Greetings HHSE Shareholders, Friends & Followers - As the home-entertainment world continues to evolve and mature, we find ourselves in an interesting position with our VODWIZ streaming portal. As originally envisioned several years ago, VODWIZ has been structured with the support of nearly all major independent film companies, as a "one-stop" destination site for independent films. As the venture grew, we found that three major studio labels were willing to "give VODWIZ a try" by offering an assortment of higher-end theatrical titles... so the venture was becoming MORE than a site solely for lesser-known, independent movies.
As we prepared for the launch of VODWIZ, we discovered that the cost for HHSE to build out the hosting, delivery and customer-service infrastructure was enormous (well over $1-mm), and that it was prohibitive to try to finance this with internal resources... and unattractive as a vehicle for borrowing (as a start-up streaming division with no revenue history). So, when the opportunity to have hosting and operations handled by Nanotech arrived, we felt that this was a good solution to defraying these significant infrastructure costs.
Unfortunately, launching via Nanotech did not work to either company's satisfaction. HHSE supplier partners wanted to see the site fully functional before opening the floodgates to 1000's of films... but Nanotech wanted a substantial initial title count before committing more resources to the venture. Ultimately, after losing several years of momentum, Nanotech and HHSE/VODWIZ parted ways. We wish Nanotech well as they pursue the UltraFlix strategy of offering 4k format programming for streaming.
For the past year, VODWIZ was working to satisfy some benchmarks required for Cinedigm to act as the host and operational partner for the venture. However, the cost-structure for Cinedigm's involvement was impeding enthusiasm from some of the HHSE-VODWIZ supplier studios.
So, what's happening with VODWIZ now? As described last week, VODWIZ has now partnered with Amazon Digital Services for hosting, operations, payment processing and customer service of all activities. This is being done without prohibitive benchmark requirements and at a fraction of the costs presented through the prior operational structures. Better yet, the massive data and streaming capacity available through Amazon's multitude of regionally-based servers, has opened up two new "channels" (so to speak) for VODWIZ. The VODWIZ site now being assembled, prepared and uploaded will feature THREE main categories of programming on the home-page menu:
WATCH - LEARN - PLAY
WATCH - menu link will open to the traditional VODWIZ assortment of passive-viewing programing: thousands of feature films and television episodes, primarily from indie studios, will be available for viewing on both a transactional basis, or a subscription basis. This is the model that VODWIZ has planned from initial conception several years ago.
LEARN - this menu link is a new twist to the Video-On-Demand streaming market. With an abundant supply of educational programming now available, the "LEARN" menu of VODWIZ can offer a wide range of subjects and levels. Art, English & Composition, Foreign Languages, History, Math, Science, Social-Sciences and many more subjects and achievement levels (from beginner to advanced levels). Most of these subject programs will offer interactive "quizzes" so that the user can track their achievement goals.
PLAY - VODWIZ will be offering a significant menu of single-player, interactive and group-play VideoGames under the PLAY menu option. Amazon's large storage capacity and data delivery capabilities make the gaming / PLAY / option an important and exciting new component of the VODWIZ venture.
USER OPTIONS - VODWIZ will offer programming under two models: Pay-Per-Transaction (starting at only $.99 per program, and increasing based upon studio rental models), and Monthly Subscription Model (monthly plans for each category, and Premium Plans for LEARN & PLAY as described below).
The Premium Subscription Model will enable up to five (5) individual users per subscription (so that "Billy, Jr." can have his own login-access). Parents can "limit" the access granted to their kids to wide range of restrictions (e.g., no "R" rated movies, no Violent Video Games, only 4-hours per day, etc...). Even better, parents can create a performance-based rewards model for the kids, by activating the Achievement Points option under the LEARN menu: passing grades on the on-line quizzes generate access points to enable Billy, Jr. to watch movies or play video games! With kids spending more-and-more time in front of electronic media today, having a mechanism to incentivize taking on-line classes to earn access to video games and movies is a twist to VODWIZ that we feel families will embrace.
Management is still working on the pricing models for the various Subscription options. However, we are attempting to work out a $7-per-month model for "watch" only, and a $10-per-month "premium model" (which allows for multiple users, limitations as well as achievement awards access). Our initial (first year) target is to have 100,000 subscription customers, averaged at $8.50 per month - for annualized gross revenues of $10.2-million. The operational system we are building with Amazon will accommodate data servicing for up to 50-million monthly subscriptions, should the venture prove to be widely popular!
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