module - globalisation, film and tv in the digital age

GLOBALISATION, FILM AND TV IN THE DIGITAL AGE

Module: [Insert module name here]Lecturer: [Insert lecturer name]Date: [Add date here]

COURSE CONTENT SUPPORTED BY

3

Table of Contents

1 CURRENT TECHNOLOGICAL REVOLUTION

2 CURRENT ERA OF GLOBALISATION

3 GLOBALISATION, MIDDLE CLASES, CONSUMERISM AND GLOBAL IMAGINARY

4 BRAND EMPIRES

5 BLOCKBUSTERS: HIT BRANDS

6 DISRUPTION OF THE HOLLYWOOD LANDSCAPE

7 INDEPENDENT FINANCIERS AND PRODUCERS

8 EMERGING GLOBAL COMPETITORS

9 FILM AUDIENCES IN EUROPE

10 TV AND FILM ARE MELTING INTO ONE MEDIUM

11 THE ROLE OF TV IN THE DIGITAL AGE

12 TECHNOLOGY, ECONOMICS AND THE SOCIAL ROLE OF TELEVISION

13 DIGITAL: NEW OPPORTUNITIES

4

Table of Contents




4 BRAND EMPIRES










5

CURRENT TECHNOLOGICAL REVOLUTION

• 1947 First transístor (Bell Labs)• 1959 First microchip (Texas Instruments)• 1969 Arpanet• 1971 First microprocessor (Intel)

Information and Telecomunications5

Source: The Economist

• Each upswing stimulated investment and an expansion of the economy• The long booms petered out as the technologies matured, returns to investors declined with the dwindling number of

opportunities• Creative destruction: after a period of much slower expansion came decline followed by a wave of innovations which

destroyed the old way of doing things and created the conditions for a new upswing • That’s why America shrugged off its lethargy in the early 1990s and started bounding ahead again

The long economic waves are shortening, from 50-60 years to around 30-40 years

The present fifth technological revolution is approaching maturity

6

8

Table of Contents




4 BRAND EMPIRES










9

CURRENT ERA OF GLOBALISATION

The integration of economies, industries, markets, cultures and policy-making around the world

A process by which national and regional economies, societies, and cultures have become integrated through the global network of trade, communication, immigration and transportation

Includes: culture, media, technology, socio-cultural, political, biological factors, e.g. climate change

After the fall of the Berlin Wall, some talked about the rise of a “one world way” of doing business and living

But recent events have suggested that some of those thoughts were misplaced as we see the success of a number of varying economic and national systems

Globalisation: A Definition

Source: Financial Times Lexicon

9

Some economists argue that today's economy favours big companies over small ones

• Big ecosystems: economic growth is increasingly driven by the ones that cluster around Apple or Google

• Scale and skills: the ecosystems need to be managed by a core company with the resources to provide technological leadership

• Globalization puts more of a premium on size than ever before• To capture the fruits of innovation it is no longer enough to be a

big company by American standards• To be able to stand up to emerging-world giants, companies are

backed by something even bigger: the State• Many of the most important challenges for innovators involve

vast systems, such as education and health care, or giant problems, such as global warming

• To make a serious change to a complex system, you usually have to be big

Schumpeter in 1909: Small companies are more inventive.Schumpeter in 1942: Big firms have more incentive to invest in new products because they can sell them to more people and reap greater rewards more quickly.In a competitive market, inventions are quickly imitated, so a small inventor's investment often fails to pay of.


Globalisation Wants Bigger10

Some improvements may not be due to globalization but to national policies on education and land reform, for example.

Improvements may have been possible without the current form of globalization and its negative consequences

The percentage of people in developing countries living below US$1 per day has halved in only twenty years

Life expectancy has almost doubled in the developing world since WWII, is starting to close the gap to the developed world where the improvement has been small

Child mortality has decreased in every developing region of the worldDemocracy has increased dramatically from almost no nation with universal suffrage in 1900 to 62.5% of all nations in 2000

The proportion of the world’s population living in countries where per capita food supplies are under 9,200 kilojoules per day decreased from 56% in the mid-1960s to below 10% by the 1990s

1950 – 1999: global literacy increased from 52% to 81% of the world, women made up much of the gap: Female literacy as a percentage of male literacy has increased from 59% in 1970 to 80% in 2000

Africa, the great exception: Just 6% of Africans qualify as middle class, which the Pew Research center defines as those earning $10-$20 a day; the number of middle-income earners in Africa barely changed in the decade to 2011

