Nancy Brill once ambitiously hoped that Blockbuster would achieve $5 billion in revenue within three years, capturing half of the videotape market share.
In 1991, Blockbuster's revenue was $2.31 billion. In 1992, Blockbuster's revenue was initially estimated at $3.36 billion, with an annual growth rate of 45%.
With Blockbuster's global chain store layout completely finished this year, and the continued high-speed growth of the global videotape market, it is not difficult for Blockbuster to achieve the same growth rate as in 1992. The same 45% growth rate means that Blockbuster's full-year revenue in 1993 is expected to approach $5 billion.
For three consecutive years, the three-stage jump plan has been officially completed.
Although some deviations are inevitable, for example, a large part of the estimated $5 billion in revenue will come from equally fast-growing movie merchandise revenue, it is only a matter of time before Blockbuster's continued expansion carves out half of the videotape market share.
Once any enterprise's market share in a certain industry exceeds half, it must consider finding new growth points for its performance.
In the original timeline, after Blockbuster became an industry oligopoly, it also tried diversified expansion, venturing into the music industry, operating cable television, and even opening theme parks, all of which ultimately failed.
The current Blockbuster is completely different from the bloated and inefficient video rental giant Simon remembered.
However, as Blockbuster's existing business expansion is about to hit its ceiling, finding completely new growth points is still necessary.
Venturing into film production and distribution is the next expansion route Simon personally determined for Blockbuster.
At the same time, Blockbuster providing a new distribution channel for small and medium-sized film companies will also help Daenerys Entertainment further strengthen its control over Hollywood's film distribution channels.
"Independently producing and distributing movies is only the most basic way to boost Blockbuster's revenue. Owning exclusive content can not only further enhance Blockbuster's brand awareness but also strengthen user stickiness to Blockbuster, preventing churn. This is a win-win situation."
In the restaurant, Simon and Nancy Brill were discussing the benefits of Blockbuster directly entering the production and distribution fields.
After listening to Simon, Nancy Brill said, "But, Simon, independent film production carries very high risks. Many second and third-tier film companies in Hollywood failed precisely because they couldn't see their position clearly and blindly ventured into the production field."
"Then, why did they do that?" Simon smiled at Nancy and said, "The key lies in the potential benefits of doing so being too great. Just like New Line back then, a self-produced *A Nightmare on Elm Street* became a huge hit, directly elevating the strength of that small workshop-style third-tier film company by a level."
"But as far as I know, New Line is on the verge of bankruptcy right now."
"That's because New Line itself lacked sufficient accumulation and foundation, or perhaps, there was an element of bad luck," Simon patiently continued, "These are not problems for Blockbuster. Blockbuster's current comprehensive strength is even stronger than Columbia and MGM among the Big Seven, and it also has ample funds."
Nancy then pointed out a crucial issue: "The exclusive video channel, lacking theatrical releases and television broadcasts that can boost a film's popularity, largely limits the scale of films Blockbuster can produce. It's difficult for us to undertake blockbuster productions."
Simon had, of course, considered this and said, "Therefore, in the early stages of the plan, Blockbuster will primarily focus on 'distribution,' expanding exclusive content by acquiring the copyrights of completed films from production companies, and at the same time, testing the waters with independent investment in low-budget films. Once Blockbuster's strength is further enhanced and it has a firm foothold globally, it can attempt large-scale productions. Moreover, Blockbuster's direct involvement in film production doesn't necessarily mean completely exclusive video channels; theatrical and television distribution can still occur, it's just that Blockbuster will have sole exclusivity in the video channel."
"Actually, I was thinking," Nancy looked at Simon and said, "Daenerys Entertainment could completely grant Blockbuster exclusive content rights when distributing its films on video."
"I've also thought about doing that," Simon shook his head and said, "However, first, Blockbuster's current strength is not yet sufficient to fully unleash the commercial potential of a hit Daenerys Entertainment film in the video channel, and this is the most important point. Second, Daenerys Entertainment's current market share is already high enough, and doing so would likely attract antitrust lawsuits from other video rental companies."
Content exclusivity is common in Hollywood film distribution.
During theatrical distribution, some powerful cinema chains often demand exclusive theatrical distribution rights for a particular studio's films. Similar cases are numerous in video rental chains, television networks, and other channels.
The problem is that Daenerys Entertainment's current goal is too obvious.
For example, if Daenerys Entertainment were to exclusively hand over last year's box office hit *Wonder Woman* to Blockbuster for video channel distribution, leaving aside whether this rental-focused chain company could fully unleash the commercial potential of *Wonder Woman*, other video manufacturers unable to get a slice of the *Wonder Woman* pie would certainly not be content.
Coincidentally, Blockbuster is also a subsidiary of Daenerys Entertainment, which would give competitors sufficient grounds to sue Daenerys Entertainment for alleged monopoly.
In contrast, if it were a second or third-tier film company that exclusively sold some work copyrights to a certain video manufacturer, it would not attract much attention at all.
Hollywood produces about 500 films that enter theaters each year, but the actual number of films produced is more than double that. These films that cannot be theatrically released can only be distributed on video or television. Some film companies don't even aspire to theatrical release, specializing in the video and television markets from the start, and many small film companies thrive by relying on the strong demand for content in these two areas.
As the conversation continued, Nancy Brill gradually understood another meaning from Simon's words, even stopping her meal and staring intently at the man opposite her, saying, "Simon, if I'm not mistaken, you want to develop Blockbuster into Hollywood's 'Eighth Major'?"
Before acquiring MCA, Daenerys Entertainment had already basically risen to the ranks of the 'Eighth Major' studio, alongside Hollywood's traditional Big Seven studios.
