Institutions film industry final 04 11 18

INSTITUTIONS: Our study will cover:
• Ownership - Who owns what?
• Why does it matter?
• Blockbuster Vs Independent,
• Conglomeration and Ownership,
• Vertical and Horizontal Integration,
• Marketing and Promotion (including Synergy)
• and
different Exhibition/Circulation/Exchange strategies.

INSTITUTIONS: Our study will cover:
• Ownership - Who owns what? Why does it matter?
• Blockbuster Vs Independent,
• Conglomeration and Ownership,
• Vertical and Horizontal Integration,
• Marketing and Promotion (including Synergy)
• and different Exhibition/Circulation/Exchange strategies.
• We will also discuss some ideas of relevant theorists - Curran and Seaton,
and Hesmondhalgh - which will provoke some interesting debate
• There are two case study worksheets ('Under The Skin' and 'The Dark Knight
Rises')or there is a useful 'Gravity' case study which covers most of the key
areas for discussion
• There is also a research task on a current release (Blade Runner 2049)
IN MORE DETAIL

What are
Media Conglomerates?
This is a
clue

Media Conglomerates
a company that owns large numbers of companies
in various mass media such as:
• Television
• Radio
• Publishing (magazines/newspapers)
• Film production
• Internet.
How many can you name?

1. Walt Disney Company
2. BBC
3. Alphabet
4. Comcast
5. Facebook
6. Time Inc
7. TimeWarner
8. Bertelsmann
9. Viacom
10.Bauer Media
11.Microsoft
12.NBC Universal Media
13. NBC Television Network
14. 21st Century Fox
15. Fox Broadcasting Company
16. Warner Bros Television Group
17. ABC Inc
18. CBS Broadcasting Inc / Corporation
19. News Corp
20. SONY
21. Thomson Reuters
22. ITV
23. Yahoo
24. Yomiuru Shimbun Holdings

RESEARCH and produce a
presentation
• The organisation’s history/origins
• Who do they own?
• Does anyone own them? (parent company)
• What is their net worth?
• What is their gross income per annum?
• What areas of media to they specialise in
• Who is the CEO? (Chief Executive Officer)

TOP 6 FILM
Multi-Media Conglomerates
?

Top 6 Film Companies and their Multi-Media
Conglomerates parent companies
• Twentieth Century Fox – 21st Century Fox
• Universal - Comcast
• Paramount Pictures (Viacom owned by National
Amusements)
• Warner Bros (Warner Media owned by AT&T)
• Walt Disney Motion Pictures (Walt Disney Company)
• SONY Pictures Entertainment (SONY Corporation)

INSTITUTIONS
The Film Industry

DEVELOPMENT
PRODUCTION
PREPRODUCTION
POST PRODUCTION
EXHIBITION
??
? ?
What order do these film processes go in?

1: DEVELOPMENT
3: PRODUCTION
2: PRE-PRODUCTION
4: POST PRODUCTION
5: EXHIBITION

creative idea, pitch
filming
location recce, script, storyboard
editing, sound, gfx
cinema, TV, internet, VOD
Which tasks are carried out at each stage?

1: DEVELOPMENT – creative idea, pitch
3: PRODUCTION - filming
2: PRE-PRODUCTION – location recce, script,
storyboard
4: POST PRODUCTION - editing, sound, gfx
5: EXHIBITION – cinema, TV, internet, VOD

The History of Film in 3 minutes
https://www.youtube.com/watch?v=84v3gV0wkjk

Since the 1920s the American Film
Industry has grossed more money
every year than any other country in
the world.

It is the 2nd largest producer of films
after India

4 Main Periods
1. Silent Era 1900-1927
2. Classical Hollywood (Golden era) STUDIO SYSTEM 1927 - 1949
3. New Hollywood (Post Classical) 1950 -1980
4. Contemporary Hollywood (after 1980)

Classic Hollywood 1927 – 1949
STUDIO SYSTEM
?

STUDIO SYSTEM -1920s – 1950
Stars, Directors etc were ‘under contract’ to one studio
Producers were more powerful than directors
‘The Big 5’

Classical Hollywood
Vertical Integration?

