INTRODUCTION
The entertainment business is going though a major change in the way it does business - - a paradigm shift. That shift is being driven by technology, and it is happening at a breathtaking rate.
The change is digital production and distribution of entertainment. The music industry is being rocked by the change, but as technology advances, traditional broadcast, cable and satellite television, and eventually feature films will be effected.
Our goal is to create a fund to produce a string of low budget independent feature films. Initially these films will need to reach theaters through traditional distribution methods; being acquired by a film distribution company, such as Miramax, or Fine Line. But we plan to be positioned to utilize new technologies to deliver digital video content to movie theaters, and the general public directly.
MILL RIDGE FILMS has developed a business model that will transform equity-financed independent feature film production by reducing risk, and driving down overall costs while increasing production value - - and future profits.
This is done by:
Management is supported by advisors with business and technical experience in the fields of:
MILL RIDGE FILMS has provided production services in film, video, and new media for more than a dozen years, with experience ranging from features, commercials, and sales films, to multimedia events and CD-ROMs.
Along the way we've built relationships with directors, writers actors, graphic designers, and craftspeople; and worked with clients and technology leaders like IBM, Nokia, and Sony.
THE BUSINESS
It is a dramatic period of change for the entertainment business. Internet technologies that have effected retailing, advertising & marketing, and even manufacturing are about to hit the entertainment industry with tidal wave force.
Twenty years ago most people had 3 or 4 broadcast television viewing choices. You got your news from Walter Cronkite or the morning paper.
With cable television, the number and variety of choices skyrocketed; channels just for movies, or music, or comedy. As the cable industry matured the choices began to range in the hundreds.
Seven years ago, the Internet was the domain of academicians and the military.
With browser technologies such as Mosaic and Netscape Navigator, this digital information pipeline opened up to anyone with a personal computer and a modem.
From cable TVs hundreds of choices, people now have MILLIONS of choices.
But those millions of sites need CONTENT. The demand for content is so great there where DOZENS of dot com companies at the 2000 Sundance Film Festival.
Sundance, one of the premier film industry festivals and markets has a long tradition of breaking out new artists. The low budget hit "Blair Witch Project" was sold at last year's festival. This year the major distributors have new competition from the Internet. And while that competition is still small, its growing, fast.
THE FILM BUSINESS TODAY
Feature films can be divided into two categories: Studio financed productions, and equity financed independent productions.
People think of studio productions as big budget "event" movies such as "The Matrix" or "End of Days", designed to attract huge audiences around the world. Along with big production budgets, studios spend enormous amounts of money to market these pictures. The studio recoups this investment from box office receipts (minus the exhibitor's percentage), video sales, and sales to broadcast, cable, and pay-TV.
But as the cost to make these mega budget movies skyrockets, studios find they can afford to produce and release fewer films. With fewer releases, the chances of success, producing the gigantic moneymaking hit, are reduced.
In the last few years studios have filled out their release schedule, and increased their chances at the box office by entering into the "Art Film" market. Art house distributors traditionally purchase the rights to less expensive finished independent films and release them. Major studios have entered this market by acquiring an independent distributor, as Disney did with Miramax, or by opening an art house division, such as Fox Searchlight, or Sony Picture Classics.
Equity financed independent feature films are funded by one or more investors. The producer and investors generally recoup their investment and sweat equity from a sale of the finished films worldwide rights to a distributor. Sometimes, an independent film will be sold prior to completion, but for the most part, it must compete in the marketplace for the studios and their art house division's attention.
With the deep corporate pockets of their parent companies, art house divisions have diverted more money into producing their own films.
With art house distributors producing more films in house, the economic reality for independent producers is that they must create films for $1.5-2 million dollars or less to ensure success in the marketplace.
Independent producers have traditionally raised money for one film at a time. With money committed, the film is shot, edited, marketed, and sold, before the process is started all over again. This cycle often runs several years, with no opportunity to share costs, or even fully capitalize on the excitement, a successful film can create.
Yet every year there are dozens of successful equity financed features - - films like "The Blair Witch Project", "Swingers", "Ulee's Gold" or "Smoke Signals".
The films that succeed in this environment are the ones that tell great stories, and tell them skillfully.
HOW WE ARE DIFFERENT
Hollywood studio executives have proven that you can't read the movie going audience and predict what will be hot in 6 or 12 months. The reason for the success of independent cinema - - people tell stories they feel passionate about - - and it shows.
Passion is difficult to quantify. But other elements of the process are not: Production value - - getting the most for your money on the screen; Talent - - getting skilled writers, directors, and actors to participate at a cost effective fee; and Schedule - - the delicate balancing act of giving the production the opportunity to achieve its best, without wasting time or resources.
