At Daenerys Entertainment headquarters, Nancy Brill had just landed and was immediately brought to the office by her driver. Upon arrival, she saw Amy Pascal sending off three tall, elegant ladies from her office. The ladies politely greeted Nancy before leaving.
After their departure, Nancy followed Amy into her office and asked, "Were they the candidates for Wonder Woman selected by the boss?"
Amy nodded, sitting down behind her desk. "Yes, the company arranged for them to audition for some minor roles."
Nancy, sitting across from Amy, commented, "I think the one in the black coat looked good. The other two, one seemed too meek and the other too doll-like for the role."
"Amy, Wayne Huiyang from Blockbuster called this afternoon. He's almost driven mad by you," Amy said, getting straight to the point.
Blockbuster, acquired by Wayne Huiyang and others, had its headquarters in Moriden, south of Denver, Colorado.
Nancy Brill had flown to Moriden the previous afternoon to attend a routine Blockbuster board meeting scheduled for the morning. However, during the meeting, she suddenly united with several directors to pressure the management to invest in upgrading their data management system and establish a dedicated data analysis team.
Daenerys Entertainment, while acquiring a stake in Blockbuster, had promised not to interfere with its management for three years. However, as the largest shareholder with a 35% stake, both Daenerys and Blockbuster's management understood that such a promise was not absolute.
Blockbuster had already adopted Daenerys' suggestion to add merchandise sales counters inside its stores, a proposal initially put forward by Nancy.
Due to rapid expansion, Blockbuster's funds were always tight.
After arriving in Moriden, Nancy privately discussed her new data processing proposal with Wayne Huiyang. However, due to the high budget of $20 million, Wayne could only refuse.
This led to the events of the morning meeting.
Daenerys' directors at Blockbuster were temporarily restricted in power, but other board members were not. Nancy took an alternative route, convincing them to support her proposal.
Understanding Amy's intent in intercepting her straight from the airport, Nancy handed over a document, explaining, "Amy, Blockbuster is expanding rapidly, but can you believe they're still using the original data management system developed by David Cook? This system only provides basic data, like which tapes sell better. It's sufficient for dozens or hundreds of stores, but utterly primitive and inefficient for thousands."
Amy listened as Nancy elaborated, flipping through the research report on Blockbuster's operation in several major cities in California.
After Nancy finished, Amy looked up, "But Nancy, you should have discussed this with everyone first."
"I'm sorry, Amy. I only received this report just before leaving Los Angeles yesterday afternoon," Nancy explained and continued, "The barrier to entry in the videotape chain business is very low. If we only focus on expanding without improving operational standards, we'll end up with a 'fat giant' that can't even walk. Even a slightly healthier competitor can easily overtake it."
Amy simply nodded, seriously reading Nancy's report.
Nancy's report, backed by data, emphasized the necessity for Blockbuster to upgrade its data management system and establish a data analysis team.
Companies like Walmart and Aldi succeeded largely because they passed savings onto customers. However, this isn't as simple as just reducing prices; it needs to be a long-term strategy. To maintain this, a company must have enough profit margin to afford it. For that, operational costs must be low, something Walmart and Aldi achieved through streamlined, efficient management systems.
Blockbuster, also a retail chain but with only about 5% market share in the videotape sector, needs to follow these companies' strategies to grow and maintain its advantage.
A sophisticated data management system would allow Blockbuster's operational team to accurately assess sales data and make timely adjustments in procurement, warehousing, and logistics. Increased efficiency leads to reduced costs and fewer required employees.
At its peak, Walmart's staff count of over two million highlights the high manpower costs in retail chain businesses. Blockbuster, with only about 500 stores, already employs over 3,000 staff.
After finishing the report, Amy understood why the other Blockbuster directors sided with Nancy.
Anyone with a bit of foresight wouldn't refuse such beneficial measures for the company's growth.
Wayne Huiyang's complaint call did affirm Nancy's suggestions, but he hoped to postpone it due to Blockbuster's tight cash flow.
Daenerys' investment of $120 million in Blockbuster was half spent on settling debts and payables in just over a month. The remaining $60 million, along with continuous revenue from the stores, would only sustain the company for half a year.
Blockbuster's management was already considering financing options for the second half of the year.
Closing the report, Amy said, "Alright, Nancy. I'll forward this to Simon. We'll let it go this time, but you absolutely can't do this kind of surprise attack again."
Amy tried to move on, but Nancy wasn't finished. "Amy, Huiyang only agreed to allocate $10 million for upgrading the data management system. The plan to establish a data analysis team and build a movie database didn't pass. I'm thinking, can our company fund this? Not just for Blockbuster, establishing such a team and database would also benefit Daenerys Entertainment."
Nancy's report also suggested that Blockbuster establish a dedicated data analysis team and build a comprehensive movie database.
This proposal was inspired by the recent turmoil in the Japanese financial market.
Following the news of Simon's involvement in the Japanese financial market, many people started paying attention to financial affairs, affecting their entertainment choices.