Classical Hollywood
Vertical Integration
• Production (Make)
• Distribution
• Exhibition (Show- Cinemas)

Vertical integration
Vertical integration is where a company can
control the production, distribution and
consumption of its products.

STUDIO SYSTEM
Vertical Integration
• Production (Make)
• Distribution ?
• Exhibition (Show- Cinemas)

Film Distribution
Film
Distributor
Distributors decide:
where, when and to who the film will be shown

Film Distribution
Film
Distributor
ALSO RESPONSIBLE FOR:
•Producing prints or DCDM (Digital Cinema Distribution Masters)
•Shipping prints around the world
•Promoting/publicising the film

STUDIO SYSTEM -1920s - 1950
Produced. Distributed & Owned Cinemas
‘The Big 5’

Universal
United Artists
Columbia Pictures
‘The Small 3’
Didn't own theatres

STUDIO SYSTEM -1920s – 1950
1938 Sherman Anti-trust Act
Eliminate: Block Booking – studios would sell an entire year’s
schedule of films (no control of what they showed)
‘The Big 5’

1948 ‘Paramount Decision’
Supreme Court ruled that major studios could not have a
monopolyof production, distribution & Exhibition –
Studios started selling off theatres and releasing actors and staff
from contracts
The studios realised that keeping Distribution
was keeping power and profit

Film Distribution
Film
Distributor
Distributors decide:
where, when and to who the film will be shown
Deciding where a film will be shown and publicising it
POWER & PROFIT

STUDIO SYSTEM
Mid 1940s
400 movies per year
Block booking =
risk was spread
(Big budget & ‘B movies’)
More artistic ventures:
Citizen Kane etc
POST STUDIO SYSTEM
New Hollywood
(Post Classical)
Less films were made
Bigger Budgets
epic blockbusters
Competing with TV
More risk of failure

Post 1970s
Agencies have become the real power brokers in Hollywood
Controlling stables of:
•Stars
•Directors
•Screenwriters
•Cinematographers
•Producers
•Other filmmaking personnel
HAND IN HOMEWORK!!!

New Hollywood (post Classical) 1950s-1980
•Offered what TV couldn't – wide screen, 3D, epics, musicals
•TV also meant an additional exhibition vehicle (old films)
•Independent productions. Directors become more powerful
•Package Unit System (no one on a pay roll)
•More creative freedom

1930 – Will Hays – Hays Code Motion Picture Producers and Distributors of America
Strict censorship

Sweeping revisions were made to the Hays Code to reflect changing social
morals
1968Jack Valenti MPAA President founded the
voluntary film rating system easing restraints on
filmmakers' creative and artistic freedom, to inform
parents about the content of films

Francis Ford Coppola Godfather (72 & 74) Apocalypse Now (79)
Roman Polanski Rosemary’s Baby (68) China Town (74)
Martin Scorsese Taxi Driver (76) Raging Bull (80)
Brian de Palma Carrie (76) Scarface (83) Wise Guys (86)
Change in storytelling methods -
flashbacks,
twist endings,
amoral heroes
New Hollywood (post Classical) 1950s-1980
Directors had more freedom and power

1980 Heavens Gate
Budget $42M
Profit $3m
– bankrupted United Artists
Est. 1917

1980 - home video market
•A 3rd Exhibition market
•Old catalogues released - £!
•Films that were not successful at cinema
but were huge on video – Shawshank
Redemption, Terminator
•Some films went straight to VHS
•Video Nasties – Chainsaw Massacre
•Porn
Contemporary Hollywood

Film Distribution
Film
Distributor
Cinema Television VHS – rent/buy
High Street – rent/buy

• Its reliance on overseas markets for revenue
• a more global focus,
• Overseas production to save costs
• Not just California-centric
• Digital masters = simultaneous global film
releases

Will Smith
1999 Legend of Bagger Vance $10m
2001 Ali $20m
2002 Men in Black II $20m + 10% of gross
2004 I Robot $28m
2007 I am Legend $25m
Star power – if a producer signs a top star
A finance deal generally falls into place quicker
Many top stars get involved in the production stage

Who were the biggest earning actors in 2017?