Globalisation: Positives and Negatives11

13

Table of Contents



3 GLOBALISATION, MIDDLE CLASSES, CONSUMERISM AND GLOBAL IMAGINARY

4 BRAND EMPIRES










14

GLOBALISATION, MIDDLE CLASSES, CONSUMERISM AND GLOBAL IMAGINARY

The global middle class is comprised by those households with daily expenditures between US$ 10 and US$ 100 per person in PPP terms

From around 2018 onwards, the world will be predominantly middle class for the first time in history, and no longer predominantly poor

The emerging middle classes display very heterogeneous characteristics: there is not a new middle class, but a variety of new middle classes

Members of the new middle classes have the means to invest in health care, education and financial services

They can afford to buy cars, housing, smartphones, durable consumer goods as well as luxury brands

For businesses, a useful sweet spot occurs when significant numbers begin earning the equivalent of over US$10 per day, and enter our global middle class

The sweet spot produces a “middle class effect” where the size of the middle class is directly proportional to economic growth. Hitting the sweet-spot accelerates growth, which, in turn increases the middle class, producing a virtuous circle

Sources: Economist, Pew Research Center

The Emerging Many Middle Classes14

• By 2030, 2/3 of the global middle class will live in the Asia-Pacific region, up from just under one-third in 2009

• Although North America’s and Europe’s middle class populations will stay roughly constant, their share of the population will be drastically reduced — Europe’s by more than half, to 14% by 2030

• A significant proportion of the new Asian middle class are also expected to be at the upper end of the income bracket, with impressive spending power

Rise of the Global Middle Classes15

In normalising global experiences, the media have helped create a “global consciousness” or “global imaginary” as a “shared sense of a thickening world community, bound together by processes of globalisation that are daily shrinking our planet”

The lived experience of globalisation and the mental and cultural models of the world it creates serve to further encourage even greater globalisation of the economy, culture and politics

This can be an enriching process for many people, opening their minds to new ideas and experiences, and strengthening the universal values in a global culture of peace and understanding

Some critics say, the concentration of major entertainment and advertising industries in the USA as contributing to the decreasing diversity of global cultures

The middle class has always been associated with more than its disposable income

Historically, it has been seen as a social class striving for political, societal and economic liberties, as a guarantor of social stability and as pillar of democracy

Globalization: Global Imaginary16

One of the major dimensions of the mental models created by globalization has been the commodification – or commercialization – of daily life

The themes and underlying values of many American and European movies, television programmes and advertisements “normalize” materialistic assumptions about what counts as “a good life” or “a life worth living”

As a result, one part of the cultural impact of globalization has been to create a global consumer culture

World consumption spending

Mental Models: Global Consumption17

But, is this so called global mental model just a superficial commercial gimmick?

Is global consumption really producing the homogenization of culture and societal values or is globalization, improved communication and access to information leading to deepening and splintered value systems?

Mental Models: Global Consumption,Global Mental Model?

18

Q) To what extent has globalization been realized?

• Globalization is still superficial• The real layer of globalization is restricted to the

capital markets• In most other areas, institutions remain intensely

local• Trade, e.g., is still predominantly regional• Intra-European trade accounts for roughly 60% of

all European trade• Most companies are predominantly national,

governments remain very national• Consumer markets are national, they are

segmenting even further within regions as consumer education improves and consumers are able to demand products that precisely meet their needs

Q) Are there aspects of globalization that lead to greater homogenization?

• Homogenization and an affirmation of distinctive cultural identities will occur simultaneously

• In terms of large economic and political institutions, cultures, ideologies are becoming more homogeneous

• There aren't as many alternatives and regime types

• To be an advanced society, a country has to be a democracy, and it has to be connected to the global marketplace

• On a cultural level, it's not clear that homogenization is proceeding nearly as rapidly.

• To a certain extent, there is a real resistance to cultural homogenization

Globalization: Interview With ProfessorFrancis Fukuyama (Merryl Lynch Forum, 2009)

19

Q) Do you believe that homogenization will ever occur on a deeper level?

• It could be that culture will ultimately become homogenized, just like political institutions

• A much slower process• In the 1950s and '60s, Asia looked up

to the US as a model of modernization• Now, Asians look at American urban

decay and the decline of the family and they feel that America is not a very attractive model

• Communications technology has allowed both Asians and Americans to see each other more clearly, and it turns out they have very different value systems

Q) Can global corporations have a homogenizing effect on culture?

