Vancouver, British
Columbia -- December 04, 2018 -- InvestorsHub NewsWire -- The
Wonderfilm Media Corporation. (TSXV: WNDR)(OTC:
WDRFF)
Dear Wonderfilm
Shareholders,
Our recent short trading halt signals some very
exciting news for Wonderfilm as the Exchange paused to review
several significant and strategic additions to our Company.
In the months ahead, Wonderfilm will incrementally unveil a
coordinated strategy employing AI, advertisement, social media and
fan interaction as we build a unique ecosystem able to monetize
Wonderfilm content creation from initial concept to premier
broadcast.
Leading the Way to the New
Economy
The moment my producing partners, Dan Grodnik, Jeff
Bowler, Bret Saxon and I joined with the Westshire CPC team to
create a public company, Wonderfilm was conceived to forge a
pathway into the future delivery of media content. Traditionally,
producers and our team relied on a tried and true film-financing
model, little changed in 50 years. That model has stagnated as the
process of developing, financing and monetizing movies and series
broadened and transformed. Wonderfilm was very much conceived as a
Company to pioneer a sea change.
Content creation provides endless opportunities for
its monetization, with Wonderfilm leapfrogging over other
independent producers leading the industry-wide evolution from an
old economy to the new economy.
Cutting-edge AI and Blockchain
Technology
When we first started to raise money for the
completion of the transaction with Westshire, many investors
expressed their desire for Cannabis or Blockchain ventures.
Although we wanted to satisfy the wants and needs of our
shareholders, we also must remain true to what makes money today,
and build in functions that make more money,
tomorrow.
Therefore, for strategic reasons, we undertook a
great deal of planning and due diligence to create a business model
that incorporates emerging technologies that strengthen our profits
and intensify our relationship with our movie and TV lovers. As
such, the vision to join arms with an AI-based data analytics and
social outreach platform such as Grapevine, along with customizable
and interactive “new TV” broadcast channels that incorporate reward
points to allow us to become a direct-to-customer model, was
born.
Maximizing fan interaction and customization
includes the ability to give their voice power in the content that
we create and distribute. The most effective way to do this is
through creating a Wonderfilm eco-system that includes the use our
own inclusive points and rewards system to not only allow voting,
but add another monetization stream for the Company. This objective
has a natural affinity to incorporate emerging AI technologies so
they work in tandem to further monetize Wonderfilm produced
content.
Launching Digital Streaming
Channels
Building on its emerging technology strategy,
Wonderfilm entered a partnership to launch a new digital (SVOD – ad
supported) Wonderfilm Movie Channel. This channel launches into
over 100 million US homes early next year through an existing
system operated by a major online
retailer.
The Movie Channel becomes both a new revenue stream
and distribution outlet for current, past and future Wonderfilm
produced content.
For the time being, aspects of this truly
game-changing vertical integration step must remain sealed as our
strategic partners prepare a press campaign for the first quarter
of 2019.
Core Production Business Pushes
Forward
As strategic growth broadens Wonderfilm’s revenue
opportunities, it also expands the core business as the recent
acquisitions and initiatives are predicated on burnishing the
monetization of Wonderfilm productions.
The 2018/19 slate of 17 films continues to be
prepped and shot on schedule, with seven movies already in the can
for delivery to distributors by the June 30th 2019
year-end. Four of the films going to camera have sensational lead
cast that unfortunately can only be announced once each officially
moves into production. Two are genre flicks with A-Listers who
could garner award recognition.
Merchant of Death, the announced high-profile TV
series based on a book, is now in active development with top tier
industry partners for production a year down the
road.
Connecting the
World
Partnering with third party distribution companies
to sell its content around the world, Wonderfilm leaves about $4 to
$5 million a year of potential revenue on the table. To
incrementally bring this revenue onto our books, Wonderfilm is
assembling a constellation of strategic foreign distribution
partnerships in key countries.