STAR POWER
http://uk.businessinsider.com/highest-paid-actors-in-the-world-2017-8
https://www.cbsnews.com/pictures/forbes-highest-paid-actresses-of-2017/7/

Independent filmmakers
• Spike Lee, Steven Soderbergh, Kevin Smith, and
Quentin Tarantino
• Low budget locations.
• Smaller budgets (Digital formats = less $)
Independent Producers/production companies
still rely on the power of the Distributor

Smaller Budgets
• Major producers have realised the small budget
opportunity (Sundance film Festival) – eg– Fox
Searchlight (Produces & distributes) (Twentieth
Century Fox)
• Slumdog Millionaire
• Juno
• Little Miss Sunshine

– Horizontal Integration
?

Horizontal integration is where a company uses its
subsidiaries to cross promote a brand and/or product
across different platforms/subsidiaries.
– Horizontal Integration
?

https://www.thewaltdisneycompany.com/about/#our-businesses
Horizontal Integration
Revenue US$55.137 billion (2017)
Operating income US$14.775 billion (2017)
Net income US$8.980 billion (2017)
Total assets US$95.789 billion (2017)
Total equity US$45.004 billion (2017)

– Horizontal integration
IN 2009:
Twentieth Century Fox – News Corporation
Films, Television, cable programming,
satellite, television, magazines, books,
newspapers, sporting events, websites
Revenue US$ 30.423 billion (2009)
Total Assets US$ 53.121 billion (2009)

21st Century Fox – previously owned by
News Corporation
Films, Television, cable programming,
satellite, television, magazines, books,
newspapers, sporting events,
websites

2013 spilt up of News
Corporation
• Twenty-First Century Fox, Inc. (21st Century
Fox and abbreviated 21CF) is an
American multinational mass media corporation
• It is one of the two companies formed from the
2013 spin-off of the publishing assets of News
Corporation, (founded by Rupert Murdoch in
1979)

July 27th 2018
21st Century Fox shareholders agreed to sell the company to
The Walt Disney Company for $71.3 billion
The sale will include key assets such as 20th Century Fox, FX
Networks, National Geographic Partners
Assets such as the Fox television network, Fox Television
Stations, and Fox News Channel will be spun off into a new
company owned by current 21st Century Fox shareholders,
being referred to internally as "New Fox".
The purchase is expected to be completed in 2019 - currently
awaiting approval by international regulators.

• What are the advantages/disadvantages of
being part of a media conglomerate?
Media Conglomerates
– Horizontal Integration -

DISTRIBUTORS:
What are their responsibilities? What do
they do?

•They arrange for exhibition in theatres
•They deliver the prints to the cinemas.
•Collect receipts from exhibitors.
(cinema ticket £)
•Market & Advertise the film.
•Control the rights to all outlets
(cinema, TV, home video etc)
DISTRIBUTORS:
What are their responsibilities? What do
they do?

Distribution/Distributors - ‘middle men’
who gets a film from the producers to the
audience.
•They arrange for exhibition in theatres.
•They store and deliver the prints to the cinemas.
•Collect receipts from exhibitors.
•Control the rights to all outlets (cinema, TV,
home video, aeroplane versions etc)

Film Distribution up to 2000
Film
Distributor
Cinema Television VHS – rent/buy DVD – rent/buy
High Street – rent/buy

Exhibition
Exhibitors pay flat fee of % ticket to
distributor
Loss Leader – more profit on
hotdogs etc!