• There is a global consumer culture that is spread by companies like McDonald's and Coca-Cola

• If you look beneath the surface and ask people in different countries where their loyalties lie, how they regard their families, how they regard authority, there will be enormous differences

• People examining a culture pay too much attention to the kinds of consumer goods that people buy

• That's the most superficial aspect of culture• A culture really consists of deeper moral norms that

affect how people link together• These deeper qualities, the so-called moral norms,

define economic activity• For instance, Chinese culture is family-centric limiting

business transactions to extended family

Fukuyama: Homogeneisation of Culture?20

22

Table of Contents




4 BRAND EMPIRES










23

BRAND EMPIRES

Source: McKinsey

Map of the Worldwide Film Industry23

Brands have transformed the process of marketing into one of perception-building.

That is to say, image is now everything.

Consumers make the buying decisions based around the perception of the brand rather than the reality of the product.

Matt Haig in “Brand Failures”

Brand promise

What the brand says it will do for the consumer

Includes a value proposition and a promise of quality or satisfaction

The branding cycle is only complete after the consumer validates the proposition through his/hers own experience

This is why Word of Mouth (WoM) is so crucial in the movie business (person to person, social networks, etc)

The opinion movie goers on the first week end can make or break the reputation of a new release

Brand-building driver

An emotional or rational performance or reputation attribute that can be statistically verified as driving purchase intentions or behavior

Drivers must be first hypothesized through qualitative research, and then quantitative analysis conducted to generate a hierarchy of brand drivers

Taking account of the competitive landscape, one of these prospective brand-building drivers is then chosen and it is at this point that the creative process begins

Source: Admap

Brands: Perception Building24

There was no such concept as brand and branding when Shakespeare created (between 1591 and 1595) his world of the Montagues versus the Capulets.

But, he was close.

He was considering the nuances of a feeling for words and names and the perceptions they bring to a specific audience.

Source: Pintney Bowes

The perception of “Brand Montague” to Juliet’s family, the Capulets and how those feelings might change if only Juliet could re-brand Romeo with a simple change of his last name.

If only her family might perceive Romeo the way that she did. Juliet saw his essence, not his family title.

She saw the man who had touched her mind, won the value of her loyalty and the gift of her heart.

The Power of Branding25

Mind share: how well the public knows your brand and cares about itMind share often precedes market share

A brand that has the trust and allegiance of the consumer and that puts forward a simple, direct “high concept” idea, is positioned to survive in an increasingly crowded marketplace.

To cut through the daily clutter of messages and products, a brand needs to do more than identify a product: It must give it a personality.

By our allegiance to certain brands, we say something about ourselves. Brands transcend particular products and carry with them a whole cultural statement.

Entertainment companies, whose products are purely cultural, have long recognized this trend.Acting on it, have not merely created strong brands; they have built brand empires. They have carved out pieces of our collective psyche that transcend any single product. We have a relationship with these companies that disposes us to accepting, or at least giving a courtesy look at, any product with their brand on it.

Source: Vogel, Entertainment Industry Economics

Brands are a cultural statement26

Entertainment brands: a simple, powerful ideiaFamily, taste, money, or fun

Through entertainment brands, consumers can gain entrance to a world that embodies a simple, powerful idea: family, taste, money, or fun.

Disney doesn´t simply mean animated features or theme parks anymore: it means family.

Bloomberg is not just a terminal on a trader´s desk; it is instantaneous financial news and analysis.

The NBA isn´t about watching tall men put the ball in the basket with a high degree of accuracy; it´s about a fast, urban, street lifestyle, whit all the glitz and glamour of showbiz.

The old definition of a brand carrying a product´s attributes has become secondary to the way a brand makes a lifestyle statement. Consumption of a brand´s products empowers the consumer with the qualities of the brand. The base principle remains the same: consume and become.


27

Consumers like the endorsement of a company name they recognizeBut the new offerings of the brand have to fill a need or supply a distinct pleasure of their own.

Entertainment brands have had to compete in an increasingly crowded marketplace, where, though the pie keeps growing, the slices are getting smaller as more products compete for audiences.It is no longer sufficient merely to turn out a hit movie, television show, magazine, or book, because in many cases these products cannot be profitable on their own.