Wonderfilm Korea is the first such agreement with
financial/distribution partners in South Korea. Now, rather than
sell the rights outside of the Company, once a Wonderfilm movie is
ready for presale, the Korean territory is immediately acquired
through our distribution partners in
Seoul.
An immediate benefit is that Wonderfilm gains more
upside from Korea than otherwise would have been possible and
beyond production and distribution, Wonderfilm also has access to
equity funds from Korea. The partnership secures additional
investment funds from the Korean market by including Korean
elements in a film such as actors, Directors or even shooting part
or all in South Korea.
Wonderfilm envisions a constellation of similar
relationships expanding to include China, UK, Germany, Middle East,
France and Spain. Fully realized this worldwide distribution
network streamlines the film packaging process, eliminates third
part distributors in these markets or in markets sharing the same
language (excluding US and Canada) and turns a loss into a revenue
source.
Heard it Through the
Grapevine
Wonderfilm acquired 34% of Grapevine Logic with an
eye to acquiring additional equity in the future. To Wonderfilm,
Grapevine complements the vertical integration of the Company by
bringing under the Wonderfilm umbrella a potent transactional
technology company with incredible established online influence and
a developed proprietary technology that carves out a unique social
media reach of 3.2 billion subscribers.
Grapevine as a technology and transactional company
is positioned to be an easy to use ecosystem and social media
activity centre for online content and becomes a source to enhance
the fan experience of Wonderfilm produced movies and
TV.
I view Grapevine as the essential web that drives
the monetization of other Wonderfilm initiatives to generate never
before obtainable interconnected revenue from each facet of
Wonderfilm. As these links establish, revenue sources will
naturally expand to include loyalty points and tokens to allow fans
to invest into Wonderfilm productions. Online AI programmed App
technology will directly engage Movie Channel viewers and online
influences by building Wonderfilm controlled brands
etc.
As each phase comes online, Wonderfilm will
increasingly use social media engagement to expand the movie
viewers’ experience from passive to active participation. New
levels of financial interaction with media content will be
developed through emerging technology, likely surpassing crowd
funding and product merchandizing as integration generates a
full-time dialogue with Wonderfilm’s growing
followers.
Grapevine is currently breaking even, but burnished
by Wonderfilm’s content creation it is positioned for rapid new
growth. Social media primarily drives movie and entertainment
marketing in general, a trend Wonderfilm has been utilizing by
casting specific actors for roles in its film based on their social
media ratings. In short, Wonderfilm now enters the star business,
using our new social media access to promote celebrities (movies,
sports, television) appearing in our films through Grapevine’s
current systems, including transactional technology that will
significantly enhance Grapevine’s
business.
As much as AI technology will be used to engage
viewers, it’s also designed to build a lucrative database of
subscribers that can be sold to advertisers or used by Wonderfilm
to directly monetize App users and streaming channel
subscribers.
Wonderfilm Does
Sports
The partnership with Starbury Sports immediately
enhances the Company’s opportunities in the Sport world through
cross-pollinating Sport icons, celebrities and athletes with
Wonderfilm’s movie Channel, production and expanding social
media.
In the short term, Wonderfilm starts monetizing up
and coming and established teams, players and celebs with guest
spots or starring roles in Wonderfilm movies and TV series. Beyond
direct benefits to production and social media, Wonderfilm’s
strategy encompasses the lucrative ancillary market, utilizing
social media exposure to sell directly to fans, followers and
viewers personalized sales and sponsored promotion of memorabilia,
movie props, meet & greets and even broadcast of
events.
Merging Sports into Wonderfilm brings a myriad of
new transactional opportunities that will be realized over the next
year and beyond.
Movies and Much More to
Come
Wonderful business case studies for the first Movie
Channel focused on launching with a themed Horror night of films
and then adding in Science Fiction, Action Movie Night or
potentially a Faith based evening. Additionally, Wonderfilm is
strategically evaluating where, when and how best to expand its
digital streaming service and retains the opportunity to expand the
number of digital channels with plans advanced to launch a second
channel themed for sports events, eSports championships, fights,
online games and other sports assets being
developed.
