At its inception, this company will have a significant first mover advantage because they will be the only independent mastering facility in North America. The founders, who are also the principal management, have extensive experience and contacts with strong reputations within the industry. This will allow them to further extend their competitive edge in this market. To secure this position with their customers, they will establish annual contracts with about 60% of their customers. They will continue to supply and support their customers to full satisfaction even if a competitor opens a new facility. They feel their customers will not change to potential competitor services over master pricing because of the amount of production time loss and profit loss that would be caused by setting up their production equipment to the new master supplier specifications. This typically would be as long as 3-4 weeks. These customers would likely approach this firm to renegotiate their pricing instead. As demand grows for next-generation media and next-generation formats become more widely adopted, margins will fall as competitors enter the BD/HD mastering market. By ramping up volumes to meet this increased demand, this Venture will be able to offset falling margins will will still be significant, considering that the starting point is 85%. To date, the Management has received a very enthusiastic and positive response from industry contacts eagerly anticipating the arrival of their mastering facilities.