A hit must become a franchise and, in so doing, become the hub from which a wide-reaching variety of products emanates. Hits and, even more so, phenomena, behave like brands. By occupying every available niche in popular culture, hits become long-lived, wide-reaching brands.


Hits become brands 28

TV channels such as HBO have clear identities that transcend distribution

Whatever the distribution platform, the channel identity imposes itself and exels through its “personality”, unique and clearly defined look and feelSource: Forrester

Movie mega brandsStudio Director Actor ProducerDisney Spielberg Clooney CameronWarner Brothers

Scorsese De Niro Lucas

Dreamworks Scott Streep Mann

“Our fans are our biggest evangelists. They have made Disney part of their lives. They live it, they breath it and they tell people about it.”

Steven Clark, Head of D23 Fan Show,.2009Source: Reuters

Film and TV brands29

A hit product that doesn´t move out into the wider economy and cultural realm is doomed.

The X-Files occupied its favored place in the cultural spectrum, it was as a real TV brand like many others. But as a television show, books, movies, a traveling road show, home videos, hats, t-shirts, and other merchandising, it became a mega brand with revenues in excess of more than $1 billion.

Lara Croft: She wasn’t a TV show, she became by being a heavily armed digital figure who was the main character in the Tomb Raider video games. With millions games sold, several books, a best-selling action figure, high-priced fashion gear, and films where she became Angelina Jolie, her revenues were tremendous.

Jurassic Park was a hit book, but Universal and Steven Spielberg built a brand empire. Became a brand that meant dinosaurs. The big cultural concept is that we are all fascinated by dinosaurs.Without marketing multiple revenue streams there would be no profit, no long-term business.


Multiple Revenue Streams30

Source: McKinsey

Map of the US film industry31

Warner Bros (Time Warner) Pictures. Biggest player in the film industry. Harry Potter, Superman, Batman, The Matrix, Star Wars

Paramount Pictures (Viacom) Star Trek, War of the Worlds, the Mission Impossible series, Transformers and Tropic Thunder

Walt Disney Pirates of the Caribbean, National Treasure, Meet the Robinsons and Enchanted

Columbia Pictures (Sony) Casino Royale, Da Vinci Code, Spider-Man series, Step Brothers

Universal Studios (Comcast) Bourne series, The American Pie series, Knocked Up, American Gangster, The Incredible Hulk

20th Century Fox (21st Century Fox) X-Men series, Mr. and Mrs. Smith, Star Wars Episodes II and III, the Fantastic Four

Disney, Burbank, California is the only of the Big Six whose parent company is still located near Los Angeles (actually, on Disney's studio lot and in the same building)Sony, Tokyo, JapanComcast, Philadelphia, PennsylvaniaViacom, New York, NY21st Century Fox, New York, NYTime Warner, New York, NY

Business functions are still usually performed in or near Los Angeles, even though the runaway production phenomenon means that most films are now mostly or completely shot on location at places outside Los Angeles

The Hollywood Majors32

Films that succeed in the US market also tend to succeed in foreign markets

Convergence of popular taste may be coming about, but against a backdrop of cultural contestationSuccess: Hollywood offers unmatched competitive advantages

• Dense regional cluster • Technical and organizational capacities• Specialized but complementary producers• Unique pool of talent from many countries

• Extensive distribution networks, joint ventures or long-term agreements with local distribution • Averted confrontation with regulators with self regulation (Hays Code of Conduct 1930)• US government efforts to push open foreign doors and promoting its products abroad (US State Department,

Commerce Department, other agencies, Marshall Plan for Europe)• Unique ability to make big-budget films that appeal powerfully to popular tastes in many different cultures• Motion Picture Association of America (MPAA) industry mouthpiece and lobbying organization, MPEA (Motion

Picture Export Association)• Independent motion-picture distributors: AFMA (the American Film Marketing Association)• American films garner at least 1/2, sometimes more than 2/3, of total box-office receipts

The Hollywood Cluster Advantage33

35

Table of Contents




4 BRAND EMPIRES










36

BLOCKBUSTERS: HIT BRANDS

Big dataWith the help of massive amounts of data and the experience of previous box office results, Hollywood typically assumes there is a built-in audience for a certain genre

Strategic objective: blockbusterOnce a film becomes a blockbuster nothing is more obvious and safe and eventually lucrative than to repeat the recipe with simple variations – sequel after sequel

One size fits allStudios have a lot of strengths — more advantages than disadvantages — but they are not nimble, they can’t tailor each project to specific filmmakers

