There’s too much cost and waste baked into the traditional Hollywood studio model. We have a handle on that.
AMORTIZED SUNK COSTS
To start a major film studio from the ground up, one would usually start with a development fund of between $20 million to $50 million. This is used to develop slates of films, most of which are never made. This is a “sunk cost” that must be amortized in the films that are actually produced.
UNRELIABLE BIG DATA
Hollywood spends anywhere from $250,000 to $5 million on big data analytics before greenlighting a film … without uncovering anything that is reliably predictive. Our model focuses on direct, primary observation of actual audience interaction with a specific story, not voodoo analytics or surveys subject to cognitive bias.
SEQUELS AND REMAKES
Risk-averse studios remain dependent on the cycle of sequels and remakes, even though it is showing signs of diminishing returns. As financial analyst Vasily Karasyov of J. P. Morgan said, “the cycle of sequels and remakes have played out,” and “films based on previous intellectual properties present a growing risk to industry profitability.”