As conceived, the Movie Channel will be a unique
offering with hosts driving daily content. And, as hinted above, a
new interactive App will actively engage viewers to move the
experience beyond watching the channel to an online experience that
will continue to engage viewers between movie nights. Fans will be
able to vote, play trivia, and connect in many different ways with
other movie goers to enrich their obsessions with movies and TV,
and there can even be eventual interaction with their favourite
celebrities or directors themselves. Fans can also use their
accumulated points to participate in the creation of alternate
movie endings, or, vote on the next sporting event or matchup.
These concepts are revolutionary for the entire Entertainment and
Media space.
Grapevine allows for the true marriage of online
and streaming. Movie or Sports Channel viewers become App
subscribers. Of course, too, Grapevine’s 3.2 billion reach is a
resource to sweep for fans to direct to the App and Movie or Sports
Channel.
At launch, the Movie Channel will reach just over
50 million homes in the US with advanced planning already in place
to expand this to 100 million homes in short order.
Within a few years, Wonderfilm expects
to use its AI technology to communicate directly with digital house
assistants to sell content directly through fans’ smart TVs or
tablets bypassing traditional distribution services like
Netflix.
Gazing Beyond
Netflix
Netflix proved a disruptive force in the content
delivery business with its high-profile movies and series for a
minimal fee. As powerful as they are, Netflix has yet to be
profitable and are borrowing junk bonds to finance its content.
This leaves two futures for Netflix, someday it transforms into
profitability or it will more likely be replaced by something new
that better delivers what consumers
want.
Wonderfilm’s path is to cast a wide net by bringing
social media, online Apps, movie and television production, fan
participation and new interactive experiences into a seamless
experience that offers the communication ease of Facebook, direct
delivery of in demand content like Netflix and the fan loyalty of
Comic Con. We are harnessing fans love of Movies into likeminded
online communities able to participate in the creation of content
they want to see while promoting and supporting existing celebrity
brands.
At its core, Wonderfilm aims to fully monetize the
fan/viewer experience as the end user finds a valuable, comfortable
interactive home in a brave new digital world Wonderfilm is
pioneering that continues to build new value for Wonderfilm’s
investors.
Revenues
Now for the section that our investors need to
know. How do we anticipate sales growth, and, where will our sales
be driven from, specifically in relationship to the recent
acquisitions?
Each division being added to the Wonderfilm
eco-system brings in known revenues and assets that we have been
able to quantify once we work them into our larger vision. To begin
with Grapevine, although we are not able to discuss their internal
projections, we can state that significant synergies exist through
our partnership that we anticipate will have a material impact on
both of our operations. What we can state is that Wonderfilm will
have several benefits through this partnership that includes
decreasing marketing expenses of our content, quicker execution of
pre-selling, decreasing financing costs and increasing advertising,
sponsorship and production revenues as we bring a production arm to
Grapevine’s team who currently has 4,700 corporate brands. The
revenue that we participate in through Grapevine will also drive
our efficiency metrics as it is a strong margin
business.
Through Dr. Bruno Wu and Starbury Entertainment,
which includes direct access to Dr. Wu’s event management company
(the largest in China), we anticipate annual sales to
conservatively be worth more than our acquisition price. To give
our investors in idea of the explosive potential involved, look no
further than the eSports boom occurring globally, with the bulk of
it coming from China. Currently, it is extremely difficult for
non-Chinese viewers stream or watch eSports competitions that are
held in China, as Twitch has recently been banned. Through our
partnership with Dr. Wu (who will be detailed below – vice chairman
for the U.S./China Trade Relations Board), whose companies own
large arenas that are fully geared towards eSports competitions,
Wonderfilm’s acquisition of The Movie Channels now connects the
Chinese eSports competitions with U.S. (and global) broadcasting
exposure. However, Wonderfilm is only looking to domestic sales
figures coming through the eSports assets in China, but this is a
potential vertical that has “blue-sky” growth that our investors
want in this market.