Film Distribution TODAY•Cinema
•Television
Broadcast
Subscription – Sky Movies est.1989
•High Street – rent/buy – Blockbuster, WH Smiths, HMV
DVD
Blu-ray
•Purchase On Line:
A la Carte – Amazon, Play.com, HMV.com
Subscription service – Love Film.com (rental)
•Download
•Video On Demand (VOD) – Pay Per View internet or cable (Sky Virgin
etc)
Film4/4OD via Mobile Phones – Sky Movies 4G via Vodafone
Streaming/Subscription: Netflix, Amazon Prime

Film Distribution for Avatar (2009)

Avatar (2009)
Directed, written & produced by
– James Cameron
Production Budget: £237m –
actual $280-310m
Marketing Budget; $150 million
2D, 3D & 3D IMAX versions
$232m grossed worldwide in first weekend
(2nd highest ever grossing film after Titanic)
Grossed – 9th Jan 2011 $9.96 Billion

Posters
Magazines
TV & Radio adverts
Cinema adverts
Internet
A Distributor Promotes a film via:

Tie ins
A way of cashing in on the film

Tie ins
Avatar (2009) Certificate 12A
Books
• Paper back Book
• Coffee table – ‘Art of Avatar’
• Movie Scrapbook
• Confidential Report on the
Biological and Social
History of Pandora

Tie ins
Avatar (2009) Certificate 12A
DVD/BluRay
Pre-selling DVDs
Extra scenes promised

Product Placement
When a film features products and brands prominently

Prepare a presentation on the
following films:
1. Four Lions (Warp Films)
2. Under the Skin (Film4)
3. Gravity (Warner Bros.)
4. Beauty and the Beast (2017) (Disney)
• Your presentation should identify what the film tells us about the
organisations that made it: production companies, distributors and
their nationalities
• Comment on the film’s budget, box office sales, cast, director, use
of special effects, marketing tools (such as trailers, websites etc.),
merchandising and themes (mainstream/non-mainstream).
• From researching these aspects of the film’s production, what can
you tell about Warp Films, Film4, Disney and Warner Bros.
respectively?

•Who produced it?
•What was the production budget?
•US or UK?
•Who distributed it in US?
•US Box office takings
•Who distributed it in UK?
•UK Box office takings
•Who owns the distribution company?
What were your findings?

Places to research
• Box Office Mojo
• The numbers.com
• Imdb (Internet Movie database)
• Wikipedia

Budget: £2.5 m UK revenue £3.3M
Budget: £8 m US revenue £5.2M
Budget: £130 m US revenue £723M
Budget: £253 m US revenue £1.2 Billon

Media Conglomerates Indie (Independent Companies)

Media Conglomerates Indie (Independent Companies)
Financial security – if a project
or business fails, other
companies will make money and
support the parent
conglomerate
Bigger budgets
Easier to get financial backing
Creative licence – do what you want
Innovative. For niche target audience
No interference from parent companies
Has to appeal to a mainstream
audience in order to make back a big
budget.
Fail safe subjects/minimize failure:
sequels, re-boots, franchises, literary
adaptations etc
Formulaic.
No financial security –
bankruptcy if film is a failure
Difficult to get a big budgets
Difficult to get financial backing
– takes a long time and from
numerous organisations

Media Conglomerates
Spreading financial risk

• Not so dependent on box office takings
• Powerful marketing global distribution and
selling again and again in a variety of windows
Spreading risk
Media Conglomerates
– Horizontal Integration -

Have we returned to the major control that he
studios had in 1930s and 40s??

TERMINOLOGY EXPLANATION AN EXAMPLE
Media Texts The different types
of media platforms
Print, TV, Radio,
Film, Video Games,
Internet
INSTITUTIONS - FILM INDUSTRY - GLOSSA

Who currently owns these companies?

INSTITUTIONS
Film Industry – Production Roles
https://estream.reigate.ac.uk/View.aspx?id=2
153~4l~LqqhFjRd

QUIZ
INSTITUTIONS
Film industry

In stand alone
sentences so this task
is useful for revision
Horizontal Integration is the acquisition of a business operating at the same level of the value chain in
a similar or different industry.
24

X

What is a Film Pitch?
What is its purpose?
Who pitches to who? Why?
Answer without using the word ‘pitch’

What is the definition
of a Mainstream film
and a Niche film?

How do large film companies try to
minimize the risk of failure (maximise the
chance of being a financial success?)
What types/genres of films do they tend to
make?