With the completion of the MCA acquisition, Hollywood returned to a state of seven coexisting majors, though this time, the Big Seven, to be precise, should be Daenerys, Warner, Disney, Paramount, Fox, MGM, and Columbia.
In Hollywood today, Daenerys Entertainment not only holds nearly 40% of the film market share but also indirectly controls MGM. Although this company, with Daenerys Entertainment's support, still only had 7% of the film market share last year, it is still one of Hollywood's established major film companies.
Controlling two major Hollywood studios and holding such a high market share, it is simply unrealistic for Daenerys Entertainment to further expand by acquiring other studios.
Even if the Westeros system has deep financial ties with the incoming Bill Clinton, the antitrust hurdle cannot be overcome.
Therefore, to expand further, a different approach must be taken.
Eliminating second and third-tier film companies and weakening other studios were strategies Simon had already set.
Further expanding Blockbuster is another move in Simon's plan.
First, Blockbuster, even with its current strength, is already comparable to some Hollywood studios and does not lack room for further expansion. Second, the superficial nature of a video rental chain can make competitors and federal regulators overlook the company's threat.
Finally, there's another point: Netflix, in the original timeline, achieved a reversal of Hollywood with its positioning as a video rental company, becoming a super media group on par with Disney.
The rise of Netflix can provide many references for Blockbuster's further development.
For the internet to enter the streaming era, even if the internet industry in this timeline has already boomed ahead of schedule, it will still take at least ten years.
Therefore, completely copying the Netflix model is definitely not feasible, and Blockbuster must also forge its own unique development path.
The other major film companies in Hollywood are already struggling under Daenerys Entertainment's sharp edge. Simon's intention to build Blockbuster into Hollywood's 'Eighth Major' is definitely something that fewer people know, the better. He didn't expect that after only a preliminary discussion of his ideas, Nancy would be able to draw inferences and directly see through his intentions.
Seeing Simon not answer, Nancy knew she had guessed correctly.
The Eighth Major, huh.
Daenerys Entertainment already holds 40% of Hollywood's market share. Thanks to its close cooperation with MGM, Nancy also knew that this once-declining film company, despite shelving its iconic James Bond series, has actually started to accelerate its recovery in the past two years. At least in the past year, MGM's share of the domestic box office market has already surpassed Columbia and Paramount, and further development is just around the corner.
With two major Hollywood film companies under its control, the Westeros system's expansion in Hollywood had clearly reached an extreme.
Neither federal government agencies nor competing peers would allow the Westeros system to continue acquiring other major studios.
In this situation, a certain ambitious fellow actually came up with such an ingenious move.
To develop a powerful video rental chain into Hollywood's 'Eighth Major,' capable of rivaling other major studios.
However, having made this conjecture and getting confirmation from Simon's silence, Nancy Brill didn't feel any sense that someone shouldn't do this; instead, she felt a subtle excitement.
But, can a video rental chain really develop into Hollywood's Eighth Major?
Discreetly refraining from further questioning, Nancy had completely forgotten about eating, and looked up at the man opposite her, saying, "In the early stage, we accumulate exclusive resources by purchasing independent filmmakers' film copyrights, and at the same time participate in small-budget films. In the later stage, we start investing in blockbusters and counterattack the theatrical and television markets. This development path seems very attractive, but, Simon, what then?"
Simon smiled and said, "If Blockbuster can achieve this, it will already be a groundbreaking achievement. Future matters, of course, will be discussed in the future. You have to understand that this world is constantly changing. Televisions in the fifties, VCRs in the seventies, these all brought fundamental changes to Hollywood. Now it's the nineties, and I think something transformative will definitely appear next."
"The Internet?"
"Well, I have to say, you are truly too smart."
Nancy's mind conjured up some information about the Blockbuster Online platform. In the past year, Blockbuster Online achieved over $100 million in revenue. Although it only accounted for about 3% of Blockbuster's annual revenue, this business area could no longer be ignored. The man opposite her had once described the future of the internet to her. If it truly entered an era of universal internet, the influence of internet platforms would certainly be no less than that of current television networks.
"I suddenly feel like I should buy more stock in America Online and Cisco."
Simon chuckled, "How much do you have now?"
"Not even $10 million yet," Nancy glanced at the guy opposite her and said, "Your salary to me is far less generous than Amy's."
"Amy is essentially one of the founders of this company; what she gets is already quite little," Simon shrugged, "However, if you need money, I can lend it to you."
Nancy leaned forward slightly, her tone carrying a hint of playfulness: "Do I need to pay it back?"
Simon admired the exquisite face across the table, his voice tinged with a playful provocativeness: "Not paying it back is also an option."
Nancy immediately sat up straight and looked at the female assistant who had been quietly sitting next to Simon, starting to complain: "Jenny, he's flirting with me."
The female assistant rolled her eyes at Nancy, then glared at the guy beside her, but didn't say anything, quickly lowering her head to continue eating quietly.
Seeing Nancy's complaint was ineffective, Simon provocatively raised his chin at her.
The petite female executive, however, was not polite and said, "Lend me $20 million, calculated at 5% annual interest. I won't take your things for nothing."
Simon nodded: "No problem. Since you want to follow the rules, this money should have collateral, right?"
"Mmm, I'll mortgage myself to you."
"Very good, I'll add another 5 million for you."
"..."
Nancy couldn't help but roll her eyes back.
---
After lunch, Simon dealt with some other minor matters and then set off again, flying to the East Coast.
Tomorrow is January 20th, the inauguration of the new president, Bill Clinton. Simon did not plan to be present at the inauguration ceremony but intended to attend some receptions after the ceremony.
Moreover, this was just a side note.
The main business was about America Online.
In the new year, America Online will push forward another ASL network construction plan involving billions of dollars in investment. Simon had to rush to America Online's East Coast headquarters to participate in the discussion of the final plan.