Daenerys Entertainment Headquarters.
Nancy Brill had just gotten off the plane and was picked up by a driver to come here. As she arrived outside Amy Pascal's office, she happened to see Amy seeing three tall women out of the office. The women didn't know Nancy, but they all politely greeted her before turning to leave.
Once the three women left, Nancy followed Amy into the office and asked, "Are those the three wonder woman candidates the boss picked?"
Amy walked behind her desk and nodded. "Yes, the company arranged a few small roles for them, and they just finished their auditions".
Nancy sat down opposite Amy and commented, "I think the one in the black trench coat is good. Of the other two, one's temperament is too weak, and the other has more of a baby face; neither is quite right".
"Lynda Carter has a baby face too", Amy said, getting straight to the point after sitting down in her leather chair. "Wayne Huizenga called this afternoon; he's being driven crazy by you".
After Blockbuster was acquired by Wayne Huizenga and others, the company headquarters was currently established in the small town of Meridian, south of Denver, the capital of Colorado.
Nancy Brill had flown to Meridian yesterday afternoon, planning to attend Blockbuster's board meeting this morning. It was originally supposed to be a routine meeting with no major agenda items.
However, at the morning meeting, Nancy suddenly teamed up with several other directors on the Blockbuster board to pressure management, demanding that Blockbuster invest funds to update its data management system and establish a dedicated data analysis team.
During the process of acquiring shares in Blockbuster, Daenerys Entertainment had promised not to interfere in Blockbuster's management for three years. However, as the largest shareholder with a 35% stake, both Daenerys Entertainment and Blockbuster's management knew that such a promise could not be 100% enforced.
In fact, Blockbuster had previously accepted Daenerys Entertainment's suggestion to add licensed merchandise sales counters inside the chain stores, a plan that Nancy had also been the first to propose.
Due to its rapid pace of expansion, Blockbuster's capital had always been in a state of being stretched thin.
After arriving in Meridian yesterday afternoon, Nancy had privately discussed her new plan regarding data processing with Wayne Huizenga. But because the budget for this plan was as high as $20 million, Wayne Huizenga could only choose to refuse.
Then the events of the morning occurred.
The rights of the directors Daenerys Entertainment appointed to Blockbuster were temporarily restricted, but the other board members were not. Nancy had found another way by convincing those people to support her plan.
Understanding Amy's intention in intercepting her directly from the airport, Nancy pulled a document from her bag and handed it to her, explaining, "Amy, the number of Blockbuster stores is indeed increasing rapidly, but can you imagine? They're still basically using the data management system David Cook developed at the beginning. This system can only provide very primitive, simple data like which videotapes are selling better. If it were just dozens or a hundred stores, David Cook's management system could still meet the needs. But if the number of chain stores increases to thousands, this system will appear very primitive and inefficient".
Amy listened to Nancy's explanation while flipping through the document she handed over, which turned out to be a research report on the business status of Blockbuster chain stores in several major cities in California.
When Nancy finished, Amy looked up at her and said, "But Nancy, before you did this, you should have at least discussed it with everyone first".
"I'm sorry, Amy, I only got this report just before I left Los Angeles yesterday afternoon", Nancy explained, then added, "The barrier to entry for the video rental chain business is very low. If we just blindly expand the scale and ignore the simultaneous improvement of business management standards, we'll eventually just end up with a 600-pound fat man who's been force-fed and can't even walk. A slightly healthier competitor could easily overtake this company on the track".
Amy just nodded slightly and didn't respond further, instead reading Nancy's research report seriously.
In the report, Nancy used a series of data to elaborate on the necessity for Blockbuster to upgrade its data management system and add a data analysis team.
The reason large supermarket chains like Walmart and Aldi are successful is largely due to their ability to pass on as much savings as possible to customers. However, passing on savings isn't something that can be done with simple price cuts; short-term price promotions don't have much of an effect. This strategy must be long-term.
So the problem arises: only by having sufficient profit margins can you pass on savings to customers in the long run. To achieve this, a company's operating costs must be low enough.
Companies like Walmart and Aldi have successfully achieved this through streamlined and efficient management systems.
Similarly, in the retail chain business, Blockbuster's market share in the video rental chain field is only about 5%. But if it wants to grow large and continue to maintain its advantage in the industry, it must emulate the business strategies of companies like Walmart.