Top 6 Film Distributors
(Multi-Media Conglomerates parent companies)

Do the Big Six have a monopoly or an oligopoly?

What are the advantages of being owned by a
multimedia conglomerate?

What are the disadvantages of not being part
of a media conglomerate? Use the UK film
industry as an example.

What percentage of films in the UK cinema
are from the US (on average)?

Distributors
What are their responsibilities? What do they do?

What are the ways a film can be
marketed before released in
cinemas?

Which month do people go to
the cinema the most??

A good time to release…?
• Cartoons

Horror Films

What % of a film’s revenue comes
from the box office?
Where else can profit come from?

A film be promoted by its
star – how else can it be
promoted?

Film Pitch
Where a scriptwriter or director presents
their creative idea for a film hoping to
back financial backing – a ‘green light’ –
money to make it.

What is a BLOCKBUSTER?
A film with a budget over $100 million.
Often has big stars. Brings in lots of money. High concept

A Mainstream film is aimed at a wide
spectrum of different types of people
(Superhero genre etc)

A Mainstream film is aimed at a wide
spectrum of different types of people
(Superhero genre etc)
and a Niche film appeals to a small /
narrow spectrum demographic?
Arthouse, documentary film etc

How do large film companies try to minimize the risk of
failure (maximise the chance of being a financial success?)
What types/genres of films do they tend to make?
Sequels
Franchises - Existing/familiar Brands
Literary adaptations
Re-boots

• Twentieth Century Fox – 21st Century Fox
• Universal - Comcast
• Paramount Pictures (Viacom owned by National
Amusements)
• Warner Bros (Warner Media owned by AT&T)
• Walt Disney Motion Pictures
• SONY Pictures Entertainment

What are the advantages of being owned by a
multimedia conglomerate?
The financial risk is spread.
If one company loses money the whole
conglomerate will support them
Bigger budget available

What are the disadvantages of not being part of a
media conglomerate? Use the UK film industry as
an example.
No financial support
With a Big 6 distributor – they take a large %profit
Without a Big 6 distributor – not many people will
hear about the film and it will not make a profit

What percentage of films in the UK cinema
are from the US (on average)?
90%

DISTRIBTORS

•They arrange for exhibition in theatres
•They deliver the prints to the cinemas.
•Collect receipts from exhibitors. (cinema ticket £)
•Decide when to release the film
•Control the rights to all outlets
(cinema, TV, home video etc)

What are the ways a film can be marketed before released in cinemas?
Premieres
Press Junkets/public
appearances
Tie-ins with 3rd parties
Festivals
Posters
TV/Cinema Trailers
The internet
Merchandising

http://www.suicidesquad.com/
• Web sites, featurettes, the making of etc

Merchandising
– DVDs/Blu Rays/downloads/purchasable
– Books
– Video Games
– Sound tracks
– Clothing
– Toys/Models

2006
$8 million budget
Distribution rigts
bought up by Fox
Searchlight at the
Sundance Film Festival
Box Office revenue
$100 m
Film Festivals

Decide WHEN to release a film

What time of year do people go to the cinema the most??
August

Cartoons School holidays

Horror Films
Hallowe'en

What % of a film’s
revenue comes from the
box office?

< 20%
film revenue comes
from the box office

< 20%
film revenue comes
from the box office
So where does the rest of the
profit / income come from?

80% film revenue
comes from…
• Merchandising
• DVD/VOD/TV sales
• Tourism
– Eg Alnwick Castle (Harry Potter) 120% increase in sales

Englefield House Berkshire UK
• I Which
film?

Marketing a Film
Promote it by:
• Stars
How else can it be promoted?

Promote it by:
• Stars
• Director
• Genre/subject matter?
Marketing a Film

Promote it by:
• Stars
• Director
• Genre/subject matter
Marketing a Film

Resumé
1. What is a Multi Media Conglomerate?
2. Name 5
3. What are the benefits of being part of a media
conglomerate?
4. What are the disadvantages of being part of a media
conglomerate?
5. What are the advantages of being an indie
(independent) film company?
6. What are the disadvantages of being an indie
(independent) film company?

