Hollywood Motion Picture Cluster


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Hollywood Motion Picture Cluster Analysis
Prepared for Microeconomics of Competititiveness class (Licensed by Harvard Business School) at Warsaw School of Economics (SGH)

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Hollywood Motion Picture Cluster

  1. 1. Hollywood Movie Industry Joanna Zwirbulis Aleksey Narko Ravi Kumar Cluster Analysis Eray Ersöz Michal Goszczycki Microeconomics of Competitiveness (Licensed by HBS)
  2. 2. Agenda Country Analysis • United States • California • Los Angeles Cluster Analysis • Hollywood • Entertainment Industry Recom mendation • Industry& Government problems • Suggestions
  3. 3. US Economic&Business Perfomance Population: 317 million Average unemployment: 7.3% (highest- Nevada 9%, lowest- South Dakota 2.6%) (Bureau of Labor Statistics, Dec. 2013) GDP:$15,685 billion GDP per capita: $49,922(1st) GDP growth: +4.1% (in 2013) Exports: 2nd globally Imports: 1st globally Negative Trade Deficit $34.3 billion (Trading Economies, Jan. 2013) Global Competitiveness ranking 2013-14: 5th Innovation: 7th Labor market efficiency: 4th Domestic market size: 1st Ease of doing business: 4th Rostow’s stages of growth (5th stage- the age of mass consumption): global leader
  4. 4. US Economic&Business Perfomance Source: Global Competitiveness Report 2013-2014
  5. 5. Factor Conditions + Availability of the latest technology (6th) + Infrastructure (15th) + Availability of research and training services (9th) + Geographical condition (climate and topography) + Labor market efficiency (4th) - Inefficient government & bureaucracy Supporting Industries + Cluster Development (6th) + Strong Innovation & R&D + Financial market development (10th) - Increased global competition Diamond US conditions Firm Strategy & Rivalry + Intense local competition (14th) + Ease of doing business (4th) + Economic Freedom (10th) + Flexible labor market (6th) - Macroeconomic environment (117th) - Institutions (35th) - Total Tax rates/ % Profits (101th) Demand Conditions + Leader in the market size (1st) + Innovation (7th) + Business sophistication (6th) + Buyer sophistication(9th) - Budget deficits/ General Debt (140th)
  6. 6. California basic information Facts and Figures: Population: 38 million Labor force size: 18,6 million Income per capita: $43,647 Unemployment rate: 8,9% Ranked 8th largest Economy in the world Home of the world’s biggest publicly traded companies Sources: 50states.com
  7. 7. California Economic perfomance
  8. 8. Cluster Employment
  9. 9. Los Angeles County Facts and Figures: Population: 10 million Incorporated cities: 88 Total number of firms, 2007: 1million Persons below poverty level: 16,3% Gross Products Comparisons, 2012 (In billion $) Sources:Wikipedia.org
  10. 10. Hollywood Cluster History & Facts - From 1910 movie companies moved from the New York to Hollywood - In 2011 industry employed nearly 162,000 wage and salary workers and more than 85,000 free-lance professionals - Around 247,000 direct job opportunities - $43 billion in labor income with a $120 billion annually output - Around 13.300 establishments in 2011
  11. 11. Hollywood Cluster Map Source: The LA Motion Picture Industry Cluster, Harvard Business School
  12. 12. Domestic Competition - In total over 40 states like New York, Louisiana , Texas, Michigan, Georgia, Florida and New Mexico - In 2004 Los Angeles peaked at 118,200 and 2011 it felt down with a 13,6% to 102,100 International Competition - Bollywood (India), Nollywood (Nigeria) and Pricy
  13. 13. Major Hollywood Movie Studios The Historic MGM Studios - Established in 1915 as Triangle Pictures - Market Capitalization (MGM) : $11.51B - James Bond, Pink Panter, Rocky Paramount Studios - Established in 1913 - Market capitalization (Viacom) : $38.6B - Titanic, Forest Gump, Top Gun, The Godfather Warner Bross Studios - Founded in 1923 by four brothers: Jack, Sam, Herry&Albert - Market capitalization (Time Warner) : $38.6B - Casablanca, The Exorcist, Batman Universal Studios - Founded in 1912 - Market capitalization (Comcast) : $133.6B - E.T, Jurassic Park, Jaws DreamWorks Studios - Founded in 1994 - Market capitalization : $1.45B - Shrek, Amistad, Madagaskar Source:wikipedia.org
  14. 14. Factor Conditions + Human Capital (artist agencies and schools) + Geographical condition (climate and topography) + Financial investment power-house -Rising Prices of labor and physical assets Diamond Firm Strategy & Rivalry + Studio Cooperation - Strategic Monopoly of big studios LA Supporting Industries + Film Awards and festivals + Related Industries Vfx, sound, Ads, financial and others +Film Awards and festivals Motion picture Demand Conditions + One of the biggest domestic markets +Innovation (7th) +Established international distribution channel + - Growing market of home cinema
  15. 15. Future challenges California state problems: - Lack of domestic savings in California region – harmful to investment Cyclical state deficit Slow integration of the minorities into the culture 25 % higher energy prices than n the rest of the US Film industry: - Development of new technologies allowing for piracy - Home cinemas which account for the drop in theatre admissions Los Angeles location: - run-away of the film shuting to other cuntries due to cost , scenery
  16. 16. Recommendation For the Federal Government: - Increase domestic saving to improve the environment for the investment - Suppoting the industry through the establishment and constant updating of property rights legislative, fighting piracy For the Californian Government: - Reduction of costs of running the industry in order to reduce the number of run-away production (taxes) - Finding a way to at least equalise the prices of energy in California with the prices in other states - closer monitoring of the needs of the filming industry through the Californian Film Commision
  17. 17. Thank you for Attention! Questions???