SANTA MONICA, Calif., Nov. 25, 2003 (PRIMEZONE) -- InternetStudios, Inc. (OTCBB:ISTO) provided a corporate update to shareholders from the Company's Chairman, Robert Maclean:
InternetStudios continues to focus on the creation and distribution of Company owned content, primarily on Digital Video Disc (DVD). The DVD is arguably the most rapidly adopted media format in consumer electronics history. In 2002, consumers spent $20.3 billion buying and renting DVDs and VHS versus $9.3 billion moviegoers spent at the theatrical box office (source: The DVD Entertainment Group). Current developments in the marketplace have created significant opportunities for an industry leader. InternetStudios has launched a twofold strategy to best take advantage of this market opportunity by: (1) aggressively pursuing a classic American brand under which the Company's DVDs will be marketed, and (2) pursuing the acquisition of library assets to release under this brand.(a)(see note below).
DVD sales have become Hollywood's cash cow, and the Company plans to capture a share of this rapidly growing market.(a) Industry analysts estimate that U.S. DVD sales exceeded 633 million units in 2002, an 84 percent increase over 2001 levels. (Sources: Adams Media; MPAA). All together, domestic DVD revenues reached $8.4 billion in 2002. The Adams Media Research Report dated as of September 25, 2003 is predicting that overseas DVD sales will increase by 55%, totaling $25.1 billion by year's end. The International Recording Media Association (IRMA) forecasted on September 13, 2003 that DVD disc shipments to be at 1 billion units in 2003, thereby returning $10 billion to rights holders. DVD is now firmly established as the fastest growing media format in history.
Further, industry heavyweights are reporting significant increases to revenues based on their DVD sales. MGM's (NYSE: MGM) world wide DVD sales increased 80% year over year to $632M and 'mini major' Lions Gate Entertainment's (AMEX: LGF) home entertainment division is projecting sales to grow to $136M, or 43% of their total revenue for fiscal 2004. Lions Gate released 70 titles in 2002, and they estimate releasing up to 100 titles per year including theatrical releases in fiscal 2004 (source: Thomas Weisel Research Report, November 12, 2003).
InternetStudios has identified a four-part strategy for success in this marketplace:
1/ Brand Recognition
The brand name that the Company is pursuing is established in
the hearts and mind of movie fans throughout the world. The
brand's remarketing with the distribution of classic movies
on DVD will ensure credibility and reinforce fidelity with
distributors and customers at-large.(a)
2/ Timing
Timing could not be better as every home around the world is
about to be equipped with a DVD player, and consumers are
soon to be spending more than three times on DVD releases
than they will be on going to the movies.(a)
3/ Multiple Revenue Streams and Outreach Potential
The company will be generating revenues from complementary
sources such as retail sales, licensing, production fees,
music and merchandising rights. In addition, the potential
for becoming the premier DVD marketing and distribution
organization for classic programs can lead to future key
content acquisitions.(a)
4/ Unique Management Expertise
The Company is assembling a highly experienced and talented
team to bring management savvy from the worlds of film and
television marketing and distribution, with hands-on
operational experience needed for this very special and
important enterprise.(a)
Robert MacLean, Chairman of InternetStudios, commented, "We have a unique opportunity today to acquire quality assets at reasonable valuations and build a significant company within a relatively short time frame. Our original plan has evolved as a result of market conditions. There is substantial institutional and private equity capital available to invest in the right plan to acquire and exploit unique entertainment assets. We have spent the better part of 2003 interacting with the investment community and fine tuning InternetStudios implementation strategy. We believe that the company is well positioned to capitalize on the last 2 years of extremely hard work and research."
The Company is actively negotiating with two parties to conclude agreements to acquire (1) a highly recognizable brand: and (2) a library of titles to release on DVD under this brand name.(a) In both cases, the Company has paid sizable deposits with respect to these transactions. However, as of the date of this News Release, the Company does not have binding agreements with either of these parties. Furthermore, there can be no assurance that either of these transactions will close, or that the Company will be successful in securing the necessary capital to fully implement its Business Plan.
Assuming the Company is successful in obtaining this brand together with the content to create these DVD packages, the Company has projected to release 30 DVDs in fiscal 2004 and 60 DVDs each of the following two years in the international marketplace.(a)
About InternetStudios
InternetStudios' primary strategy for 2004 is to build its business by the marketing and distribution of library content to DVD and television markets worldwide and through aggressively acquiring specific undervalued media assets. Management is identifying undervalued media assets, with a focus on classic filmed entertainment, to integrate into the Company's new distribution strategy.
(a) Note: This news release contains forward-looking statements regarding the Company's business strategies and future plans of operations. Forward-looking statements involve known and unknown risk and uncertainties. The company's risks and uncertainties include: intense price competition, economic, political and regulatory uncertainties, the need to raise additional capital for growth and expansion, its ability to acquire other companies or assets at reasonable prices, and its ability to hire and retain qualified employees to implement its business strategy. The forward-looking statements contained in this news release speak only as of the date hereof and the Company disclaims any obligation to provide public updates, revisions or amendments to any forward-looking statements made herein to reflect changes in he Company's expectations or future events.