COMM 431-Midterm Exam Prep
Challenges
"Distance still matters" The CAGE distance framework -Helps understand the key sources of differences -Cultural distance -Administrative distance -Geographic distance -Economic distance
Non-Scripted TV Content
"Reality" TV shows: American Idol Game Shows: The Price is Right Sport Events: Olympics Business practices -Global formats/events adapted locally -License fees -Fewer (if any) "windows" of exhibition -No deficit financing
What is Globalization?
-" A term used increasingly toward the end of the 20th century to describe a set of conditions escalating since the postwar period. These conditions include: -Increased rates of migration -The rise of multinational corporations -The development of global communications and transportation systems -The decline of the sovereign nation-state -The "shrinking" of the world through commerce and communication"
Hollywood in the 21st Century
-20th Century Fox -Paramount -Sony Pictures -Universal Pictures -Walt Disney -Warner Bros. -Market share 6 major players, vertically integrated
Competitive Factors
-Competitive factors are the business strategies and actions of one's competitors. -The competition may have designed a better product or service. Examples: Sony vs. Microsoft Video game Nokia vs. Motorola Cellular Verizon vs. AT&T Telephony VHS vs. BETA
Generic Strategies
-Cost Leadership -Differentiation -Focus
SWOT Analysis
-Internal- Strengths Weaknesses -External- Opportunities Threats
Media and Entertainment Value Chain
1. Content Creators 2. Distributors 3. Packagers (media) 4. Audience
What is strategy?
A way of thinking leading the organization to specific actions to create and capture value in a competitive environment Create sustainable competitive advantage -Winning in the present -Creating the future
Strategy Formulation
Competitive business strategy -Defining the business mission -Goals and objectives Planning and growth strategies -Horizontal integration -Diversification -Vertical integration
Global Strategies in the Movie Industry
Content Distribution Issues US import - export Theoretical models to explain Hollywood's global competitive advantage
Typologies of Strategy
Cost leadership Differentiation Focus
Hollywood's competitive advantage
Demand Conditions: -US is the largest market in the world: - $1.4B tickets / year $9.6B / year office box revenues. Factor Conditions: -Skilled labor. USC and -UCLA film schools -Weather condition that enables whole year outdoor production Strategy, Structure, and Rivalry: -6 Big Studios located and aggressively competing in -Hollywood: Warners, FOX, Paramount, Universal, Sony, Disney Relating and Supporting Industries: Music and Recording TV Talent agencies Special effects Content developers Production design
Economic Factors
Economic factors are marketplace changes that can help or adversely affect your business operations. 1. Spiraling inflation 2. Economic recession 3. Natural calamity 4. The availability of a product substitute
Global Distribution of Entertainment
Entertainment is a major US export The flow of entertainment from and to the US is clearly disproportioned The US entertainment industry has a global competitive advantage
Environmental Scanning
Environmental scanning is the ability to identify strategic factors (both external and internal to the organization) that can significantly impact the firm's business operations. Environmental scanning requires the ability to assess the internal strengths and weakness of the organization as well as the external opportunities and threats to the organization.
Characteristics of Entertainment Products
Experience goods Non-rival, public goods Non-excludable Expensive to produce, cheap to reproduce - High first copy costs High levels of uncertainty and risk associated with the demand and production of entertainment Single and continuous creation products
The international entertainment marketplace
Financing or co financing -International investors -International media and entertainment entities Production -Foreign talent -Foreign locations Distribution
Television Networks
Free TV: NBC (Universal) ABC (Disney) CBS (Viacom) FBC (News corp.) CW (Warner Bros. e Viacom)
Dynamics of Non-Scripted Entertainment
Global Formats Extremely flexible entertainment Adapted locally Live or semi-live Potentially interactive Local features -Host -Contestants
What is Global Strategy?
Global communications landscape -Political drivers -Economic drivers -Technological drivers Phenomena of globalization call for global strategies
Global Strategic Management
Global landscape -Suppliers -Customers -Competitors Foreign Market Entry Modes -Exporting -Licensing -Joint Venture -Direct Investment
Global Content Strategy
Global movies -Universal themes -Global characters Country of origin effect -Made in USA Local adaptations -Remakes -International script / Local actors
The international entertainment marketplace - distribution
Hollywood studios distribute internationally -Separately -Jointly (ex. UIP ) -With or without local partners Role of MPAA
What are some Growth Strategies?
