The HHSE Board resolution yesterday (authorizing the formation of a subsidiary corporation, VODwiz, Inc.), sparked some discussion and inquiries about the share structure and plans for the new entity. The purpose of this morning's blog is to answer some of the key questions posed by HHSE shareholders.
1). Why will HHSE only own 60% of the VODwiz, Inc. stock? This is a false question. HHSE will own 100% of the "issued" VODwiz, Inc. stock upon initial issuance. However, like most corporations, VODwiz, Inc. will only be releasing 6-million of the 10-million "authorized" shares initially. So HHSE will own 100% of the ISSUED shares by having this quantity from day one.
2). Why have a separate entity for the Video-On-Demand streaming venture at all? The number of studios signing up for participation in VODwiz is exceeding our expectations, and the number of films to be available upon launch is headed towards being a very impressive number (we're still NOT officially "consumer launched" as of this date... VODwiz willl officially launch as a service to consumers on the day that all of the new, third-party titles go "live" to the site). Accordingly, we're feeling that this venture is positioned to become much larger than forecast, both in terms of revenues as well as visibility and eventual operational infrastructure. Putting all of the studio licensing agreements into the VODwiz, Inc. name serves a variety of purposes, including liability insulation for HHSE, business credibility for the venture, and a degree of separation for some suppliers that are a tiny-bit uncomfortable about participating in a streaming venture with a direct competitor.
3). What will happen with the "unissued" VODwiz, Inc. stock shares? Without having a crystal ball, it's impossible to say. While there are no immediate plans for the issuance of any of the authorized (but non-issued VODwiz, Inc.) treasury stock, possible uses come to mind, e.g.: a). VODwiz, Inc. might become it's "own" separate publicly traded entity someday, with HHSE shareholders receiving shares in the new VODwiz Pubco (while still retaining their HHSE shares); b). VODwiz treasury shares might be useful in attracting a super-star level President for VODwiz, someone with a background and proven track record in the internet-site or streaming businesses (shares for sign-on or performance-based incentives); c). Treasury shares might be useful in securing a few "major studio" product lines to be available through VODwiz.
4). Mobile Devices and Streaming are becoming the "New Norm" worldwide - VODwiz is positioned as a Pioneer in a rapidly growing market segment. CISCO, APPLE, SAMSUNG and other hardware / software giants have forecasted an explosion in streaming-enabled mobile devices... up to TEN BILLION units in the coming years. VODwiz, Inc. is ready to ascend to a leadership role and pioneer site as a major streaming supplier due to its broad programming from more than a dozen studio suppliers. Check out the article below from FORBES, and decide if you think NOW is the right time to put focus and energy into the VODwiz venture?
GO HHSE! GO VODWIZ!