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Entertainment Product Market Study …

Entertainment Product Market Study
Introduction To Marketing
Full Sail University
June 2010


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  • 1. Theo Skudlark June 24, 2010Introduction To MarketingFull Sail University
  • 2. DreamWorks Studios, LLC.The CompanyDreamWorks Studios is a motion picture company formed in 1994 by StevenSpielberg, Stacey Snider and The Anil Dhirubhai Ambani Group. The Walt DisneyCompany holds exclusive worldwide distribution agreements with the studio. Films Suchas “The Peacemaker,” “Amistad,” “Saying Private Ryan”, “American Beauty”, and all ofthe “Shrek” features established the studio as a powerhouse of motion picture production.By 1999 the company had totaled over $2 billion dollars in international box office ticketsales. The company also offers television programming and an immersive Internetexperience through its web sites.The company is financed by Reliance BIG Entertainment and a syndicate ofbanks arranged by J.P. Morgan Securities. The Limited Liability Company is the parentcompany for its subsidiary DreamWorks Animation SKG.The animation company is publicly held under its subsidiary DreamWorksAnimation SKG and traded on NASDQ under the DWA ticker symbol and currently hasa 1 to 1.5 million average volume in shares. The current trading price of its commonstock is $28.35 per share. The companies EPS position is 0.63.BusinessThe company generates its main source of revenue from box office ticket salesand an exclusive line of merchandise branded by many of its original motion pictures.DreamWorks Animation SKG offers an exclusive line of animated motion pictures and amerchandising franchise that is much larger than is parent company. Motion Pictures onmultiple formats to Children’s Toys are what the company markets and offers as its lineof products. The Company also co-operates with other companies under licenseagreements to promote its line of products.
  • 3. MarketBecause the company comingles many titles that are targeted to specific marketsthe geography for the companies marketing is worldwide. Forty percent of its revenuestream comes from countries outside the United States. The parent company targets theentire global market while the subsidiary targets the same market but more strategicallychildren, young adults and parents. Concluding that the demographic would be suited tocommunities that are family orientated. The psychographic would be primarily childrenfrom ages 2 through 13 whereas most of the titles are rated PG.CompetitionLions Gate Entertainment a motion picture company that offers similar titles andprogramming of theatre and home entertainment. The company although hasmore titles in its catalog is worth a considerable amount less than its competitor.WPTE Enterprises an entertainment company that specializes in gaming contentprogramming. While its product line varies, the company appeals to very similarmarkets. In valuation the company is a fraction of the powerhouse of itscompetitor DreamWorks.4Kids Entertainment is a licensing company that specializes in product placementexclusively geared towards the children’s market. While the company’s productsdo not directly compete with DreamWorks the company competes withDreamWorks distributor, The Walt Disney Company for retail licensingagreements. There is no public record of the company’s finances that I cancompare; the company appears to be a privately held firm.DreamWorks Studios and DreamWorks Animation SKG are the realization of one mansvision. The parent company entails four officers and one principal partner while thesubsidiaries corporate governance is comprised of ten officers on the board of directors.The company employs 1,900 persons and has a very comprehensive benefit andinvestment package.
  • 4. Student  Name:  _Theo_Skudlark_____________      Date:_June  20,  2010____    SWOT  Analysis  for:  DreamWorks  Animation,  SKG.          Strengths   Weaknesses        1. Currently  owned  by  Paramount  Pictures  and  Viacom  Inc.,  DreamWorks  Animation,  SKG.  has  strategic  distribution,  promotion  and  service  alliances  internationally  and  retains  control  over  its  intangible  assets  of  feature  films.  (1)      2. The  company  has  produced  eighteen  animated  films  to  date,  three  of  which  have  been  the  highest  grossing  animated  films  for  the  respective  years  of  release.  (2)      3. The  company  has  1.1  million  dollars  in  equity  and  has  earned  profitable  revenue  for  each  year  that  the  organization  has  been  established,  while  the  majority  of  its  competitors  operate  at  a  deficit.  (3)            4. The  lack  of  diversified  business  could  have  adverse  effects  on  the  company  because  its  focus  is  confined  to  animated  family  entertainment.  (4)      5. Animated  films  are  expensive  to  produce,  uncertainties  inherent  in  their  production  could  result  in  the  expenditure  of  significant  amounts  on  films  that  are  abandoned  or  significantly  delayed.  (5)      6. The  production  and  marketing  of  animated  films  and  other  properties  is  capital-­‐intensive,  the  capacity  to  generate  cash  from  the  films  may  be  insufficient  to  meet  anticipated  cash  requirements.  (6)      Opportunities   Threats    7. DreamWorks  Animation,  SKG.  is  a  publically  held  company;  anyone  can  purchase  Class  A  common  stock  through  various  brokerage  firms.  (7)      8. Live  Entertainment,  Virtual  Environments  and  Television  programming  syndication  could  diversify  and  expand  the  company’s  valuation  and  market  share.  (8)    9. DreamWorks  Animation,  SKG.  Expansion  into  the  stereoscopic  3D  market  and  potential  Theme  Park  in  Dubai  could  expand  the  company’s  consumer  awareness  and  profit  margins.  (9)        10. The  current  economic  climate  has  proven  a  decrease  in  3D  box  office  ticket  sales.  (10)      11. There  are  limited  amounts  of  screens  capable  of  showing  3D  features  and  many  theater  companies  will  not  embrace  the  technology  due  to  limited  amounts  of  3D  features  available  to  validate  the  expense  of  retrofitting  facilities  for  accommodation.  (11)    12. Piracy  and  international  copyright  law  violations  threaten  the  motion  picture  industry  as  a  whole.  Furthermore  economic  disintegration  within  the  United  States  could  result  in  a  melt  down  of  the  entire  industry.  (12)      
  • 5. Supporting Facts and Figures:1. Currently owned by Paramount Pictures and Viacom Inc., DreamWorksAnimation, SKG. has strategic distribution, promotion and service alliancesinternationally and retains control over its intangible assets of feature films.(DreamWorks Animation, SKG. 2009)2. The company has produced eighteen animated films to date, three of which havebeen the highest grossing animated films for the respective years of release.(DreamWorks Animation, SKG. 2009)3. The company has 1.1 million dollars in equity and has earned profitable revenuefor each year that the organization has been established, while the majority of itscompetitors operate at a deficit. (DreamWorks Animation, SKG. 2009)4. The lack of diversified business could have adverse effects on the companybecause its focus is confined to animated family entertainment. (DreamWorksAnimation, SKG. 2009)5. Animated films are expensive to produce, uncertainties inherent in theirproduction could result in the expenditure of significant amounts on films that areabandoned or significantly delayed. (DreamWorks Animation, SKG. 2009)6. The production and marketing of animated films and other properties is capital-intensive, the capacity to generate cash from the films may be insufficient to meetanticipated cash requirements. (DreamWorks Animation, SKG. 2009)7. DreamWorks Animation, SKG. is a publically held company; anyone canpurchase Class A common stock through various brokerage firms. (DreamWorksAnimation, SKG. 2009)8. Live Entertainment, Virtual Environments and Television programmingsyndication could diversify and expand the company’s valuation and marketshare. (DreamWorks Animation, SKG. 2009)9. DreamWorks Animation, SKG. Expansion into the stereoscopic 3D market andpotential Theme Park in Dubai could expand the company’s consumer awarenessand profit margins. (DreamWorks Animation, SKG. 2009)
  • 6. 10. The current economic climate has proven a decrease in 3D box office ticket sales.(Regal Entertainment Group / United Artist Theaters 2009)11. There are limited amounts of screens capable of showing 3D features and manytheater companies will not embrace the technology due to limited amounts of 3Dfeatures available to validate the expense of retrofitting facilities foraccommodation. (DreamWorks Animation, SKG. 2009)12. Piracy and international copyright law violations threaten the motion pictureindustry as a whole. Furthermore economic disintegration within the UnitedStates could result in a melt down of the entire industry. (DreamWorksAnimation, SKG. 2009)Conclusions:DreamWorks Animation SKG has positioned itself as a leader in animated featurefilms. With the strength of Paramount Pictures, one of the major motion pictureproduction studios, and innovators such as Steven Spielberg and David Geffen as theorganizational backbone is likely that this company will experience longevity and growththrough its featured animated motion picture releases and stockholder equity in the yearsahead.The lack of diversification in the DreamWorks Animation business model couldlimit the expansion of the company into untapped markets and revenue streams.Production adaptation of stereoscopic 3D features; while innovative this could also be therope by which the company commits economic suicide. Furthermore with the escalatingexpense of production and marketing, decline in 3D feature box office ticket sales andinternational piracy the company must be weary of the return on investment everyproduction embodies and advocate anti piracy laws.While most of its competitors operate at a deficit or financial loss, DreamWorksAnimation has profited even in one of the most difficult economic environments indecades. This statistic and its schedule of upcoming unreleased titles has positioned and
  • 7. proven that DreamWorks Animation SKG continues to be an innovator in the animatedfeature arena and motion picture industry.There is tremendous risk investing in entertainment ventures and the competitionis additionally fierce. With the minds that brought us part of the Star Wars Trilogy andGeffen Records leading the way, I can trust that these individuals hold the vision. Avant-garde and lacking diversification, nonetheless there is zealous within their creativeconcepts. They have proven foresight with past ventures with the icons they haveinnovated and contributed to American culture. It is clear that they know what they aredoing and where they are going. With that said I would certainly invest into DreamWorksAnimation SKG however diversification would be my primary objective if I were everelected to the board of directors.
