After being teased by her boss, Nancy Brill could only roll her eyes. Realizing that such topics inevitably involved too many sensitive matters, and Simon wasn't likely to disclose much, she conceded, "Fine, boss. Let's get back to business."
Simon nodded and stopped joking around. He glanced again at the Diablo sales report in his hand and said, "First-month sales of 2.1 million units. That's an outstanding result. Total sales reaching 10 million is within reach. But as you've probably noticed, of the 2.1 million units sold, 1.4 million were online sales, while only 700,000 were offline. So, here's what I want to say: it's time for Daenerys Entertainment to build its own online game store."
Nancy Brill's eyes widened in surprise. "Boss, I've brought this up with you a million times before. What made you agree today?"
"The timing wasn't right before. During the early stages, we needed to focus our resources on Egret to maximize the cultivation of online consumer habits. Now, both the network environment and user habits have reached a mature stage. Even if we don't do this, other companies certainly will. Rather than waiting for competition to emerge, it's better for us to compete with ourselves."
Nancy nodded rapidly, almost as if she feared Simon might change his mind. But then she asked, "Boss, have you discussed this with Egret?"
"Of course."
Nancy thought for a moment, then shifted the topic slightly, unable to resist asking, "Boss, does this mean you're planning to voluntarily split Egret in response to the antitrust investigation?"
Simon glanced at Nancy's still youthful-looking face. "Don't you think your curiosity is a bit excessive?"
Nancy grinned. "Looks like I guessed right."
"No, you guessed wrong," Simon replied, shaking his head. "Egret's position is too strong for me to make any concessions."
Nancy pouted slightly. "Boss, has anyone ever told you that you're hypocritical?"
"Hmm, Jenny said the same thing just a few days ago."
"..."
"Alright, let's stay on topic," Simon redirected the conversation. "Nancy, you need to understand, this won't be an easy task. I'm giving you two years to get it done. The name will be EA Store. The store should not only distribute games developed by Daenerys Entertainment but also welcome titles from other developers onto our platform. Additionally, I don't want to see predatory price wars between your store and Egret's game store. Such competition would hurt not only the profits of both companies but also the fundamentals of the gaming industry as a whole."
Nancy immediately put on a pitiful expression. "Boss, you're making this way too hard for me."
Simon ignored her exaggerated look of distress and said, "Daenerys has its advantages, doesn't it? Starting with the Dune series, we've had our own online multiplayer platform. That's a feature Egret doesn't have."
The online multiplayer platform was inspired by Blizzard's Battle.net, which was launched in 1997 in the original timeline.
In this case, Egret had rolled out a similar platform years earlier with the Dune series. After acquiring Silicon & Synapse (the predecessor of Blizzard), both Warcraft titles and last month's Diablo were seamlessly integrated into the online platform.
Simon had initially hoped to develop fully online games. However, apart from casual hits like FarmVille and Happy Ranch, most attempts in recent years hadn't been particularly successful. Instead, the online multiplayer platform had steadily gained popularity among users.
As of now, not only real-time strategy games like Dune and Warcraft, but also EA's popular sports games and certain RPGs, had implemented online multiplayer modes.
This technology was one of the most significant advantages of Daenerys Entertainment's gaming division.
Understanding the company's strengths, Nancy suggested, "In that case, boss, could we transform our online multiplayer platform into the EA Store, rather than relying on a web-based model tied to the IE browser ecosystem?"
The IE ecosystem was the foundation of Egret's monopoly over internet access points.
Over the years, Egret had fiercely defended the IE ecosystem, clashing with numerous tech companies to maintain its dominance.
Nancy's suggestion, in essence, sought to avoid relying on IE, but she didn't have high hopes for Simon's approval.
To her surprise, Simon nodded. "That's a good idea. But we still need to set up a website."
Nancy was briefly stunned and then asked, "Boss, have you been... under some kind of stress lately?"
Simon's expression remained calm. "No, but I have been getting a bit too much action lately. Exhausting."
"..."
"Something wrong with that?"
"A lot of things are wrong."
"Then don't ask," Simon dismissed her concerns outright. "In any case, your goal is to establish the EA Store within two years. In addition to distributing Daenerys Entertainment's own games, you need to attract external developers as well. Egret will provide technical support and authorize Ypay integration. My only requirement is to ensure competition with Egret is healthy, not destructive. Your target should be other emerging online game stores, not Egret."
Nancy nodded seriously, indicating she understood.
Simon glanced at his notepad and continued, "Also, I want you to step up acquisitions. Any studio with potential should be considered."
Nancy voiced an objection: "Boss, isn't that unnecessary? As a film director, you of all people should know that creators rarely produce more than one or two classics. They can't stay at the top forever. Game studios are the same, if not worse."
"You can adjust the acquisition model as needed, but the strategy to expand acquisitions remains unchanged," Simon said firmly. "Nancy, I understand the issue you're raising. However, our acquisition targets aren't necessarily the teams themselves but their creative output."
"Boss, I recall you once said that creativity is the cheapest commodity."