For a video rental chain company, an efficient data management system allows the operations team to more accurately judge the company's terminal sales data and make timely adjustments in procurement, warehousing, logistics, and other areas. As efficiency increases, costs naturally fall, and the number of employees the company needs to hire will also decrease.
The fact that Walmart had over 2 million employees at its peak shows how high the labour costs of retail chain businesses are. Blockbuster's number of video rental chain stores has only recently reached 500, and the number of employees has already exceeded 3,000.
After finishing the research report in her hand, Amy also understood why the other directors of Blockbuster would stand on Nancy's side.
Anyone with even a little bit of foresight, probably wouldn't refuse such a measure that is very beneficial to the company's development.
In the complaining phone call from Wayne Huizenga, he also affirmed Nancy's suggestion. He just hoped this matter could be delayed a bit because Blockbuster's cash flow was indeed too tight.
Of the $120 million Daenerys Entertainment invested in Blockbuster, half had been spent in the last month or so on repaying maturing debt and accounts payable. The remaining $60 million, even counting the continuous income contributed by Blockbuster's chain stores, could at most keep the company supported for six months.
Blockbuster's management is already starting to consider financing issues for the second half of the year.
Closing the report, Amy said, "Alright, Nancy, I'll send a copy of this report to Simon. We'll let it slide this time, but you absolutely cannot pull a surprise attack like this again next time".
Amy wanted to move past it, but Nancy wasn't done yet. She said, "Amy, Huizenga still only agreed to $10 million for upgrading the data management system. The plan to set up a data analysis team and establish a film information database didn't pass. I'm wondering if the company can put up the money to do this? Not just for Blockbuster; establishing such a team and database would also be of great benefit to Daenerys Entertainment".
Nancy's report also suggested, based on previous research results, that Blockbuster establish a dedicated data analysis team and even further establish a comprehensive film information database.
Speaking of which, this proposal was inspired by the recent turmoil in the Japanese financial market.
The news of Simon's entry into the Japanese financial market was exposed recently, causing many ordinary people to start paying attention to financial current events, further affecting people's entertainment and leisure lives.
The research team Nancy hired found that many customers at Blockbuster chain stores began asking clerks to recommend some business war or financial movies. However, either the clerks didn't understand the type of film the customers wanted, or there weren't many films of similar themes in the store.
The result was predictable: the chain stores were unknowingly missing out on a large number of sales opportunities.
Employees willing to work in video rental chain stores are basically just there to make a living, and a large portion are part-time. The company can't expect all these people to have the rich film knowledge needed to serve customers.
At the same time, because the chain stores' data management system is relatively primitive, customer demands cannot be fed back to management in a timely manner to quickly arrange for the allocation of film and television resources.
All these reasons cause inefficiency in Blockbuster's operations.
Nancy believed that her proposed data analysis team and film information database plan could not only effectively solve the above problems but even actively create business opportunities.
For example, this time, if there were a data analysis team that could receive and process sales information feedback from terminal chain stores in a timely manner and confirm that consumers are interested in business war and financial films, the supply team could quickly check corresponding content resources from the film information database and make allocations.
If the data could be more refined, it could even predict the demand for content in different regions in advance, avoiding wasted resources in procurement, warehousing, and logistics, and saving as much cost as possible.
Moreover, with the company's data support behind the scenes, even a clerk who knows little about film information can skilfully provide appropriate suggestions to customers at the right time: "Oh, you're interested in this type of film? Perhaps you could take a look at Oliver Stone's 'Wall Street'".
Across the desk, Amy felt an urge to rub her temples as she listened to Nancy's introduction. "Nancy, such a team and database might be of great help to Blockbuster, but it's hard to generate direct revenue and profit. If we invest in it, not only will we not make money, but it will also require long-term continuous investment. The company can't do such a thing".
"I've already talked it over with Huizenga, Amy. Daenerys Entertainment can set up a special subsidiary for this purpose and then sign a cooperation agreement with Blockbuster. After operating for a few years, once Blockbuster has enough strength, it can pay to acquire this company, and we'll be able to recover our investment then. Even, if this company's effect on Blockbuster is significant enough, we can request to acquire more shares from Blockbuster through a stock-for-stock merger."
