The Movie Industry Analysis Essay Research — страница 2

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expected to increase dramatically over the next five years, creating an accelerated demand for original and re-run motion pictures. DATA ANALYSIS What is the competitive environment? There are thousands of screenplays in development at any given time, however each year only 450 to 500 of these are produced into motion pictures. Although the majority undergo principal photography in the United States, approximately 60 to 80 are shot offshore (including Mexico and Canada). Of these approximately one-third come from the majors (Disney, Sony, (Columbia-Tristar), Warner Brothers, Universal, Paramount and Twentieth Century Fox) and approximately two-thirds from the “independents”. “Independents” are those companies engaged in the production and/or distribution worldwide in all

media of all motion picture and television programs that are not generated by the recognized major studios. It includes those independent productions, even those distributed by a major studio, in which the producer retains a significant ownership interest and is at risk for a significant portion of the production cost. Of the 450 to 500 feature films produced each year, only 155 were given a theatrical release in 1994, 169 in 1995 and 195 in 1996. Thus a significant number of features do not get a theatrical release but are released directly to home video and other media. Producing and/or financing these movies are approximately 6 major studios, 50 to 80 major independent production companies and over 1,200 smaller independent production companies. The domestic market share is

evenly distributed. Any major changes in the market? *** (The Movie Industry by James Jaeger). Increased foreign demand for U.S movies is reflected in the fact that recent export sales to foreign markets hit an all time high in 1997. The European foreign market accounts for 56% of global revenues generated by English language. One of the most attractive markets is centered around the Far East, Japan being the largest. Focus on Asian themes has produced many movies that clearly reflect this trend. Generally speaking, if an English-language film made for U.S. release does well domestically, it becomes popular in foreign markets, particularly in Europe. All of this popularity and success internationally has not come without a price. Some countries began to complain about the spread

of American culture due to the movie industry. In order to soothe these complaints, Disney and Miramax announced in October 1994 the creation of a company to promote the distribution of French films in the United States and increased funding to French filmmakers. Relaxed enforcement of the 1948 antitrust decree under Reagan administration which allowed Universal, Paramount, and Columbia to acquire interests in various theater chains. Rapidly changing demographics. Shrinking population of 13 to 25 year olds who would traditionally see as many as 12 films per year. Real growth audiences were becoming both younger and older. The older group (40-49) appreciated mature themes; those with children were also attracted to family oriented movies. Distribution media is dynamic. Beginning

in the late 1980’s, ancillary markets (videos, TV, cable, or pay per view) began to emerge as the high-growth segment in the industry. This growth had a negative impact on box office sales as ticket growth was limited by the relatively inexpensive availability of movies outside the traditional theater. Key Industry Financial Statistics: * Admission Revenues * Average Cost per Film * Profitability (by Operating Margin Percentage) Results of past marketing strategies and current marketing strategies- Control and expansion of distribution channels has always been a primary objective of major studios. In 1950, many theaters were owned by major movie studios. This represented a trend toward vertical integration into theaters. This risk-reduciton strategy combines the production,

distribution, and exhibition functions under the studio’s control. The distribution pattern seen in theaters was reproduced in ancillary markets. As with theater exhibition, films in the motion picture industry began to vertically integrate into these media, owning cable stations, TV networks, and video chains. Even more recently, technology has improved to include such state of the art viewing options as Pay-Per-View, Digital Video Disc (DVD’s), satellite television, and Home Theater (surround sound). Interactive Video and computer games are another huge new market that is rapidly expanding. Ancillary markets have proven to be invaluable sources of revenue as in the case of Star Wars and Jurassic Park. There were such spin-offs as toys, games, T-shirts and novelty items.