"Creativity is cheap. The problem is, turning creativity into a game isn't cheap. And turning creativity into a hit game? The odds are even lower. Nancy, most games are still 2D, but you've probably noticed the growing trend toward 3D. Compared to 2D, think about how much it costs Pixar to make an animated film. You'll realize that future 3D game development will become exponentially more expensive. At that point, turning ideas into games will carry a hefty price tag. The safest strategy will be to produce sequels. Unlike films, where actors and other factors often limit franchises to trilogies, games can continue indefinitely. Some franchises, like Japan's Super Mario, are already on their 10th or even 20th installment. So now is the last chance to acquire creative properties—Intellectual Properties, or IPs—at relatively low costs. Think of them like the copyrights Daenerys Entertainment owns for its various properties. Do you understand?"
Nancy nodded. "I understand."
"That's the first matter," Simon said, glancing at his notepad again. "The second involves Blockbuster. If everything goes as planned, Sony, Toshiba, and other manufacturers will launch DVD players by the end of the year. Blockbuster's online operations have been very successful in recent years, but with the advent of the DVD era, its strategy needs to adapt."
"Boss, I've noticed this too. But compared to VHS tapes, DVDs will likely exacerbate piracy issues," Nancy said.
Simon, aware of how piracy had shaped the VCD industry in China, nodded. "That's inevitable. But just like VHS tapes in their early days, there were concerns they'd lead to rampant piracy. In the end, VHS tapes doubled Hollywood's market size. DVDs will follow a similar trajectory. We must avoid the record industry's recent mistake of resisting the internet and instead embrace and control this trend."
"In that case, what should Blockbuster do?"
"It's simple. Double down on online operations and expand its logistics network. The ultimate goal is to phase out physical stores and transition to a fully online model."
Nancy felt overwhelmed. "Boss, isn't that a bit too aggressive?"
"You can start with small-scale tests," Simon replied. "For instance, test DVD-by-mail services. Unlike Blockbuster's current hybrid model, where customers order online but pick up tapes in-store, this would deliver DVDs directly to customers' homes and allow returns by mail. Compared to VHS tapes, the lower shipping costs of DVDs make this viable."
"But boss, Blockbuster's current model is already very successful. Otherwise, its market value wouldn't have reached $37 billion."
"If we don't disrupt ourselves, Nancy, someone else will."
Nancy, usually confident, looked conflicted. "This feels... painful."
Simon replied matter-of-factly, "A little pain now, and it'll feel much better later."
Nancy blushed and glared at Simon. "Boss, keep that up, and someone's going to sue you for harassment."
"Are you planning to sue me?"
Nancy paused, then nodded threateningly. "Maybe."
"Alright, no more jokes," Simon said, steering the conversation back. "DVDs, and even Sony's upcoming high-definition DVDs, are still transitional technologies. Blockbuster's ultimate form should be a streaming platform. It needs to completely abandon physical formats like VHS and DVDs and focus solely on online streaming. So someday in the future, Blockbuster will need to go through this painful process again."
Nancy didn't respond with another quip this time but instead asked, "In that case, boss, shouldn't we just fully acquire Blockbuster?"
"Not right now. Its stock price is too high," Simon said.
"I understand. But what
I mean is, we should start preparing now for when the internet bubble bursts."
In the original timeline, Blockbuster collapsed with the rise of the internet.
This time, however, thanks to its hybrid model aligning with the new tech wave, its market value had soared to $37 billion. Still, Daenerys Entertainment's ownership in Blockbuster had decreased from 35% to 28% due to mergers and stock-based incentives over the years.
As the largest shareholder, Daenerys still maintained strong control over Blockbuster, but it no longer had absolute control. Given Simon's vision for the company, Nancy believed fully acquiring it would be the best option.
After a moment of consideration, Simon said, "We're already facing frequent antitrust scrutiny as Blockbuster's largest shareholder. If the opportunity arises, acquiring just enough shares to reach 51% and secure absolute control would be a less contentious path than a full buyout."
Nancy thought it over and agreed, nodding.
The two continued discussing details until lunchtime, wrapping up the morning's work.
There were still unresolved matters regarding music.
As one of Daenerys Entertainment Group's two presidents under Amy Pascal, Nancy's portfolio now included games, music, and home entertainment after several adjustments. If Daenerys Entertainment wanted to find new avenues for growth, these three areas were all promising.
Of course, there was also the cable television division overseen by the other president, Robert Iger.
Overall, aside from the core film business, Daenerys Entertainment's television, gaming, and music divisions all held substantial potential for further development.
Particularly gaming.
Simon had always regarded it as a top priority. After all, as the saying goes, gaming can be more profitable than selling drugs. And most importantly, the gaming industry was as vast in scale as the film industry. This was a key reason why Simon suddenly approved the creation of Daenerys's own online game store to compete with Egret.
The market was big enough to accommodate two top-tier online distributors.
And competition would only help drive innovation.
Simon had always emphasized the importance of competition. "Adversity fosters growth, while complacency leads to decline." A lack of competition not only hurts consumers but also stagnates the industry itself.
Then there was music.
In recent years, the rise of the internet had decimated the record industry at an unprecedented pace, especially with the launch of the iPlayer, which accelerated the decline.
Simon understood that the record industry was the foundation for hardware products.
However, due to the industry's stubborn resistance to change, Simon had adopted a wait-and-see approach, allowing the sector to collapse under its own weight—even if it meant significant short-term losses for Daenerys Entertainment's music division. Eventually, when the major record labels were forced to adapt, Simon planned to step in, likely through acquisitions, to expand Daenerys's music business further.
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