Huayu: Starting from joining the mainstream entertainment industry in 96

Chapter 380, Section 378: Times Have Changed Again
The weather in Los Angeles at the end of October and the beginning of November remained mild and bright.

In the following days, Wang Sheng's team and the New Line Cinema team engaged in intensive, alternating rounds of negotiations.

The talks revolved around the specific distribution plan for "Shaolin Soccer", the future cooperation ideas for "Night at the Museum", and the grand "market for market" strategic framework.

Regarding the North American distribution of "Shaolin Soccer," the two sides discussed in depth several common models Hollywood used at the time for handling foreign-language films, especially Asian commercial films:

Buyout

This is precisely the approach proposed by Miramax. The production company receives a fixed fee upfront, and all subsequent revenue from the North American market (regardless of profit or loss) is unrelated to the production company.

The advantages are low risk and quick return on investment; the disadvantage is that the profit cap is locked, preventing the sharing of the film's potential huge success. Wang Sheng directly rejected this idea, as it did not align with his strategic objective of using the film to break into the market.

Guaranteed minimum profit sharing

The issuer pays a minimum guarantee fee in advance, which can be considered as a minimum guarantee.

Then both parties agree on a revenue-sharing ratio (for example, after deducting distribution expenses, a certain percentage of the net revenue goes to the production company).

If the revenue sharing exceeds the guaranteed minimum amount, the settlement will be based on the revenue sharing; if it does not exceed the guaranteed minimum amount, the guaranteed minimum amount will not be refunded.

This is a compromise that provides some protection for the production company while also motivating the distributor to do a good job.

Pure profit sharing

The distributor does not pay a minimum guarantee, but directly agrees on a revenue-sharing ratio. After deducting its marketing and distribution costs (usually a certain percentage of the "gross distribution revenue", or a fixed amount), the distributor distributes the remaining net revenue to the production company in proportion.

In this approach, the production company bears greater risks, but if the film becomes a hit, the profits are also the highest.

Wang Sheng's side prefers a "minimum guaranteed revenue sharing" model, which requires New Line Cinema to provide a minimum guaranteed amount to demonstrate its confidence in the film, while also demanding a high percentage of net revenue after deducting reasonable distribution costs (for example, no less than 40%).

He emphasized that the success of "Shaolin Soccer" in Asia has proven its commercial value, and New Line needs to provide matching resources and sincerity.

Regarding the new line, Kevin Brown repeatedly emphasized "cultural discounts" and "market cultivation costs," attempting to lower the guaranteed amount and revenue sharing ratio.

He pointed out that comedy and sports themes face specific cultural barriers in North America, requiring localized editing and dubbing, which is costly and the results are uncertain.

“Mr. Wang, we must face reality. North American audiences are intrigued by the combination of ‘Shaolin Kung Fu’ and ‘football,’ but they may also be confused.”

"We need to do precise marketing positioning, which may mean abandoning some of the original film's humor to adapt to more mainstream viewing habits," Brown said, pointing to a few clips initially selected by the editor.

Wang Sheng demonstrated flexibility on this point, agreeing that New Line Cinema could make moderate edits to suit the market, but the bottom line was that the core spirit of the film and Stephen Chow's unique comedic style must be preserved, and the final edited version needed to be approved by him.

At the same time, he suggested that Shengying Media could send people to participate in the publicity and planning in North America, providing cultural interpretation and marketing advice to reduce the "cultural discount".

Negotiations are tough; sometimes the two sides can argue for an entire afternoon over a one percent share of the profits or a guaranteed minimum amount of several hundred thousand dollars.

Robert White played a crucial facilitator role, sometimes communicating privately with Brown and sometimes explaining Hollywood norms and Brown's team's real concerns to Wang Sheng.

To ease the tension of the negotiations and to deepen understanding and test each other's bottom lines in informal settings, both sides will also arrange some leisure activities.

They had played golf at the famous Riviera Country Club near Los Angeles. On the lush green course, their seemingly casual conversations often contained a reaffirmation of the cooperation framework or a subtle probing of points of disagreement.

Wang Sheng was also invited to make a short stop in New York, accompanied by Brown, and watched a classic musical, "The Phantom of the Opera," on the famous Broadway.

Amidst the stunning audiovisual feast and enthusiastic audience response, Wang Sheng and Brown exchanged views on the psychology and entertainment consumption habits of audiences in different markets.

