Its most expensive release, "Ender's Game," released in November, was a financial failure, grossing $112 million worldwide on a $110 million budget. Budget figures omit the sizable amount spent on marketing a film.
By comparison, this new company will seek to release films with approximately $40 million budgets featuring big-name stars, filling a territory most studios have abandoned. It expects to invest $1 billion in new productions during the next five years.
Adopting the business model of larger established studios, it will be a distributor of its films as well, having inked distribution agreements directly with four of the biggest movie theater chains in America: AMC Theatres, Regal Entertainment Group, Cinemark and Carmike Cinemas. According to The New York Times, those agreements guarantee nationwide screen time for up to 10 films a year.
Another key part of its strategy is China's Hony. SMG (Shanghai Media Group) Pictures is in its investment portfolio. According to the Times, SMG has forged deals with other American studios to develop movies for the Chinese market.
"We wanted this to be blue-chip, strategic money, and not just some guy writing a big check," Simonds told the Times.
Still, even the best business strategy will not insulate anyone from flops. And the risk rivals venture capital, in which conventional wisdom goes that only 1 out of every 10 startups will succeed. Similarly, among the most difficult creative achievements is crafting a piece of entertainment that a lot of people want to watch.
Tribune reporter Nina Metz contributed.