Horizontal Integration -Growth by expansion in the same business (mergers and acquisitions): MSO Diversification -Diverse portfolio of related and unrelated business: GE Vertical Integration -Owning most of or all of a company's operational phases: Hollywood System
Global "Piracy" Risks
Internet piracy Optical disc piracy Other (camcorder, etc.) Piracy per regions
The international distribution TV
Licensing -Negotiated number of runs per period (ex.: 3 runs in 5 years) -Exclusive/non-exclusive (language, territory, "window") "Output deals" Package deals Barter deals
Other international production and distribution strategies
Local co-productions in foreign languages Local adaptations of global formats/properties TV Channels -Global brands adapted locally -Think globally, act locally
Evaluation and Control
Measuring Performance Assessing Actual Performance
Public Relations
Media -Trade journals Variety and The Hollywood Reporter -Newspapers / opinion makers Los Angeles Times New York Times Magazines -Time -Entertainment Weekly Opinion leaders
How the movie industry operates: windows of exhibition
Movie theatres Home Entertainment Video On Demand/Pay Per View Pay TV Broadcast TV 2nd TV run Basic cable - Syndication Ancillary revenues
The international flow of entertainment
Movies TV -TV series -Comedy -Drama -Non-scripted programme ("reality -TV", game shows, etc.) -Documentaries -Miniseries -Live events (Sports, ceremonies, etc.)
Typology of Entertainment Products
Movies: TV content -TV series -Comedy -Drama -Non-scripted programs ("reality TV", game shows, etc.) -Documentaries -Miniseries -Live events (Sports, ceremonies, etc.)
Ancillary Revenues
Non theatrical -Airlines -Ships at sea -Army bases -Schools, etc. Merchandising and licensing (consumer products) -Soundtrack and music publishing -Sequel and remake rights -TV series rights
Movie Marketing
Opening weekend -Total Box office is linked to the opening weekend -Future revenue streams linked to box office -"Word of mouth" After the opening weekend -To sustain the theatrical run -To sustain the following "windows"
The Global Landscape
Opportunities Challenges Competitive strategy
Subsequent Windows of Exhibition
Pay TV - Second window -60 months after initial theatrical release, lasting 12 months Basic cable -72 months after initial theatrical release, lasting 60 months Syndication -132 months after initial theatrical release, lasting 60 months
Pay-TV & Free TV Networks
Pay-TV: -12 months after theater release, lasting up to 18 months -Pay-TV networks buy rights to broadcast through cable and satellite -HBO(Inter.), Starz, Encore (US) Free TV Networks: -Approx. 30 months after theater release, lasting 30 months -TV networks buy rights to broadcast via free TV -US: ABC, CBS, NBC, FOX, CW -Internationally: RTL (Germ.), ITV (UK) Mediaset (Italy), TF1 (France), Nippon TV (Japan)
Audience
Players: -Final Customers -Audience Activities: -Pay Tickets, buy/rent home video, watch TV, -Download from Internet Key-Success Factors: -Does Not Apply-
Distributors
Players: -Studios Activities: -Distribution and Financing -Marketing/ Promotion Key-Success Features: -"Bet" on right projects -Copyright and library ownership -Capital to finance productions -Relationship with Creators and access to packagers -Promote releases
Packagers (Media)
Players: -Theaters -TV Networks & Pay-TV -Home Video -Internet Activities: -Provide access to final viewers customers Key-Success Factors: -Media coverage -Audience and scale to enable the purchase of blockbusters -Contract rights negotiation -Regulation expertise
Content Creators
Players: Movie Producers Some Studios Activities: Creation and production of movies Key-Success Factors: "Bet" on right projects Access to Talent (Directors & Actors) Access to financing Access to Distributors
Political/Legal Factors
Political/legal factors represent changes in the political and regulatory environment that can significantly influence the business operations of a company or organization. Examples: -Paramount Consent Decree 1948 -Cable Communications Policy Act of 1984 -The AT&T Divestiture (breakup), 1984 -The Cable Television Act, 1992 -The Telecommunications Act of 1996
Marketing Costs
Publicity PR events -Press junkets -Previews -Awards (Oscars, Golden Globes, Guilds awards, etc.) Print costs Trailers Advertising costs
4 Steps of Strategic Planning
Researchers Wheelen and Hunger (1998) suggest that there are four steps involved in the strategic management process. They include: 1. Environmental Scanning 2. Strategy Formulation 3. Strategy Implementation 4. Evaluation and Control
Strategy Implementation
Setting the strategy into motion -Explaining the goals and objectives Working through the operational details -Who does what, how, with what budget?