The Chinese production assets alone are estimated
to be worth just under our acquisition price, hence the value of
the deal. We also anticipate that by controlling distribution
through these various new channels that our bottom line will get a
multi-million-dollar increase by bringing those distribution
revenues in house.
Finally, through the movie channels, Wonderfilm
will be set to acquire 3rd party rights that we will
immediately monetize upon launch of the channel through
participating in the ad-revs that will be boosted through our
integration with Grapevine.
Another major asset is Wonderfilm’s ability,
through Grapevine, to aggregate extremely valuable consumer data
from all of these new networks and markets. There is a global race
for data aggregation and this combination of businesses sets the
new Wonderfilm entity up to gain this data that is actually
invaluable and truly coveted.
Due to our lawyers advice, we can’t give forecasts
about revenue. However, we can state that without the
addition of Grapevine and Starbury, Wonderfilm has $90 million in
production budgets that are locked in through our core business of
17 films that are in production and green lit. In active
development behind these projects (“the pipeline”) is a potential
production slate that is significantly larger, and we believe the
market is not pricing these correctly, given the extreme “low risk”
of our pre-sell, single base hit model that we are known to execute
on time and time again.
Who is Dr. Bruno
Wu?
Despite receiving tremendous assets and new revenue
opportunities with global possibility, perhaps the strongest asset
Wonderfilm gains in this transaction is access to Dr. Wu and his
growth resources that stretch around the
globe.
Dr. Bruno Wu is one China’s most influential
people. He is media and entertainment pioneer and has built Chinas’
largest private media conglomeration. Recently, he has been
appointed the vice chairman for the US/China trade relations, and
as such, had to step down from his role as CEO of Ideanomics, a
NASDAQ listed company. However, Dr. Wu has identified Wonderfilm as
the production studio that he wants to partner with to bring global
distribution to his events in China, while providing Wonderfilm
with the 25 movie packages and many large sports assets to
integrate into our core business, as well as dedicated access to
his event management company Sun New Light (owned by Sun Media
Group), which is one of the largest event management companies in
China. This company hosts the world’s largest music festival that
has over 840,000 paying attendees, and, organized the Olympic count
down event that was televised during the 2010 Olympics in
Vancouver.
Dr. Wu also has full access to iQiyi, one of the
world’s largest video platforms that has 500 million Active Monthly
Viewers. As previously mentioned, Wonderfilm has distribution
through over 50 million homes in the U.S. along with access to 3.2
billion followers through Grapevine.
To take an excerpt from Thesis Capital’s write up
on these acquisitions:
Despite
becoming a very prominent figure in international relations and
foreign affairs, Dr. Wu’s rise to success and fame have come from
the E&M space, and his ambitions to continue building a
next-generation entertainment company are becoming realized.
From an interview by Nancy Tartaglione via
deadline.com, Dr. Bruno Wu discusses his view of the
future and what he is trying to create:
“I’m about building the next-generation
entertainment company that’s lean and mean and scalable...I see
that there’s a very strong need to develop the next generation of
film and TV companies. Which means that you have to be very highly
concentrated only on IP and brand, and have a strong partnership
with talent. I believe that IP is more people-driven than
project-driven... I invest in people... I like to work with the
best people.”
Further in the
interview, when asked if there were any U.S. companies he would
list as a takeover target, he responded: “...My
personal interest is mainly in digital distribution, or top-tier IP
ownership.”
And this is where I can end this letter, because we
are the solution, the hub and the engine behind this tremendous
identified opportunity.
Thank you for reading and remaining with us as we
enter an extremely exciting time for this
business,
Sincerely,
Kirk Shaw
The Wonderfilm Media Corporation,
Chief Executive Officer
Telephone: (604) 638-4890
Email: info@wonderfilm.com
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