Musical” trilogy (1999, 2000, 2001); in 2000, “The Pursuit of Happyness,” “Memento,” and “Juno”; in 2002, “Sweetheart,” “Ice Age,” and District 9,” all of which made a killing.

Memento,” and “Juno”; in 2002, “Sweetheart,

On Hotfire’s own North American box office top ten list, “District 9” is in first place with $253 million, followed by “Ice Age” at a final $215 million, “Juno” with $212 million, then “The Pursuit of Happyness” at $203 million for the fourth, and “High School Musical” at $201 million for the fifth…

And the other companies? Let’s look at Liongate Films, also an independent film company like Hotfire, whose top-grossing film is “Paranormal Activity” at $163 million, followed by films that aren’t worth mentioning, all below $50 million. And for Dimension Films, the highest is the $103 million “Scream” in ’96, followed by “Scream 2” at $101 million in ’97 and “Scream 3” at $89 million in ’00, then there’s “Halloween H20: 20 Years Later” at $55 million in ’98…

Of course, in the presence of Paramount’s $600 million “Titanic,” $320 million “Forrest Gump”; 20th Century Fox’s $430 million “Star Wars Episode I”; Universal’s $350 million “E.T.”; Sony/Coiumbia’s $403 million “Spider- Man”… and the likes of other big companies, Hotfire Films seems to have nothing to be envied for. After all, everyone is about the same level.

The problem is that the others are big companies that require co-financing and distribution rights sharing when making a movie. Hotfire is an independent film company that always takes the whole lot, bearing all the risks, but also making all the money.

Flame Films is just like a gambler gone mad with confidence, always ready to bankroll their projects without seeking outside investors. You should know that most movies with a budget of $5 million usually involve three or more production companies.” —The Wall Street Journal.

This topic has been discussed many times by business newspapers like The Wall Street Journal, and the reason is that Flame Films has made big profits every time. Many have been waiting for them to take a hard fall, but after several years, they just seem to be getting better; many investors and institutions have been waiting to buy Flame Films’ stocks, but they have steadfastly refused to go public.

At first, the media conglomerates didn’t care about how a small company operated. If you wanted to promote your film, you just paid the market rate; but now, as they watch Flame Films skyrocketing, they want a bigger slice of the pie.

This is why independent film companies struggle; they lack the support of television networks, newspapers, and websites owned by media giants, and they have to work harder to promote themselves. Their films, no matter how good, will always be promoted after those produced by mainstream movie studios of the media conglomerates, unless they have a stake in the movie.

Luckily, Flame Films previously identified some emerging channels for promotion such as the internet, their biggest weapon, and smaller means like restroom advertising, which has allowed them to do as they please.

Of course, even if Flame continues its distinct approach, it won’t fall. The distribution department already has a complete system; there won’t be a “media conglomerates unite to boycott Flame Films” scenario—that won’t happen; but their cold attitude is inevitable. You want to buy Super Bowl trailers, you’re at the end of the line; you want to get on talk shows, you’re at the end of the line…

It seems that having a long-term ally in a major media conglomerate and competing positively with other companies might be a better choice.

Have you ever thought about us doing it ourselves?” Wang Yang raised his eyebrows with interest, saying with a smile, “Why should we depend on others’ whims? That’s not the Flame Films way.” Mark Slant was taken aback, asking in confusion, “What do you mean?” Wang Yang aimed his pencil at the desk organizer while laughing and said, “Aren’t those media conglomerates powerful because they have television and print media networks?”

Mark Slant, with an ‘it’s obvious’ look, spread his hands and then quickly realized, exclaimed in surprise, “You’re thinking of doing the whole media conglomerate thing? TV channels, newspapers?”

No, we can’t afford to play with a complete media conglomerate right now. Wang Yang laughed as he tossed the pencil into the cup where it bounced out again. He rolled his eyes, picked it up, shook it, and continued with a smile, “But we could start with launching a subscription cable channel.”

Mark Slant was taken aback, his expression blank. An independent film company launching a subscription TV channel? The idea was far more outlandish than acquiring Blue Sky Studios or purchasing an imaging engine.

It’s not that setting it up was hard. For a satellite channel, you’d work with satellite TV providers like STC or DISH-Network, and for cable, you’d work with Comcast or Time Warner Cable; they’d be responsible for transmitting the channel signal to TVs all over America, while Flame Films would supply the content. Public channels like NBC, FOX, and subscription channels like HBO, Showtime all work the same way.

But the question is, what scale would this channel be? If Flame Films wants to be self-sufficient in promotion, then it would have to be big. How many customers would subscribe to this new channel? How do you attract them to subscribe? How do you turn a profit? Until profitability is reached, does Flame Films have enough funds to weather the startup phase?

Our position is to be a TV movie channel, starting off with some good series to attract and stabilize viewership, and also showing some movies, music; eventually, maybe after years, ten years, or twenty—who knows—we’ll gradually add reality shows, variety entertainment programs, etc. The ultimate goal is to become a comprehensive TV channel.”

Wang Yang roughly outlined the idea; of course, it was easy enough to say, but fraught with difficulties in practice. He smiled again and said, “We’re not doing this alone. We could team up with other independents like Lionsgate, Dimmon, MGM—a whole bunch of us together, and their films would benefit too.”

Money!” Mark Slant shook his head, dampening the enthusiasm, “How much money are those companies willing to put in? What about us?” He paused, shrugged with a smile, and said, “Boss, I have to remind you that 95% of that money is yours, and this is another high-risk investment.”

