Group Project
Hollywood Motion Picture Cluster Analysis
Prepared for Microeconomics of Competititiveness class (Licensed by Harvard Business School) at Warsaw School of Economics (SGH)
2. Agenda
Country
Analysis
• United States
• California
• Los Angeles
Cluster
Analysis
• Hollywood
• Entertainment
Industry
Recom
mendation
• Industry& Government
problems
• Suggestions
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
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. 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
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. 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
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. 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. 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. 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. 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