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The Mammoth Task of EOQ Financials

If your end of quarter financials have become almost impossible to manage, you’re not alone. New deal structures and data introduced by streamers have increased the complexity of financials by an order of magnitude. Goetz Grossman, former CEO of FilmRise joined MOLTEN’s Arjun Mendhi in a recent webinar on royalty reporting in the world of streaming. He explains that the pre-streaming distribution ecosystem produced a manageable amount of data. One might have had a few thousand data points, such as videotapes or movie tickets sold, reported by their theater chains. Since the rise of streaming, this has changed completely. Whether you have a few hundred titles or a few thousand, you may be receiving millions and millions of data points from your streaming platforms every month.

There are several significant problems that come with this enormous influx in data. The first is sheer volume.

"Your systems start to break down. Maybe historically you've used Excel, and you very quickly exceed the capability of Excel. Maybe you start a SQL database, and that becomes too rigid" - Goetz Grossman

Perhaps the perfect illustration of this is a story shared by Iemke Roos, CFO of BeyondDutch, describing the challenge of calculating rev shares. His team started out with an Excel file which seemed manageable when they were working with just one streaming platform in one country. After one or two months calculating royalties for multiple streaming platforms on a personal computer, the employee tasked with calculations came back and asked for a bigger one. He got it, but in the next quarter the sheet had already exceeded the capabilities of his new computer, and he needed to use one of the video editors' computers just to run the report. Iemke jokes that by the end of the year, he would have needed a NASA computer just to run his excel sheet, which at that point would have run out of lines.

"The traditional means that we have to create royalty reports just don't work anymore." - Goetz Grossman

Why is it so complicated? You may be running calculations on viewing time across different territories, across different platforms, all connected to the same title, with different deal structures, with different companies, with minimum guarantees to compare against, and it goes on and on. The answer to this complexity for Dutch Channels was to do away with rev shares entirely, instead opting to go to license and circumvent the issue. Iemke theorizes that “without a well-connected system, it’s just undoable”.

Goetz figures that at some point or another every organization, from studios to small distributors, gets to a point where they need to find a new solution, and the existing tools simply aren’t able to keep up. “Structurally they are software solutions from the '70s, '80s, '90s, 2000s, and none of them can handle this volume. None of them are flexible enough to actually generate all these different reports, and deal structures [or are] changeable on the fly.” He imagines that there are a lot of discussions going on internally for a lot of organizations on the best way to handle this problem. One option is Iemke’s method, which is that, by running his own service, he can say no to revenue shares altogether and instead opt for minimum guarantees and licensing. While that’s a good choice for him, that's not the reality that many in the industry find themselves in because they might have existing contractual obligations, and revenue shares might be a good business model for their organization. As the data continues to grow, Goetz feels it’s an imperative problem to address in the industry. From his perspective as a former CFO, “there’s a fiduciary responsibility towards all of the partners that we're reporting to. So you have to get [royalty reporting] right…But what if your system doesn't keep up with that? It’s a very pressing matter.”

It's clear that, in order to operate effectively in an increasingly streaming-oriented landscape, this is a problem that each organization must solve. MOLTEN's answer is to reimagine the entire data ecosystem, optimized for the complex requirements of media operations today. In the same way that you may run apps on an iPhone, MOLTEN offers apps that can provide different lenses on the same core data across rights, content, and financials. The result? Once laborious processes like avails searches, royalty calculations, or deliveries can be executed in a matter of seconds.

Interested in learning more? Meet the MOLTEN partnerships team for an introduction.