If you are currently projecting that you will start to receive income from sales within the next 36 months then we expect a certain level of minimum information. We want to know the approximate manufacturing cost of your product, the cost of raw materials and the selling price of the product. We also want to know what level of sales you are forecasting. Please explain the assumptions on which the figures are based. If you are able to provide a spreadsheet to back up this information please do so. The information that you provide at this stage should build on the information that you have provided in the earlier question on the route to market (Q5.5)
Due to the scale and nature of the project, incorporating protracted periods of prototype R&D, prototype production, further R&D, final production and then marketing & distribution before seeing any real financial returns, it is unlikely that the project will be receiving sales income before 24 months have elapsed. A pre-sales agreement for the DVD will be sought with a major distributor (film or game) but as this is a new type of product, it is hard to estimate figures ahead of promoting the initial demo to distributors and retailers and getting projected figures.
The sales plan is:
1) Sell the SANCTUARY DVD as a budget entertainment title
2) Sell print rights to make the "head bin" property into a graphic novel
3) Sell script and rights to make the "head bin" property into a feature film
4) License technology and art assets from the SANCTUARY DVD
No direct income from cinema distribution of SANCTUARY is expected. Short films are not generally screened outside of festivals. The film effectively acts as a pilot to generate interest and promote brand recognition.
Provisionally we are considering selling the SANCTUARY DVD at close to cost price, which will be inversely proportional to the print run, itself depending on demand created by a marketing campaign leading up to distribution.
To estimate the selling price of the DVD, we have looked to related products for benchmarks. The Steam distribution system (currently only available for PC games but with upcoming online-enabled console support) operates on a US$9.77 (approx £6) per 600 MB download basis. AAA console game titles retail between £30 and £50. Top 10 DVD titles retail between £15 and £30. "Nothing So Strange", the first "open source" film was offered online for US$5 (cost price), with micropayments of 5 cents per individual asset download.
We are also looking into a demo purchase/refund scheme recently operated for the release of the AAA game Pro Evolution Soccer 3 as another potential model for distribution. We are looking at 5,000 sales at £10 per unit, totalling £50,000.
The projected sale price of "head bin" is US$700,000, based on researching script sales during the period 2000 - 2001 (source http://www.scriptsales.com).
The projected sale price of print rights (for a graphic novel) is US$35,000.
The pricing model for re-mixable film assets (for commercial use) will be comparable to the one in use on digital asset marketplace sites like Turbo Squid (http://www.turbosquid.com).
The way the project is looking now, we might well be receiving sales income within the next 36 months. We should discuss approaches and timescales.
Posted by: ken at November 28, 2003 04:48 PM