Director of Photography Department of Huayu

Chapter 186 The New Company Location, The Long Tail Revenue of "The Magic Thieves"
Early morning, Chaoyang District.

Sunlight streamed through the still-smoky sky above the city, casting a pale golden glow on the glass curtain wall of Tower B of the Huixin Building.

This is the address that Xu Dong personally visited over the past few days.

Downstairs, a group of people had just stepped out of the elevator. The corridor was clean and well-lit, and in the distance, they could see the core area of ​​the Asian Games Village business district.

"Brother Dong, that's impressive!"

Xiang Zhuo glanced around, a hint of surprise in his eyes. "Is it expensive?"

"What do you think?" Wu Chen replied with a smile before Xu Dong could speak.

Turning around, he looked at Xu Dong and asked, "Is this place only for rent, or is it also for sale?"

Xu Dong was taken aback, then nodded:

"Also for sale, Mr. Wu. I've inquired, and there are two more floors on this floor that are currently open for leasing or sale."

Wu Chen nodded, looking very satisfied.

Buying is definitely better than renting. Nowadays, when buying real estate, you can just take out a lot of loans. These locations are appreciating assets, and besides, he's not buying an entire building, so the pressure is manageable.

The Asian Games Village business district is unlikely to incur losses for the next decade or more.

"Okay, this will do."

He put it bluntly, "We'll work together to finish it over the next few days."

"China Film Group has officially sold off the cinemas, so we need to get things started here too. I'll have to keep you busy visiting each one."

As he spoke, he patted Xu Dong on the shoulder.

Although the latter still maintained his composed demeanor, a hint of excitement was hard to hide in his eyes.

He was well aware that although these cinemas were scattered and seemed few in number, they already formed a nascent network within the cinema distribution landscape of 2006.

Only those in the know understand what this means.

The three were about to go downstairs, and had just stepped into the hall when a voice suddenly came from ahead:

"Director Wu!"

Wu Chen was slightly taken aback. He looked in the direction of the sound and saw a man and a woman walking towards him, their expressions warm.

The newcomers were dressed neatly and exuded a strong presence. At first glance, they were none other than Li Ming and Zhong Lifang from Xiao Ma Ben Teng.

Although they weren't very close, Wu Chen had met him at several industry events and exchanged glances.

"Director Wu, we've met before. This is Li Ming from Xiaoma Benteng, and this is Zhong Lifang, our company's general manager."

Li Ming introduced himself very proactively, with a big smile, and even handed out business cards to Wu Chen and the others.

"Chairman Li, President Zhong." Wu Chen nodded in greeting, somewhat surprised.

In its later years, the once-promising Xiaoma Benteng has only achieved a small scale in the industry, still operating within a small scope of television drama production.

Li Ming looked around, then at Wu Chen and the others, slightly puzzled:

"Director Wu, what's going on?"

He remembered that there seemed to be no other film and television companies in this building besides Galloping Horse, although some small and medium-sized behind-the-scenes production companies were located in other buildings.

"Hehe, maybe we'll be neighbors in the future."

Wu Chen smiled, glanced at the time, and said, "Chairman Li, I have other things to do today, so I won't chat any longer. If Xingchen Pictures moves here, you must come over for a visit another day."

"No problem, no problem, Director Wu, you're busy."

Li Ming waved his hand, his smile unchanged.

The two passed each other.

Zhong Lifang watched Wu Chen's retreating figure, lost in thought, and slightly turned her head:

"Chairman Li, given the company's current development, we'll have to get involved in the film market in the future." Li Ming's smile faded, and his gaze turned serious.

"This matter needs careful consideration. Making a movie is not as simple as we think. The risks are too great, just like gambling. You might win back many times over, or you might lose everything."

A good film doesn't guarantee good sales; factors like film scheduling, marketing, release date, and theater availability also play a role.

Zhong Lifang did not refute, but simply nodded.

She understood Li Ming's caution, but in her mind, a normal company that relies on a single business structure is very risky.

A good financial structure should have a combination of short-term, medium-term, and long-term cash flows; only with financial security can one survive.

This means that multiple revenue streams are needed to create checks and balances on each other in order to provide relatively stable financial data.

"Forget it, the company's TV dramas will soon reach their limit. We'll bring it up again then," Zhong Lifang silently made her plans.

After leaving, Wu Chen and his group went straight to the developer's sales office. If they wanted to rent, they would contact the property management company, but if they wanted to buy, they would naturally have to contact the developer.

However, this is obviously not something that can be completed in a short time. Property verification, signing and payment, loan approval and transfer of ownership all take time.

Xu Dong also officially went to the north to first resolve the issues with the cinema chains in more than ten locations in the north, and then promote the remaining upgrades and renovations in the south.

With so much money to be spent in such a short time, Wu Chen's domestic earnings alone are clearly far from sufficient.

Although the copyright fees for the past few works have been received one after another, most of those early copyrights had been pledged as collateral. After repaying the loans, less than 20% of them were actually available for use.

His most confident work is still "Now You See Me".

Therefore, Wu Chen made a special phone call to Jason Blum to thoroughly settle the accounts.

“Wu,” Jason’s voice came from the other end of the phone, “The North American box office is currently $1.85 million. After deducting the costs of theaters, publicity, distribution, etc., you will probably only get a little over $25 million.”

"As for the revenue sharing in the international market, it's even more complicated. Generally, Hollywood producers can get about 20% of the international box office. Let's say we calculate it at 300 million, that's about 25 million - that adds up to about 50 million, but there may be some discounts."

At this point, Jason couldn't help but exclaim "Wow!" with a hint of envy in his voice.

Compared to Wu Chen, his earnings were only slightly more than double.

"What?!" Wu Chen shook his head, dissatisfied with the returns.

He didn't earn much from a movie that grossed nearly $500 million.

“Wu, you’re still not satisfied?” Jason said, both amused and exasperated. “You have to understand, blockbusters like Pirates of the Caribbean sound glamorous, but their production budgets and marketing expenses are terrifying.”

Box office profits may not be as high as we imagined.

Jason Blum paused, then added, "But the real big money comes from the DVD and home entertainment market, and overseas licensing."

As for merchandise, don't get your hopes up. "Now You See Me" isn't an animated film, so there's practically nothing in that area."

Wu Chen nodded: "So, according to convention, how much would it typically cost? And how many years would it take?"

"If all goes well, the home entertainment segment, including DVD sales, rentals, and video-on-demand in North America and internationally, is projected to generate around $1.5 million in revenue, but..."

Jason Blum chuckled as he spoke:
“After deducting distribution, channel, and copyright management fees, only 30-40% remains.”

"."

Wu Chen was initially a little excited when he heard the number, but in the end, he only received a tiny fraction, plus what he actually got.
“However, the copyright licensing aspect is better,” Jason added. “For example, when selling to international TV stations, airlines, and streaming platforms, the revenue share is about 40%–50%, but the amount isn’t that high.”

It's generally possible to make 20-30 million, but the monetization period takes at least two years.

"take it easy."

Wu Chen spoke calmly, indicating that he had long anticipated this type of delayed benefit.

However, this is also one of the advantages of making money in North America: it can sustain you in the long run. Even if you don't make a fortune in the early stages, it can still contribute cash flow for the next few years.

More importantly, the international copyright licensing cycle is usually between 3 and 5 years. High-quality films can achieve second and third rounds of copyright resale, but only average high-quality films can continue to monetize their copyrights for more than 10 years.

For films like "Now You See Me," revenue will likely decline significantly in the second run, and after the third run, it will only be a negligible amount of "tailwind."
(End of this chapter)