Barriers to entry The fight for distribution is still a narrow gate, despite all the new media platformsThe business has been around for 80 years but there are still just six or seven studios. Wide-release studio distribution remains the great barrier to entry and the great goal

Hollywood joke A producer is always looking for a story to turn into a movie that's been very successful in the past and that no one has ever seen beforeJeffery Deaver, blockbuster author: There’s some truth in it. "I'm always looking to give readers the characters they're familiar with and yet arc the story differently and introduce new types of conflict"

Source: www.nzherald.co.nzSource: thewrap.com

Blockbuster addiction: the same old recipe36

Source: Box Office Mojo

The major studios have reduced their output over the past decade, focusing on fewer—albeit larger—tent poles with the international marketing power of pre-existing concepts and merchandise appeal

Tent Poles37

• Pegg decries he effect that genre entertainment has had on mainstream culture

• We’ve been infantilized by our own taste

• It is a kind of dumbing down in a way, because it’s taking our focus away from real world issues

• Films used to be about challenging, emotional journeys or moral questions that might make you walk away and re-evaluate how you felt about… whatever

• Now we’re walking out of the cinema really not thinking about anything, other than the fact that the Hulk just had a fight with a robot

Simon Pegg: actor (Star Trek, Mission Impossible), producer, writer (Shaun of the Dead 2004, Hot Fuzz 2007, The World's End 2013, comedy series Spaced 1999–2001, StarTrek Beyond 2015) Source: The Hollywood Reporter

«Films used to be emotional journeys…»38

• Recent developments in popular culture were predicted by the French philosopher and cultural theorist Jean Baudrillard in his book, America, in which he talks about the infantilization of society

• It is the idea that as a society, we are kept in a state of arrested development by dominant forces in order to keep us more pliant

• We are made passionate about the things that occupied us as children as a means of drawing our attentions away from the things we really should be invested in, inequality, corruption, economic injustice etc

It makes sense that when faced with the awfulness of the world, the harsh realities that surround us, our instinct is to seek comfort, and where else were the majority of us most comfortable than our youth?

These concerns have also been monetised and marketed and the things that made them precious to us, aren’t always the primary concern [to those controlling the properties].

Even the most morally complicated genre material, like Ex Machina and Mad Max: Fury Road, are ultimately driven by market forces, and somebody somewhere will want to soften the edges so that toys and lunch boxes will be sold.

«Now, its all about seeking comfort inOur childhood memories and monetizing lunch boxes»

39

• JK Rowling became a billionaire author

• The publishers and related license holders also enjoyed massive gains

• Film series, video games, licensing of over 400 Harry Potter products

• The brand value is estimated to be at $15 billion

• Scholastic had released four new images of Potter characters for the re-release of The Sorcerer's Stone; will release the first fully color-illustrated version of book

• The last and the final installment of the movie series, Harry Potter and the Deathly Hallows – Part 2, had a budget of $250 million (shared with part 1) but it had a box office collection of $1.342 billion

• Time Warner’s following quarterly performance reflected the impact: Sales jumped 5% to $8.2 billion, driven by 7% revenue growth at Warner Bros, which in turn benefited from DVD and Blu-ray release of Harry Potter and the Deathly Hallows: Part 2

HARRY POTTER: 35 YEARS40

• General Electric: owns 80% of NBC Universal, which wholly owns Universal Orlando theme park resort that houses The Wizarding World of Harry Potter

• Hasbro Inc.: rights to Harry potter trading card games, role-playing games, candy and youth electronics

• Johnson & Johnson: the Harry Potter bath and dental products

Source: Talk Markets

• The Coca-Cola Company: exclusive rights to tie-in their products in the first two movies; reportedly paid $150 million.

• Mattel, Inc.: shares game rights with Hasbro, has the largest contract as master toy licensee, the contract included Harry Potter Scene It, plush toys and action figures

• Scholastic Corporation: exclusive publishing rights to Harry Potter books; though JK Rowling owned rights to the series and sold e-books on Pottermore website, Scholastic kept the revenue share

HARRY POTTER: MERCHANDISE 41

Source: Rentrak , Financial Times

Strength: they have built-in awareness with audiences

When they work, they can be a licence to print money

Seven of the 10 top-grossing movies globally in 2014 were sequels, 20 years ago only one of the top 10 — Clear and Present Danger, starring Harrison Ford — was a sequel

Disney’s Marvel unit has set a new bar for franchise movies, creating an interconnected “universe” of films populated by many of the same characters

Warner Brothers, part of Time Warner, is trying to get its own “universe” off the ground, based on characters from DC Entertainment, which it owns

Next year WB will release Batman vs Superman: Dawn of Justice, a movie which throws together two of its best known characters

Legendary Entertainment, a co-producer of the Dark Knight Batman films, is also getting in on the act, striking a deal with Warner Bros to unite the “monster” franchises of King Kong and Godzilla, greenlighting a movie set for 2020, Godzilla vs Kong.

