FUNDING THE GROWTH
Solid strategies underpin company’s business plan
Until now, the bulk of the financing for Felix & Paul Studios’ projects has come from Oculus and other companies with virtual reality platforms, including Samsung and Google. This is not corporate altruism; the moves are intended to address the classic chicken-and- egg dilemma faced by purveyors of new media technology: you can’t sell the hardware if there isn’t enough content to play on it, and you can’t finance the content if only a few own the hardware.
While sales for the first generation of consumer virtual reality headsets were underwhelming, a new batch of better, cheaper models, similar to the upcoming Oculus Go, which is wireless and self- contained, have the potential to transform the VR industry and, in turn, the business models used by companies such as Felix & Paul.
“If headsets 2.0 do as well as they’re projected to do or even come close, there are going to be enough viewers and customers, effectively, to inspire thirdparty financiers to jump in,” says Felix & Paul’s chief content officer Ryan Horrigan. “And if markets continue to grow, I think the budgets will get to a significant place.” Although he can’t comment on specifics, he says, “We’re getting close to cable television drama cost-per-minute.”
According to Horrigan, the business plan Felix & Paul is crafting is akin to those employed in the indie film world, which combine minority equity investments with foreign sales, tax credits and international co-productions. It works particularly well for Felix & Paul, which, because it is based in Montreal, can take advantage of Canada’s wealth of government tax incentives, as well as co-production treaties with close to 60 countries.
As with its counterparts in the traditional film and TV business, Felix & Paul can also use windowing — selling its projects sequentially to different platforms in a variety of regions.
The first window rights have typically gone to the VR platforms underwriting the content, such as Oculus, owned by Facebook, but there are a growing number of potential buyers around the world that could help bolster the balance sheet.
“It ranges from specific location-based venues that need content — that’s a No. 1 evolving market — to more traditional streaming distribution,” says Bryan Besser, co-founder of the talent agency Verve and a partner and an investor in Felix & Paul Studios. “There is a very large market for 2D 360 video, which can be viewed on mobile, tablet, laptop and desktop, so you don’t have to own a headset to experience it.”