Imagine if you could give these independent features an economy of scale to squeeze more production value from the same dollar; imagine if you could give them world class, high profile talent, and increased public awareness.
That is the basis of our business model. Produce a slate of independent films, in the $300,000 to $1.2 million dollar range; produce them in series to share resources, discounts and promotion; and cast them, when possible, with recognizable actors.
Often shot on new digital video formats, or acquired by partnering with film makers, these films, produced in quick succession, would give us immediate presence in the marketplace, providing lower risk opportunities for new methods of distribution.
Prior to production of our first film, we plan to establish a web presence, promoting our films, showing interviews and behind the scenes looks at the set. The tremendous real world success of Internet marketing for "The Blair Witch Project" proves the importance of a web strategy.
This promotional site can be expanded to offer web tailored entertainment choices for specific audiences. Sites can be created for young readers, lovers of romance, sci-fi and horror or extreme sports, to name just a few. These sites could all be linked and cross promoted.
Better still the hardware and technical expertise required for web production is comparable to digital video production, allowing us to maximize our creative and technical resources.
MILL RIDGE FILMS brings together a depth of experience in producing film, video and new media, with business experience, and contacts to the creative community and entertainment industry.
Our track record of creative, on time, on budget, production and our rolodex of contacts in film, TV, theater, and new media are hard to match.
THE INTERNET & BEYOND
The Internet was designed to deliver digital information, and digital entertainment is the next logical step. Over the last 5 -10 years almost all phases of entertainment production have moved into the digital world - - whether it's midi music files, or films and TV programs edited on computers.
The sudden widespread use of mp3 audio files to distribute music over the Internet has caught the recording industry sleeping. There is a major effort going on to bring this new technology under industry regulation. But with all the resources at their disposal, the music industry's effort to control Internet music distribution is not guaranteed. There will come a day when a garage band has a single that gains notice on the Internet, releases, and distributes albums electronically, and becomes hugely popular with out a major label in sight.
As for feature film production, high definition video is already making inroads into the production side; for distribution, successful satellite transmission, and digital video projection systems exist. They are at most a year to 18 months away from competitive price point.
Broad band Internet access will be commonplace in the same time frame - - offering video on demand to most consumers.
Not to mention the next generation of intelligent appliances - - a convergence of computer, telephone, and TV that will download your entertainment programming of choice, and allow you to watch at your convenience, not a distributors.
Harvard business professor, Clayton Christensen, has made a study of businesses as diverse as the disk drive industry in the 70's and 80's and the steam shovel industry in the 30's and 40's.
He describes technologies like Internet entertainment, as DISRUPTIVE TECHNOLOGIES - - those that often proceed a recognized market, and under perform established products in main stream markets. In the final analysis most disruptive technologies prevail over the established product. More surprising still, market leaders in established products rarely entered the markets served by the disruptive technology, even as it threatened their core business.
Industry leaders often fail to read the market for a disruptive technology.
As an example, in the early 80's, even after IBM chose the Intel 8088 chip for its successful first line of desktop PC's, Intel's internal forecasts predicted the top 50 applications for it's next generation 286 chip. The personal computer didn't even make the list.
Growing and succeeding with a disruptive technology requires flexible thinking, and conservation of resources - - much like the independent film business.
For over a dozen years we have practiced our craft as producers for other people. Now we can use that experience working together, with our investors, to make the best entertainment possible.
THE FUNDING OPTIONS & SCHEDULE
We are ready to produce projects singly or in packages - - obviously multiple projects offers an economy of scale.
To finance a package, investors would fund a LLC, which would cover all costs of production for each film. In return for their investment, investors would receive initial recoupment on a per film basis, from first proceeds of each film, in second position after repayment of bank "gap" financing, if any. In addition investors would received a share of all net proceeds received by Mill Ridge from such film. In most cases, the talent in film projects (i.e., actors, directors, writers, third party producers) will participate in a film's net profits (after recoupment of the investment); In these instances, Mill Ridge will receive less than 100% of a particular film's profits.
Whether funded singly or in groups we have a production timetable we will follow.
Red Betsy is slated for production Winter 2001. In the interim we will be approaching corporations and individuals to serve as program underwriters. We plan to begin casting this spring/summer.
As for our other projects, with funding in place casting could begin almost immediately. It is possible to have production begin as early as summer 2000 on any one of our other projects.
The next few years will see the greatest variety of entertainment and information services ever available to consumers. Those services will have a voracious appetite for content.
Now is the time to tap into that need, build a brand name, and create characters, and storylines that will become moneymaking franchises for the future.
Questions can be addresses to:
Jim Calabrese Mill Ridge Films P.O. Box 1147 Maplewood, NJ 07040 212.517.1790 973.763.6398 fax E-mail:jimc@millridgefilms.com
Take a look at our demo site for the Next Wave in internet entertainment.
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