FRANCHISE MOVIES, FILMS WICH CAN SPIN OFF SEQUELS

42

44

Table of Contents




4 BRAND EMPIRES










45

DISRUPTION OF THE HOLLYWOOD LANDSCAPE

Source: Financial Times

The disrupters: financial crisis, digital distribution, globalisation

The financial crisis: obliged to find new ways to spread the sizeable risk of film production• The studios’ landscape has been disrupted. Forecast: box office revenue will flatten in 2018

• The flush years of DVD home entertainment are gone

• Revenues carved up between studios and digital upstarts

• Rise of the independent financiers, private equity

• Most big studios, with the exception of Disney, now rely on external investors to co-finance big films

• Portfolio or slate investments to mitigate risk

• Incentives or tax breaks to cut filming costs

• International markets, especially China, can serve to provide a large boost

• Other revenue sources becoming ever more important: view-on-demand streaming services

• Video games and merchandising continue to provide additional income

Disruption: the hollywood studios Landscape is changing

45

Commercial weight and cultural impact is now felt in virtually every corner of the world Exports grown much more rapidly than domestic markets, exceed domestic box-office receipts, main importers of Hollywood products: Europea, Japan, Canada, Australia, Brasil, KoreaCommercial, cultural confrontations: Canada, European countries, France, the “cultural exception” (GATT, WTO) Cultural products are intimately bound up with matters of social identity and consciousnessRunaway production activities from Hollywood to cheaper locations in Canada, Mexico Not a threat as a center of creativity, deal-making but outflow of capital and work to competitor film industriesNew dynamic production centers: Paris, Beijing, Hong Kong, Tokyo, Mexico City, Mumbai, Sydney, NigeriaForeign studios thinking about their own export markets, budgets in developing countries are increasing rapidlyThe traditional models for creating, distributing and monetizing content have changed U.S. studios paying more attention to international box office, even more than they pay to U.S. box office

Source: Yale University

Top 10 grossing films of 2015

Foreign market ratio (Takings outside the U.S. market as a percentage of global receipts)

1: Jurassic World: 60.7%2: Avengers: Age of Ultron: 67.4%3: Furious 7: 76.8%4: Inside Out: 51%5: Minions: 68.1%6: Cinderella: 62.9%7: Pitch Perfect 2: 35.6%8: Home: 54.2%9: Mission: Impossible – Rogue Nation: 64.5%10: Ant-Man: 53%

Source : Box Office Mojo

Globalization is an insistent and problematicalProcess confronting Hollywood

46

• US media conglomerates no longer unchallenged champions of cultural globalization• Large multinational media corporations in Europe and Japan have significant stakes in US film, television,

music, publishing other cultural-products • Continued leadership by no means automatically assured (Detroit)• Unpredictable shifts in the structure of consumer preferences for motion-picture entertainment• Digital: streaming, SVOD dispatch films directly and cheaply to individual purchasers and open the market to smaller

independent production and distribution from a wider circle of locations• Great increase of cinematic material available to consumers, broadening the market and making inroads on

audiences for blockbuster films• Digital irrelevance: marketing more complex, better quality more expensive products, but uncertainty remains• Consumers' choices molded by a limited number of firms with the resources to mount extravagant marketing

and promotional campaigns• Even if the audiences for blockbusters stabilize or shrink , the phenomenon of large-scale revenues on products

at the top end of the market is likely to continue

Source: Yale University

47

Globalization is an insistent and problematicalProcess confronting Hollywood

The entertainment industry — like so many others — is undergoing enormous changes as a result of globalization and the extraordinary growth of the worldwide middle class

The impact of globalization on the entertainment industry has resulted in a significant shift in the global box office

Until recently, the U.S. generated two-thirds of the global box office, while the rest of the world contributed a third

Today, the reverse is true: nearly 70 percent of the global box office is generated outside of the U.S