Wang Sheng's insights into global cultural consumption trends, especially his predictions about the future impact of the internet on the entertainment industry, secretly alarmed Brown.

This young man not only has a thorough understanding of the Chinese market, but his vision and perspective also far exceed those of ordinary regional producers.

Brown privately remarked to his assistant, "His talk about streaming and the future of home entertainment makes me wonder if we old guys are about to be left behind. It's like he's witnessing the future firsthand."

Of course, this has nothing to do with Wang Sheng paying a considerable amount of public security fees to Brown's family company.

Time slipped away quietly in the cycle of negotiation, leisure, and further negotiation.

During this period, a major event occurred that shook the world and profoundly impacted Sino-US economic and trade relations—

On November 10, 2001, at the Fourth Ministerial Conference of the World Trade Organization (WTO) held in Doha, Qatar, the decision to allow China to join the World Trade Organization was formally adopted.

When the news reached Los Angeles, Wang Sheng clearly sensed a subtle but positive change in the attitude of the New Line team, especially Kevin Brown.

China's accession to the WTO means that the openness and predictability of this huge market have been greatly enhanced, and the "Oriental treasure" that Hollywood giants have long coveted has finally opened a wider door.

Partnering with a company that has already established a strong distribution network in the Chinese market instantly boosts its strategic value.

On November 11, 2001, the day after China's decision to join the WTO was officially passed, the atmosphere in the conference room of New Line Cinema in Los Angeles was different from usual.

There was less tension and more of a pragmatic willingness to move forward.

After another day of intensive negotiations, witnessed by Robert White, Wang Sheng and Kevin Brown, representing Shengying Media (and Beijing Film Studio) and New Line Cinema respectively, reached a series of strategic cooperation framework agreements.

Secretaries and legal staff typed rapidly on their keyboards, transforming consensus into rigorous legal clauses:

Regarding the North American release of "Kung Fu Soccer"

The agreement adopts a "minimum guarantee and revenue sharing" model. New Line Cinema will pay a minimum guarantee of $300 million and, after deducting agreed distribution and marketing expenses (up to a maximum of $500 million), will pay 45% of the net revenue from theatrical distribution in North America to Shengying Media.

Newline holds exclusive North American distribution rights for five years (including home video, TV on demand, etc.). Wang Sheng retains the right to review the final cut of the film, and Shengying Media may send representatives to North American marketing meetings.

Regarding future collaborations with "Night at the Museum"—

New Line Cinema has the right of first refusal in negotiations for this project.

Once the film is completed, both parties will prioritize discussing global distribution (excluding mainland China, Hong Kong, Macau, and Taiwan) based on the quality of the finished product.

At the same time, both parties agreed to explore the possibility of upgrading the film to a Sino-US co-production, in order to enjoy the same treatment as domestic films in the Chinese market and obtain more favorable terms in terms of global revenue sharing.

The new line will assist in introducing international partners and technological resources that meet China's requirements.

Regarding the framework for in-depth strategic cooperation—

Both parties agreed to establish a relationship of "market information sharing and strategic cooperation".

Shengying Media (and its affiliate China Film Shengshi Cinema Line) will, based on its professional judgment, give priority consideration and maximum support to key films produced by New Line Cinema that are suitable for the Chinese market in terms of scheduling and release dates.

In exchange, New Line Cinema has committed to providing equal priority distribution negotiation rights and competitive revenue-sharing terms for projects with international distribution potential that are led or deeply involved by Shengying Media in regions covered by its global distribution network.

Core terms confirmed —

Wang Sheng and his team have the final selection and decision-making power regarding film allocation support in the Chinese market. New Line Cinema provides film lists and suggestions, but respects the Chinese side's market judgment.

……

The agreement marks the first time that Chinese film capital and mainstream Hollywood studios have established a strategic cooperative relationship based on resource exchange on a relatively equal footing.

This is not just about the sale of one or two films; it has opened a door for Chinese films to participate more deeply in global market competition in the future.

The signing ceremony was simple and efficient, without champagne or grand celebrations. Both sides knew that this was just the beginning, and the real test would be the subsequent execution.

Wang Sheng and Brown shook hands again, and this time, both of them wore smiles that had a more meaningful meaning.

“Welcome to the world stage, Your Majesty,” Brown said, his tone carrying a touch of emotion rarely seen in formal settings.

“Mr. Brown, this is just the first step in our cooperation. I believe the future market will prove that our choice today was correct,” Wang Sheng responded calmly.

(End of this chapter)