David Hesmondhalgh
• Media companies seek to minimise risk and maximise
audiences through vertical and horizontal integration and by
marketing products based on Genre, Star and Franchise.
• The most successful media conglomerates operate across different
media.
• The democratic potential of the web has been contained by the
influence of large profit orientated ‘new media’ corporations

INDUSTRIES/INSTITUTIONS
James Curran and Jean Seaton
Media industries are controlled by a small group of companies primarily
driven by pursuit of profit and power.
Concentration of media ownership limits choice and diversity.
Greater diversity in ownership leads to more adventurous and varied forms
of media content
https://www.youtube.com/watch?v=QcoZZCSdXl8

UK needs to control distribution to
make more profit and keep it in the
UK

UK & N Ireland 2009 box offices figures.
The highest grossing film was:
1st place Avatar (£83.27M)
and in 5th place Slumdog Millionaire (£31.6m)
Out of the top 20 only 8% were British films.
UK independent films were: Slumdog and St Trinians

• Britain >90% of screens are showing American
films
• France & Italy have tried to limit the market of
Hollywood products to their country
Why do we watch more Hollywood films than
British Film?

Average budget for a US film is £18-80M
UK average budget - £7M

EXAMPLE
The average UK film costs £3m in production costs
(‘negative cost of the film’)
P&A (Prints & Advertising) are generally 30% on top of
the production costs
UK £3m + £1m P&A
£3M
£1M

Who Gets What at the Box Office? And in what order
1 Exhibitors 10-50% -(generally 30%) of the box office income
So on a budget of £7M, £2M is taken by exhibitor. £5M left
£7M
-£2M
= £5M

2 Distributor. Takes on average 30% of the rest. So 30% of remainder £5m =
approx £1.3M so £3m left.
£7M
-£2M
= £5M
-£1.3M
=£3M

Plus all expenses for prints and advertising paid up front – thus taking a
huge risk. Generally £1-2M. Plus they deduct overheads, tax, BBFC fee and
any royalties. Leaves £1.5m profit.
£7M
-£2M
= £5M
-£1.3M
=£3M
-£1.5M
=£1.5M

Plus all expenses for prints and advertising paid up front – thus taking a
huge risk. Generally £1-2M. Plus they deduct overheads, tax, BBFC fee and
any royalties. Leaves £1.5m profit.
3 Production Costs. Including actors deferred fees (gross participant VIP
actors) On average £3M -£1.5M in debt !!
4 Producer On average 50% of what’s left of net profit !!
Distributors – take the biggets risks by investing up front, but can earn the
lions share of any profit.
£7M
-£2M
= £5M
-£1.3M
=£3M
-£1.5M
=£1.5M
-£3M
=-£1.5M
??

What % of films in the UK cinema are American?

Slumdog Millionaire $15M production
$377 M worldwide box office
Classed as a ‘British Film’ (Danny Boyle, Film Four)
Distributed by Pathe inUK and jointly by Fox Searchlight and Warner Brothers in US
Hailed as a big UK success but did not earn the
UK film industry very much

Top UK Distributors are:
•Twentieth Century Fox
•Walt Disney Studios
•SONY
•Warner Brothers
92% of distribution is by US Media
Conglomerates – UK has very little
power in distribution.

Street Dance 3D
$4m production
$20M profit worldwide so far
Produced and Distributed by Vertigo Films
– a UK company
Therefore all box-office profit went straight
back into UK film production

To advertise a film on Facebook £0 – no cost
Twitter – no cost
StreetDance 3D took advantage of this new
media. Creating interactive, non passive
advertising.
Rupert Preston Head of Distribution at Vertigo
Films said: ‘we spent a lot of time but not much
money on distribution’

Pop ups
Imdb
Trailers
Featurettes
Facebook
YouTube
Twitter
Internet Promotion
An Internet Campaign costs approximately 10%
of a TV campaign
and it is interactive and provides a brand community

Institutions film industry final 04 11 18

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Institutions film industry final 04 11 18