  • 8. ProductShrek is a flagship brand of DreamWorks AnimationSKG. A series of animated feature films that has fourfull-length motion pictures in addition to made fortelevision productions.The competitive advantage of the Shrek brand and whatdifferentiates it from the competition is its originalcharacters. No other animated features or characters havebeen able to achieve paralleled success through amultitude of sequels besides that of Walt Disney’s MickeyMouse.
  • 9. Product Benefits & FeaturesShrek’s Benefits and Features:The benefits of Shrek is the story telling capacity. Themotifs present action, drama, comedy and fiction, whichpresent stories with an ethical foundation and solid moralexamples. There are valuable moral lessons that arepresented in each of the stories that speak to bothchildren and adults alike. DreamWorks hassuccessfully captured the realm of familyentertainment with its Shrek features.The merchandising of the brand includes products andmaterial that are educational in addition to entertaining.This synergy is a very strong accomplishment whereas it isdifficult to capture the attention of children. Furthermoreentertain children while at the same time teaching themvaluable traits that have the potential to be carried over andbeyond into there lives.
  • 10. Target Market SegmentDemographic:The target market for Shrek ‘s animated features is family entertainment and comedy.More specifically the animation demographic targets the 12 – 17 age bracket of bothmale and female market segments. Each of the films story lines present scenarios thatalso target an adult demographic. Thus the films appeal to more than merely onespecific market segment. DreamWorks has succeeded in achieving total marketsaturation by the scale of Shrek’s demographic.Geography:The films have been adapted to 44 languages and have global distribution channelscovering the majority of westernized nations (1).Psychographic:Upwardly mobile teenagers who enjoy comedy and can afford to see movies. Themedian family income is within the middle to upper class. Respectively representing 79million people or 28% of the entire U.S. population (2).Sources: 1. Shrek Languages. http://www.subtitleseeker.com2. DreamWorks Psychographic. Eagle Eye DVD Promotions Plan. Page 6.http://www.georgeozuna.com/mktg/EagleEye.pdf
  • 11. Pricing• The median price for Shrek DVD’s and Blu-ray is between $10.00 and $20.00.• The median U.S. box office ticket price for an average film is $7.50.• The median U.S. box office ticket price for 3D films is $15.00.• The median U.S. box office ticket price for Imax-3D is $18.00.One of Shrek’s competitors Walt Disney / Pixar’s “Toy Story” was used incomparison. The findings indicate that competitive pricing for DVD’s and Blu-rayvary among retail competitors and do not reflect the pricing options set forth byDreamWorks or Walt Disney / Pixar. Furthermore movie theaters compete for boxoffice sales, representing a standardized ticket price that does not reflect aparticular title. These pricing options represent the Status Quo pricing strategywhere as film companies operate different from retailersand theatres. Theaters and retailers often use the SkimPricing Strategy to leverage competition.Sources: Amazon.com, BestBuy.com, National Association Of Theater Owners, SlashFilm.comVs.
  • 12. PlacementDreamWorks SKG has an exclusive distribution agreement with ParamountPictures, a subsidiary of Viacom Inc. This is because Paramount Pictures acquiredDreamWorks SKG and utilizes an already established global distribution channelwith exclusive retailers of Paramount’s discretion.DreamWorks SKG however retains all other rights to exploit its films, includingpromotional tie-ins, promotional rights, merchandising and music publishingwith respect to each of its titles.The global reach of Paramount and Viacom’s distribution channels hassuccessfully saturated DreamWorks target market. This has propelled Shrek to beDreamWorks most successful brand and the largest grossing animated films inhistory.Sources: DreamWorks SKG 2009 Financial Report and SEC filings.