Uh-huh, I’m not concerned about that,” Wang Yang said casually. With next year’s revenues gathered, Flame Films should be able to free up $1 billion, enough to start a small channel. But if all that money went into the TV channel, how would Flame Films, which was still in its early stages, continue to develop? Stop making new movies? And how long would $1 billion last? Could it turn a profit quickly? These were the main problems.

He thought for a while, almost decided, and said with a smile, “But our cash is indeed a bit short right now. Let’s wait another four or five years, get Flame Films well-established, until everything is on track and we can steadily claim 10% of the annual box office.” He spun the pencil in his hand and continued, “By then, our finances will be much healthier. We can go public to raise capital, and we should be able to pull together $3 billion, right?”

3 billion? Wow!” Mark couldn’t help but laugh, analyzing, “Even if the IPO raises 500 million, that’s already a very high estimate; the remaining 2.5 billion, we’d need a net profit of 500 million each year, that’s almost all your money; then with such a big decision, those shareholders would make a fuss after going public.”

Mark, you know what? Then I’ll just do it alone, leaving 500 million in liquid assets for the company to go public,” Wang Yang leaned back in his chair comfortably, with his arms crossed, and smirked, “I’ll take out 2 billion to make a big play, who cares?” Mark Slant’s face read ‘you’re amazing!’, and he laughed, “I must say, 2 billion will last you a long time.”

It’s not just me playing. MGM, Lionsgate, those independent companies would be interested.” Wang Yang thought about it, and suddenly his eyes lit up “Oh right, the Internet! It has made traditional media lose its dominance! Those websites that can provide an audience, we can gradually acquire some with potential, like the women’s site ivillage. Jessica really likes to visit.”

His eyes shifted, pondering aloud, “And there will definitely be paid online video services in the future, movies and TV shows can be watched on websites. And Jerry Yang is a good friend of mine; we can work with Yahoo to create a video website.” He raised his fist excitedly, laughing, “Haha, who will care about those media conglomerates then? We will be the media ourselves!”

Of course, Jerry Yang and he were not really good friends; at most, it was just a spiritual connection.

My boss, buying websites costs money, launching TV channels costs money…

Mark Slant’s head shook as if on drugs, “3 billion? Oh! A net profit of 500 million each year, oh! You really are a gambler, oh!”

Let’s first look at the company’s development over these five years; we should start by accomplishing the goal of becoming the leading independent film company,” Wang Yang smiled and sat up, pointing at him, “But Mark, we need to start acquiring websites now because if we miss the right moment, we won’t get the chance again. Take Milage, we’ll settle it within 1.5 billion this year if they are willing to sell.” He remembered something and shook his head with a chuckle, “Like Blogger, did you know Google wanted to have a go at it recently?”

Mark Slant shrugged, and Wang Yang laughed, “Because it was only a preliminary contact, they were thinking of paying 200 million to buy it, but sorry Page, we can collaborate, but we are not selling; we haven’t just seen the likes of Washington and Franklin.”

He and Evan Williams were fully confident in the future of blogging; now, the number of users was growing rapidly each month, the company’s R&D team was full of vigor, Blogger was getting better and better, and the services more diverse.

So, what do we do now? Suddenly buying ivillage, are we still collaborating with others?” Mark Slant asked seriously, “Yang, I really suggest ‘MIT-21- TEAM’ should partner with another film company. Because the protagonist is of Chinese descent, and it’s not Kung Fu, a new screen image, the marketing will be challenging without the support of media conglomerates.”

Now, every studio wanted to make a movie with “Mr. Magic.” Paul Emery had a pile of film offers, Paramount was continuing that project, with a maximum production budget of 150 million, with Flame Films willing to invest 20% into whatever he wanted to make; Warner Brothers were also extremely eager, they hoped Mr. Magic could reinvigorate a superhero on the big screen, “Superman,” “Batman,” etc were all options; Universal was filled with enthusiasm too—they even had a “wild” idea to invite Steven Spielberg to produce and the amazing Yang to direct a big-budget sci-fi movie with a mix of old and young talents…

Everyone was also watching the mysterious film claimed to be starring Natalie Portman as the female lead; the strongest post-8os director and actress reunion naturally had every company wanting in, and they had already actively contacted Flame Films to inquire about collaboration possibilities. That’s why there was this little office meeting.

OK, in any case, we won’t lose out.” Wang Yang nodded and smiled, under better marketing, a good film could have higher box office returns, which meant more earnings for the company, and Flame Films had a pretty good relationship with NBC Universal. But when the time came for Flame Films to spread its wings, no one could stop it from soaring freely in the sky! He looked at Mark Slant and smiled, “We’ll let them join in the fun! Who will be the lucky one?”

20th Century Fox wasn’t a good choice due to some issues they had with Blue Sky Studios; Warner Brothers? Paramount? Universal?

How could you prevent other film companies from feeling envious? When August 23 to 29 drew to a close, in its fourth week of release, “District 9” took in another 29.86 million US Dollars in 3,650 theaters, with a North American total of 282.8 million, topping the North American weekly box office charts for the fourth consecutive week. Internationally, it earned 44.61 million US Dollars that week. This additional 74-47 million in box office revenue put “District 9” on the verge of joining the 700-million-dollar club.

The total North American box office that week was 126 million US Dollars, with “The Omen” in second place earning 10.71 million, and “xXx” in third with 10.23 million.

The time was approaching September, summer was passing, and the bustling summer blockbuster season came to an end.