CINEMEDIA STUDIOS, INC.
37404 Bedlington Park PI.
Bedlington, WA 56390
June 23, 1992
CineMedia Studios is an aggressive developer of unique virtual reality entertainment products. Catering to the intelligent user seeking a game with intellect, it is seeking additional capital to fund more projects in its already well-received line. Following is an outline of a progressive company plan that can provide insight into product development and marketing.
- EXECUTIVE SUMMARY
- PRESENT SITUATION
- FINANCIAL PROJECTIONS
- OBJECTIVES
- MANAGEMENT
- PRODUCT/SERVICE DESCRIPTION
- INTERACTIVE MOVIE MARKETING
- TECHNOLOGY DEVELOPMENT & ACQUISITION
- CONCLUSIONS AND SUMMARY
Executive Summary
In 1990, CineMedia Studios was formed to fill the void in the marketplace for intelligent, sophisticated, interactive entertainment. The studio has grown to create world-class, interactive multimedia software products designed to take advantage of the rapidly expanding market. CineMedia Studios follows an artistic vision of interactive storytelling and entertainment, defining new boundaries of personal involvement with computer-based cinema. It continually explores the territory of this new media, charting ways to bring together user interaction, video, text, graphics, animation, music and sound.
CineMedia Studios now intends to capitalize on the immediate opportunities for growth in this explosive market by building our business to the next tier, expanding our operations to encompass publishing as well as production, and significantly increasing the number of innovative titles we produce each year.
Background
For the last several years, this industry has been geared towards children, and sales of computer games and equipment have risen steadily. Unfortunately, parents have found it much more difficult to find computer software that will challenge as well as entertain. This trend will continue as the Nintendo generation grows up; one need only take a look at all of the computers being used in classrooms around the country to see the potential adult market.
CineMedia Studios believes adults are hungry for intelligent, interactive entertainment that takes advantage of the computer but jettisons the adolescent trappings of computer and video games. The advent of the large installed base of CD-ROM drives coupled with the increased sophistication of computer technology has now made the delivery of this kind of content possible. According to a new study done by Simba Information, Inc., the market for consumer-based CD-ROM titles is expected to double this year, generating over $300 million. With the increased penetration of CD-ROM drives leaving consumers searching for more diverse content, audiences are clearly ready for the titles that CineMedia creates.
In the past, CineMedia Studios has developed distribution arrangements in order to produce our interactive software. We now seek capital to develop our own titles, and to establish a publishing arm. This will solidify the future of our development, and is designed to capitalize on the enormous opportunity in this industry - one that, like the golden age of Hollywood, may never come again.
Our company developed The Lunacy of Ronald, which sold out of its initial run by the end of 1993. We have operated at a break-even position ever since because every dollar we make is immediately put back into the development of the company and additional software products. Revenue projected for fiscal year 1995 is expected to be $2,000,000. Annual growth is projected to be at least 50-60% per year through 1996. We are now ready to expand our operation to achieve maximum growth in the next five years.
Concept
CineMedia Studios' target market includes educated adults ages 18 to 45 who have the latest in computer technology available in their homes and a disposable income. This combines the current market of "early adopters" with females 21-40 and college-educated families with growing children.
Our strategy for dominating the competition is through the continued development of products, each as entertaining and technologically advanced as the last. Future products, will be strategically designed to chart a course for the market, and then follow up with products that will capture the interest of our audience again and again, building brand awareness and encouraging repeat customers.
Our work on CD-ROM has already broken new ground and will continue to lead the industry in interactive cinema. Our competition is just now entering the market and must develop the expertise and experience we already bring to our titles. The ability to develop award-winning interactive films from the ground up is unique to CineMedia. Our customers expect intelligent, engrossing entertainment and leading-edge technology when they reach for our products. Since our products take a completely different approach of the traditional computer game, we've found a niche others have not been able to capture.
We have just completed the development of Astral Gate: No One Sleeps Here, a full-length, interactive movie. The press we've received for this product has been voluminous, and our proprietary method of presentation, Absolute Cinema (patent pending), is setting the standard for interactive movie entertainment.
All products from CineMedia Studios are protected by trademark, copyright laws, and patents.
We are currently developing two titles, Astral Gate II and Gateways, an interactive movie theater environment that contains ten interactive films: six new films and four others that have already garnered multiple awards, including two Best of Shows at Quick Time™ Festivals.
In addition to our existing products, we have written treatments for another dozen software products that will build on the technology available and the demands of the market. We also have a project list of seventy other titles.
Other services include teaching and speaking engagements by our CEO and founder, James St. Clair. We are also beginning to involve other members of our organization in these capacities, including our resident composer, our computer programming team, and our award-winning digital architect.
CineMedia has been watching the movement of the interactive industry, and we have now decided to move into a strong growth phase, both to keep up with the sheer number of CD-ROM titles being distributed every year, and to capitalize on the current market opportunities for a company such as ours. This approach is generating a tremendous amount of interest throughout our industry. For example, CineMedia's recent signing with the Agency for the Performing Arts in Hollywood resulted in coverage on the front page of the Business Section in the Los Angeles Times Sunday edition.
Responses from customers and the press indicate that our software titles are enjoying an excellent reputation, and a shelf life that is far above average. Inquiries from prospective customers suggest a considerable demand. Relationships with leading retailers, manufacturers and other distributors substantiate the expectation of CineMedia Studios for rapid growth and accomplishment in our industry.