  • 13. PromotionDreamWorks uses multiple faucets to promote its films. Shrek has establishedco-operative promotions and merchandise-licensing agreements with McDonald’s restaurants, Heinz Food, Mars Inc, The U.S. Forest Service, Hasbro,Activision, X-Box and Nintendo in addition to clothing manufactures forexclusive Shrek branded products. These products promote the films inaddition generate revenue for DreamWorks SKG outside of box office ticketand DVD/Blu-ray sales.DreamWorks utilizes Print Advertising in magazines and out door media aswell as Internet, Television and Radio promotions to promote its films and theShrek titles.Sources: PRNews Promotional Partners Press Release (DreamWorks SKG May, 2010)
  • 14. Outdoor Advertisement
  • 15. Media MixDreamWorks advertises its Shrek features with outdoor advertising inheavily trafficked areas such as posters in Shopping Malls, Billboardsand Bus Kiosks near movie theatres and DVD / Blu-ray retailers.The print ads appear in Fashion and Beauty publications such asVman magazine a subsidiary of BASH Publications. The ad campaignfor Shrek Finally Ever After, created noteworthy controversy. (1)DreamWorks utilizes Clear Channel Communications and TurnerBroadcasting affiliates for an abundance of its U.S. Television andRadio promotional campaigns.Yahoo was innovative with its online marketing campaign through thetechnology used in its development of ads for the Shrek features.The vehicles chosen and affiliated promotional partners represent thecore demographic of Shrek’s market segment. Therefore the synergywas relevant within the execution of Shrek’s marketing campaigns.Sources: 1. Vman Magazines ad campaign controversy http://www.imdb.com/news/ni2085658/2.
  • 16. SummaryAfter extensive research upon DreamWorks SKG and the Shrek titles I have concluded thatthe Shrek brand combined with the promotional affiliates and campaigns are one of thefinest marketing and creative synergies the entertainment industry has witnessed. Shrekwhile being the flagship for DreamWorks SKG is only a portion of the company’spowerhouse of motion picture titles and animated features.While DreamWorks SKG’s parent products are the feature films, the merchandisingassociated with the Shrek Brand is vast. This presentation only touches the tip of the icebergof how truly extensive the Shrek franchise and other Brands under the DreamWorksumbrella are. I hope that this has presented a portion of the magnitude and scope of whatone mans vision can accomplish.Mr. Spielberg’s contributions to the world have enriched the lives of millions. I like manyothers anticipate what he and his group of creative minds will think of next.
  • 17. SourcesShrek Demographicshttp://lexicalist.com/search.cgi?s=shrekShrek in multiple languageshttp://www.subtitleseeker.comA Shrek Psychographichttp://www.dove.org/news.asp?ArticleID=72Shrek “Go Green” Campaignhttp://www.clickz.com/3626771DreamWorks Psychographic. (Page 6) Eagle Eye DVD Promotions Planhttp://www.georgeozuna.com/mktg/EagleEye.pdfAmazonhttp://www.amazon.com/s/qid=1277604527/ref=sr_pg_2?ie=UTF8&keywords=Shrek&bbn=130&d=1&rh=n%3A130%2Ck%3AShrek&page=2Best Buyhttp://www.bestbuy.com/site/olstemplatemapper.jsp?_dyncharset=ISO-8859-1&_dynSessConf=-8273464082132008116&id=pcat17071&type=page&ks=960&st=Shrek&sc=Global&cp=1&sp=&qp=crootcategoryid%23%23-1%23%23-1%7E%7Eq536872656b%7E%7Enccat02015%23%230%23%23v&list=y&usc=All+Categories&nrp=15&iht=nNational Association Of Theater Ownershttp://www.natoonline.org/statisticstickets.htmSlash Filmhttp://www.slashfilm.com/2010/03/25/3d-ticket-prices-are-on-the-rise-effective-this-weekend/Promotional Press Release: Advertising partners for Shrek the final chapterhttp://www.prnewswire.com/news-releases/dreamworks-animation-announces-ogre-whelming-promotional-partner-and-licensee-support-for-shrek-forever-after-94540789.htmlVman Magazine ad campaign controversyhttp://www.imdb.com/news/ni2085658/Yahoo Innovationshttp://www.marketingvox.com/shrek-ad-debuts-on-yahoos-new-mobile-html5-based-platform-046993/DreamWorks Financial Data: DreamWorks SKG 2009 Financial Report and SEC filingshttp://ir.dreamworksanimation.com
  • 18. References:DreamWorks Animation, SKG. 2009 Annual Report and 10-K Sec filings.Retrieved on June 8, 2010 fromhttp://www.dreamworksanimation.comRegal Entertainment Group, United Artist Theaters & Edwards Cinemas 2009 FinancialReport. Retrieved on May 20, 2010 fromhttp://investor.regmovies.com/phoenix.zhtml?c=222211&p=irol-irhomeDavid Geffen & Geffen Records HistoryRetrieved on June 20, 2010 fromhttp://www.answers.com/topic/geffen-records
  • 19. Sources:DreamWorks Historyhttp://www.dreamworksstudios.com/about/historyDreamWorks Animationhttp://www.dreamworksanimation.comInvestor Guidehttp://www.investorguide.com/stock.php?ticker=DWAHoovers A D&B Companyhttp://www.hoovers.com/company/DreamWorks_Studios/ctxiff-1.html

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