Nancy's research team found many Blockbuster customers asking for recommendations on finance and business movies. However, the employees either lacked knowledge about such films or the stores didn't stock many of them, missing significant sales opportunities.
Employees willing to work in video rental stores are mostly there to make a living, and many are part-time. It's unrealistic to expect them to have extensive film knowledge.
Also, due to the primitive data management system, customer demands couldn't be quickly relayed to the management for prompt film resource allocation.
These factors contributed to Blockbuster's operational inefficiencies.
Nancy believed her proposal for a data analysis team and movie database would not only solve these issues but also create business opportunities.
For example, if there was a team to receive and process sales data from stores, confirming consumer interest in finance and business films, the supply team could swiftly check the movie database for relevant resources and allocate them accordingly.
With more detailed data, it's even possible to anticipate content demand in different regions, avoiding waste in procurement, warehousing, and logistics, and saving costs as much as possible.
Moreover, with company-backed data support, even employees with limited movie knowledge could competently suggest films to customers at the right moment: "Oh, you're interested in this genre? Maybe try Oliver Stone's 'Wall Street.'"
Amy, listening to Nancy's explanation, felt a surge of frustration. "Nancy, such a team and database might greatly help Blockbuster, but it's hard to generate direct revenue and profit. If we invest, we won't just not make money, but also need continuous investment. The company can't do this."
"I've already discussed with Huiyang, Amy. Daenerys Entertainment can establish a subsidiary specifically for this purpose, then sign a cooperation agreement with Blockbuster. After a few years, once Blockbuster is strong enough, they can buy out this company, allowing us to recover our investment. Even more, if the company proves to be significantly beneficial to Blockbuster, we could ask for more shares through a stock swap acquisition."
Amy wanted to object, but hesitated, finally saying, "I'll forward this report to Simon. If he agrees, I'll provide you with a budget. But you've just established Blizzard Studios and are responsible for the consumer products department. Can you really handle another company?"
"Of course, no problem," Nancy confidently replied, standing up to leave. "If there's nothing else, I'll head off now."
Amy walked Nancy to the door and reminded her, "Are you coming to the 'Rain Man' celebration party tomorrow night?"
"Rain Man" had surpassed $100 million at the box office from February 10th to 12th. After its complete ninth week, the film grossed another $6.63 million, reaching a cumulative total of $106.32 million.
Daenerys Entertainment announced a celebration party for Saturday night after the week's data was released, also serving as a PR push for the Oscars.
Nancy had no plans for tomorrow night but still declined, "I won't be attending."
Amy didn't insist but reminded her, "Then pick a gift or write a card for Simon and have it sent to Jenny's."
Nancy, puzzled, asked, "Hm?"
Amy explained, "Next Wednesday is Simon's birthday. Jenny is probably flying to Melbourne the day after tomorrow."
Nancy smiled, a bit surprised, "I didn't expect you to remind me."
Although Amy was only thirty this year and Nancy looked younger due to her height and appearance, she was actually a few years older and had more work experience. So, she was aware of Amy's subtle wariness towards her recently.
Despite the buzz around Simon's 20th birthday party last year, Nancy indeed wouldn't have remembered without Amy's reminder. If everyone else sent cards and gifts and she remained silent, Simon might feel slighted.
"I actually hoped you would forget," Amy admitted, opening the door for Nancy. "But still..."
Nancy didn't rush to leave, asking, "Speaking of which, I'm not good at this kind of thing. What gift are you planning for our young boss?"
"A box of pencils," Amy replied.
Nancy was surprised, "Isn't that a bit cheap?"
"I had them brought specially from Germany. Besides, what could we give Simon that would really surprise him? Even if there is something, we probably can't afford it."
Indeed, considering Simon's expanding fortune, Nancy pondered what gift to choose, but then remarked, "I definitely can't afford it, but that might not be true for you."
Amy's compensation package was no secret: 5% annual net profit share and equivalent deferred equity rewards. Based on Daenerys' net profit last year, this amounted to over $20 million.
Compared to Robert Rem and Robert Ager's agreements with Daenerys, which included a maximum annual bonus of $3 million on top of their base salary, Nancy's own three-year package was only $150,000 per year plus a maximum bonus of $1 million.
Rem, Ager, and Nancy's compensation was comparable to executives of similar positions in the Big Seven studios.
Everyone understood that Amy's generous compensation was a reward for the risks she took when she left a vice-president position at Fox to work for a 'greenhorn.' Hence, Nancy never felt it was inappropriate, nor did she care what others might think.
Amy, having joined in March 1987, would have her annual bonus settled next month. With the recent box office contributions from "Rain Man" and "Dead Poets Society," her cash reward would be slightly higher than 5% of last year's $238.73 million net profit.
Aware that some in the company might feel imbalanced, Amy didn't continue Nancy's topic, only smiling and saying, "The company's financial report was just finalized this morning, and everyone agreed to keep it as confidential as possible. So, if you want to see it, come to my office next week. This data can't be taken out or disclosed."
Nancy nodded in understanding, "I get it."
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