Today the traditional models for creating, distributing and monetizing content have changed. U.S. studios are paying more attention to international box office than they used to — in some cases, more attention than they pay to U.S. box office

Virtually no big-budget movie in Hollywood is approved without considering what its box office potential could be in China

Likewise, foreign studios are starting to think about their own export markets

Budgets in developing countries are increasing rapidly

Globalization of entertainment: impact on Box office

48

Source: Financial Times, Imax

China has become the fastest source of growth for Hollywood

New multiplexes springing up in urban centres, screens being added at a tremendous rate, China is on course to eclipse the US box office as the world’s largest cinema market by 2017

Forthcoming competition US-Chinese studios to grab market share

One option for Hollywood would be to change its film release dates, the north American release calendar is wedded to US holidays, with the biggest movies released in the summer for maximum impact

Theatrical distributors have zealously guarded these windows, because tinkering with the model would undermine cinema-going which often propels a film’s financial performance through its life on DVD, cable and TV

Should Hollywood change release patterns to reflect the international market?

Some argue that films will continue to come out under a windowing system for a significant amount of time

US studios are active in China: DreamWorks Animation formed a joint venture with Chinese partners in 2012 to create original Chinese content for the market

Other studios deals with local producers to ensure their films qualify as Chinese co-productions, to grab a far larger share of the box-office

IMPACTS OF CHINA ON US FILM BUSINESS MODEL49

European films reach their highest market share, driving growth at the EU box office

Rise of 0.6% (€40 million) in gross box-office (GBO) takings in the 28 EU member states compared to 2013

GBO figures increased in 14 member states and decreased in 13 (from among the 27 states where data are available)

France, Spain and Poland were the countries that attained the highest figures, with +€15 million, while Italy and Germany fell by €46 million and €43 million, respectively, representing the biggest declines

Despite the improvement, GBO for 2014 still represented the second-lowest level from the past five years

Source: The European Audiovisual Observatory

The growth in cinema attendance was driven primarily by the success of European films

Cumulative admissions grew in line with the trend during 2013

US blockbuster attendance decreased significantly compared to previous years, causing the market share for US films to drop from its record level of 69.5% in 2013 to 63.1%

The estimated market share for European films in the EU reached its highest level since 1996, when the Observatory started collecting data, jumping from 26.2% to 33.4%

EUROPEAN FILMS OF THE RISE IN EUROPE 201450

Sources: Eurodata, The Hollywood Reporter, Freemantle Media

• 2009: Nearly 20% of the top-rated series on European TV were American

• 2014: Only slightly more than 10%

• US shows shift from main to smaller channels, smaller audiences

• BBC and ITV to Channel 4 and Channel 5 in the U.K., to Quatro in Spain, to TV3 and Kanal 5 in Sweden

• Growing strength of top-notch Europe-made drama

• Rise of digital channels • British Telecom agreement to carry

all AMC shows exclusively on digital pay TV eroding the attractiveness of the remaining U.S. series which are even less likely to make it to primetime

• Spread of SVOD (Netflix, etc)• Steady upgrade of pay TV demand for scripted

content• Piracy: Demand for day-and-date release of U.S.

series• Sweden: first 300,000 TV viewers may be lost to

piracy• S investment in local European content

• NBCU + PBS: Carnival Films UK (Downton Abbey), deal with leading German network RTL, deal in France with TF1 to co-finance and produce procedural series directly for the European market

• Demand continues by the many platforms, emerging markets and smaller channels

• CSI spinoff CSI: Cyber has sold out in Europe, and the new CBS drama Zoo has been licensed to multiple markets, including the U.K., Germany and India, despite debuting to soft ratings domestically

U.S. series are on the decline in European prime-time FTA TV but spreading to digital channels and streaming

Drama series on prime time free-to-air tv51

Shortening the exhibition window52

Since the rise of the VCR in the 1980s, studios have waited at least 90 days after a movie debuts on the big screen before making it available elsewhere, regardless of when it stopped playing in theaters.

Hollywood has complained that the 90-day “window” encourages piracy and fails to acknowledge shifting consumer behavior but 72% of consumers weren’t aware of the 90-day delay

The industry continues to wrestle with shrunken DVD sales, a rise in digital competitors and worrisome attendance trends at the multiplex, most movies play for less than two months, but cinema owners argued that people wouldn’t go to the multiplex if they knew they could watch a film at home in less than three months.