Objectives
Our current objective is to people the company into a prominent market position. We feel that within two years CineMedia Studios will be in a suitable position for even greater expansion or an initial public offering. To accomplish this goal we have developed a comprehensive plan to intensify and accelerate our marketing and sales activities, product engineering and development, and customer service.
We also intend to take on a strategic partner, either a distributor or a publisher, who can guide us into the future while providing us with some of the necessary services that CineMedia inherently avoids. We will implement a publishing division designed to bring unique, marketable titles to an expanding audience. Our partner will help get these properties into retail channels in a time when shelf space is becoming scarce, and will also help us achieve our goal of marketing our titles through innovative sales channels.
To implement our two-year plan, we require an initial investment of $2 million, followed by a second tier funding of $6-10 million for the following purposes:
- Develop ten new innovative, interactive software titles for the mainstream market.
- Solidify relationships with strong strategic partners/distributors, exploring innovative new sales channels.
- Hire and develop a small, focused publishing team that will bring in new products and collaborate with the marketing department to sell them through known or unique channels.
- Develop a campaign to promote our current products and services, in order to maximize sales, educating and exciting our customers as we go.
- Augment company staff to support and sustain prolonged growth under the new marketing plan.
- Increase Research & Development to create additional technologies as well as to further fine-tune our competitive advantages through our existing proprietary software tools.
Management
Our Management team consists of seven men and women:
James St. Clair, MFA, is our founder, CEO, and Artistic Director. His background consists of over ten years' experience as an award-winning actor, director and author combined with eight years' computer experience. He is now on the faculty of San Diego State University's Multimedia Studios Program and a coveted lecturer all over the world.
Evelyn Halistrom, President, has seven years' experience in sales and marketing and single-handedly propelled CineMedia from a two-person operation to the leading-edge growth company it is today.
Katherine Mailor, Executive Vice-President, serves as an integral part of the day-to-day management of the company, acting as both Director of Human Resources and Production Coordinator.
Jack Lockheart, Vice-President and Chief Marketing Officer, has fourteen years of sales and marketing experience in various arenas, including the Live Aid Concert where he raised over $20 million, the 1984 Los Angeles Olympics, and most recently, major motion pictures.
Diane Armstrong, Vice President and Chief Financial Officer, has seven years of financial, corporate development, management and systems consulting experience; in her last position, she worked with American General Life Insurance Company.
Thomas Calloway, Vice-President of Technology, has twelve years' experience in systems engineering and design, including nine years with NASA and other aerospace development companies.
Michael Peters, Vice President of Audio Production, is a musician with twenty years' experience in the music industry. He composed, arranged, performed, recorded, produced and engineered the complete soundtracks for both of our interactive films.
In addition, our Advisory Council offers outside management advice and consultation. This nine member council provides tremendous support for management decisions and creativity. A list of council members is available on request.
Marketing
Overall, our company can be characterized as a high profile producer of worldclass interactive multimedia entertainment.
The fundamental thrust of our marketing strategy in the short term involves reaching the audience searching for intelligent adult entertainment, through traditional software retail stores as well as untapped channels.
In the near future, we plan to lead the industry in the production of interactive movies for television and theater, and computer platforms. We anticipate a campaign aimed at filmgoers, and intend to reach this market segment by placing a variety of advertisements in industry publications and mailing a full-color catalog to retail outlets every three months.
A partial list of current customers incudes:
- Warner Music Enterprises, Inc. (client)
- Arthur Anderson Consulting, Inc. (client)
- Media Vision, Inc. (distributor)
- Micro Warehouse, Inc. (catalog distributor)
- Tiger Software (retailer)
- Educorp, Inc. (retailer)
Also, we are targeting Europe as a strong future market: a deal is being negotiated for distribution and localization of The Lunacy of Ronald throughout Japan and Australia, and 35,000 copies of Astral Gate I: No One Sleeps Here have already been shipped overseas, resulting in very favorable press.
Finance
Based on conservative estimates, CineMedia Studios' asset base approximates $3,000,000, including cash, receivables, equipment and the value of copyrights and patents pending. In just two years we will have grossed $28,000,000 in sales and our investors will be able to collect a return on investment within five years.
Vision
CineMedia Studios' long-term strategy is keyed to the future of interactive media. We are currently pursuing all possible trademarks, copyrights, and patents, in order to increase the value of our intellectual property and our technology. We are already negotiating to license the appropriate material to other companies who seek to duplicate our methods of interactive filmmaking and its related elements.
CineMedia is very aware of the changing face of the industry, and is constantly preparing for the future. For example, raw film assets are archived at the highest possible levels for repurposing in a future iteration of the medium. Possibilities might include a port to another platform, interactive television, and forms of new media that have yet to be invented. Our proprietary perspective-switching technique is ideally suited for feature-like films, delivered via interactive television, and Absolute Cinema is equally appropriate for virtual reality-based programs.
CineMedia Studios is a content producer first and foremost, and until a standard is established, will continue to work on whatever platform is exciting and commercially viable.
Conclusion
CineMedia Studios enjoys an established track record as a unique supplier of interactive entertainment to our audience. By carving the niche in the marketplace for interactive cinema, we intend to continue our advances in the multimedia marketplace with many more exciting entertainment products, geared toward a sophisticated, educated customer.
Technology Development & Acquisition