Amy wanted to argue some more, but after hesitating, she said, "I'll send this report to Simon, Nancy. If he agrees, I'll provide you with a budget. However, you just recently founded Blizzard Studio and are also responsible for the consumer products department. If you add this company on top of that, are you sure you can handle it all?"
"Of course, no problem", Nancy nodded. Seeing that the matter was settled, she stood up to take her leave. "If there's nothing else, Amy, I'll be going now".
Amy saw Nancy to the door and added, "Are you coming to the 'Rain Man' celebration party tomorrow night?"
On the previous weekend of February 10th to February 12th, 'Rain Man' successfully broke the $100 million mark. After its full ninth week of release, the film took in another $6.63 million in seven days, bringing its cumulative box office to $106.32 million.
Daenerys Entertainment announced after the data came out this Monday that it would hold a celebration party on Saturday night, which also served as a PR move for the film's Oscar run.
Nancy didn't have any plans for tomorrow night, but she still declined. "I won't be going".
Amy didn't push it, but reminded her, "In that case, pick out a gift tomorrow, or write a greeting card, and have someone send it over to Janette's place".
Nancy was a bit confused. "Hmm?"
Amy explained, "Next Wednesday is Simon's birthday. Janette will probably fly to Melbourne the day after tomorrow".
Nancy stood there looking at Amy, smiled after a moment, and said, "I thought you wouldn't remind me of something like this".
Amy just turned thirty this year. Although Nancy was a bit shorter and looked younger, she was actually a few years older than Amy and had more extensive workplace experience. Therefore, she was actually very aware of Amy's faint wariness towards her during this period.
Although there was a lot of buzz around Simon's 20th birthday party last year, if it weren't for Amy's reminder, Nancy really wouldn't have remembered this. For her boss's birthday, if everyone else sent cards, gifts, or other greetings and she alone was indifferent, it was hard to say if Simon would develop some grudge because of it.
"I actually really hoped you'd forget about it", Amy said, shrugging as she opened the office door for Nancy. "But, regardless..."
Seeing Amy open the door for her, Nancy was no longer in a hurry to leave and said, "Speaking of which, I'm not very good at this kind of thing. What gift do you plan to give our young boss?"
Amy said, "A box of pencils".
Nancy was a bit surprised. "Isn't that too stingy?"
"I specifically had someone bring them back from Germany. Besides, do you think there's anything we can give that would surprise Simon? Even if there were, you and I probably couldn't afford it".
"That's true", Nancy thought about Simon's terrifying, continuously expanding net worth and considered what gift to pick, while saying, "I definitely can't afford it, but you might".
Amy's compensation package was no secret: a 5% share of the annual net profit and an equal value in long-term equity rewards. Based on Daenerys Entertainment's net profit scale last year, this was a huge sum of over $20 million.
In comparison, the agreements Robert Rehme and Robert Iger signed with Daenerys Entertainment, besides their base salary, had a maximum annual bonus limit of only $3 million. Nancy's own three-year compensation package only had a $150,000 annual salary plus a maximum bonus of $1 million.
The compensation packages for Rem, Iger, and Nancy were actually comparable to those of executives in equivalent positions at The Big Seven studios.
Everyone also knew that Amy had given up her position as Vice President at Fox to jump ship and work for an inexperienced 'young kid'. If it failed, she could have become a laughingstock. Such a generous salary was also the reward for the risk she took back then.
Strictly speaking, Amy was equivalent to another founder of Daenerys Entertainment.
Therefore, Nancy herself didn't feel anything was amiss. As for whether others would have any thoughts, she didn't care about that either.
Amy joined in March 1987, and her annual bonus wouldn't be settled until next month. Because the box office shares for films like 'Rain Man' and 'Dead Poets Society' had been arriving since the new year, the cash bonus she could get was actually even higher than 5% of last year's $238.73 million net profit.
However, Amy also knew that some people in the company would feel it was unfair, so she didn't pick up Nancy's topic. She just smiled and said, "The company's financial report for last year was just finished this morning, and the consensus is to keep it as confidential as possible. So, if you want to see it, come to my office next week. This data cannot be taken out or shared".
Nancy nodded understandingly. "I understand".