The international distribution Movies
Similarly to the US distribution, movies are released internationally in "windows" of exhibition in local territories Local distribution release strategy -Different seasons' potential locally Day and date release -To minimize "piracy" risks -To coordinate global marketing efforts
Situation Analysis
Situation Analysis Internal Financial People Core Competences External Customers Competitors Industry structure & segments
Sociocultural Factors
Sociocultural factors are social/ cultural changes in the environment that may affect a consumer's buying habits, product usage etc. Examples: 1. Consumer reaction to animal furs, etc 2. Student attitudes about software piracy 3. Privacy and security while purchasing merchandise on the Internet.
Media Communications & Strategic Planning
Strategic planning is the set of managerial decisions and actions that determine the long term performance of a company or organization.
Strategic Positioning & Trade Offs
Strategic positioning -Based on customers' accessibility or needs -Based on the entity's products and services Trade-offs
Facts About Strategy
Strategy rests on unique activities Establish a difference Preserve it in the long run Not just a written long term plan Not just Operational Effectiveness
SWOT Model
Strengths, Weakness, Opportunities and Threats (SWOT) Model: Internal 1. strengths of the organization 2. weaknesses of the organization External 3. opportunities for the organization 4. threats to the organization
Drivers of Hollywood's competitive advantage
Superior storytelling ability for "universal themes" -"Narrative transparency" -Diversity of US audiences Historical industry know-how Access to unique pool of talent Economic drivers
Technological Evolutions: Media as Distribution Channels for Entertainment Products
TV (40 / 50s) Home Video (80s) Multichannel (cable and satellite - 80 / 90s) Internet (2000)
Television Content
TV and technology TV economics Scripted Entertainment -TV series: Comedy -TV series: Drama -Telenovelas Non-scripted Entertainment -Game shows -Reality shows
Technological Factors
Technological factors represent advancements in new technologies that can help or adversely affect one's business. 1. Direct Broadcast Satellite 2. Apple iPhone 3. MP3 File Sharing 4. Cable Modems 5. High Definition Television
Contra-flows in the international entertainment marketplace
Telenovelas (Latin America) Reality TV (Europe) Quiz formats (Europe) Animation (East Asia) Bollywood (India) New global players (Endemol, Fremantle, etc.)
Dynamics of non-scripted entertainment cont.
Television's "new engines" Adaptable entertainment products Advertising "friendly" Interactive potential Multiple revenue streams
The External Environment
The external environment can include a number of different forces that can impact the performance and operations of an organization, including: 1. Competitive Factors 2. Political/Legal Factors 3. Economic Factors 4. Technological Factors 5. Sociocultural Factors
Opportunities
The globalization of markets Global landscape -suppliers -customers -competitors
Internal Factors that Influence Business Operations
The internal environment can include a number of different forces that may affect organizational performance: 1. Core Competency 2. Organizational Decision making 3. Organizational Culture 4. Management / Labor Relations 5. Operational Issues
Triggering Event
The need for strategic planning is sometimes caused by a triggering event. A triggering event can be caused by: -Changes in the competitive marketplace -Changes in the management structure of an organization -Changes associated with internal performance and operations
Revenue Streams
The properties generate multiple revenue streams through the "windows" of exhibition Single or multiple views Experience goods Non-rival, public goods Non-excludable
Windows of Exhibition
Theaters Home Entertainment VOD/PPV Pay-TV Free TV Networks
Theaters, Home Entertainment, VOD/PPV
Theaters: -Initial release, usually lasts 3-6 months -Studios share 50% of the revenue with exhibitors -Reference for the other windows success and negotiations Home Entertainment: -4-6 months after theater release (it can last 10 years) -Purchase and rental of DVDs and tapes -Main players: Blockbuster, Netflix VOD/PPV: -8 months after theater release, lasting 2 months -Provided by cable and satellite carriers in exchange for fee per viewer -Direct TV, MSOs
The determinants of box office revenues for English language movies
US domestic box office Content Action movies Children's movies Sequels Academy Awards Production budgets Critic-movie reviews?
Ancillary Revenues Cont.
Video games Theme park rides Novelizations Comic book rights Animated series rights
Telenovelas vs. US Serialized Television Fiction
Vs. Soap Operas (Guiding light) Definite endings allowing narrative closure Vs. TV series comedies - drama (Desperate Housewives) They last on average 180-200 episodes
Strategy Questions & Business Concepts
Which market segment(s) What is crucial for the segment(s) Business Concept: How the entity intends to be unique in the market
Distribution Strategies
Wide release Limited release Platform release Multipex vs. prestigious venues