Paramount Pictures struck a deal with two major cinema chains to make new movies available to watch at home just two weeks after they leave most theaters.

Big-budget movies typically play longer, making them less likely to undercut the traditional turnaround for a home release unless they flop.

The average movie that opens nationwide runs in more than 300 theaters for 51 days.

Source: The Wall Street Journal

53

Shortening the exhibition window

Joe Pichirallo, Chairman, Tisch School of the Arts’ Undergraduate Film & Television program at NYU

In the 90’s, scriptwriters, directors, producers had to be entrepreneurial: write a script, find an agent or go to a studio

Studios used to be underwriters of producers and would cover their costs with the idea that somewhere down the line they would come up with material they’d want to make

Today, those deals are almost gone

Now creators have to deal with a shrinking universe in terms of mainstream sources of support

Universal appeal Foreign markets have become much more important for getting the initial greenlightA project has to be planned to potentially play from Leicester Square to the Champs-Élysées, to the Shinjuku in Tokyo, China and Russia and South America, the growth territories

Discerning audiencesGrowth has to be found in exhibition and in the theatrical experienceThere’s movie demand, but that’s quickly followed by discernment Audiences are not moved by the spectacle movie like they were a couple of years agoMaybe it’s over-familiarity

Source: thewrap.com

And audiences are becoming more discerning54

Spielberg• An "implosion" in the film industry is inevitable

whereby a half dozen or so $250 million movies flop at the box office and alter the industry forever, change the paradigm."

• What comes next -- or even before then -- will be price variances at movie theaters, where "you're gonna have to pay $25 for the next Iron Man, you're probably only going to have to pay $7 to see Lincoln.”

• His 1982 film E.T. the Extra-Terrestrial stayed in theaters for a year and four months

• Lincoln came "this close" to being an HBO movie instead of a theatrical release, he had to co-own his own studio in order to get Lincoln into theaters.

Source: Hollywood Reporter

• Some ideas from young filmmakers "are too fringe-y for the movies." “Big danger”.

• Teamed with Microsoft to make a "TV" show for Xbox 360 based on the game Halo and he is making a movie based on the Electronic Arts game Need for Speed.

Lucas• Lamented the high cost of

marketing movies and the urge to make them for the masses while ignoring niche audiences. He called cable television "much more adventurous" than film nowadays.

• "I think eventually the Lincolns will go away and they're going to be on television“.

• "The pathway to get into theaters is really getting smaller and smaller."

Lucas and Spielberg• Vast differences between

filmmaking and video games because the latter hasn't been able to tell stories and make consumers care about the characters.

• The industry is at an extraordinary time of upheaval, where even proven talents find it difficult to get movies into theaters.

Spielber and Lucas predict American film Industry implusion (@USC SCHOOL OF CINEMATIC ARTS, 2013)

55

Lincoln was nominated for the Best Picture Academy Award

Steven Spielberg spent over a decade developing it for the big screen

Even with his blockbuster name attached, the dialogue-heavy, distinctly American historical drama still wasn’t a sure bet since it would need to be profitable both domestically and internationally

In the end, Lincoln was distributed domestically by Disney/Touchstone Pictures but co-financed with DreamWorks and other partners, including Participant Media

The case of Lincoln 56

58

Table of Contents




4 BRAND EMPIRES










59

INDEPENDENT FINANCIERS AND PRODUCERS

The industry landscape had to adapt to the global shift in box office power

Until the 1980s, the domestic US box office accounted for the vast majority of a film’s total revenue—upwards of 80 percent—while today, foreign receipts generate over 70 percent of revenue

This meant opportunity to chancier, non-mainstream material

That shortfall led to the rise of independents seeking, both creatively and financially, to make the kinds of films the studios became reluctant to back

From 2002 to 2011 the number of movies released by the Big 6 studios

and their affiliates dropped by 43 percent, (169 films in 2011, down from

296 in 2002)

The number of releases by independent producers jumped by 74

percent over the same period (469 films in 2011, up from 270 in 2002),

according to MPAA reports

Source: ssninsider.com

The rise of the independent financiers59


The studios still needed for distribution

The caliber and budgets of today’s independent films bear little resemblance to the small, off-beat projects with limited art house distribution

More independent producers are seeking to make the kinds of films that came from the majors in the past, including high-profile projects with sizable budgets and top-tier actors and directors

Many ultimately end up with studio distribution, offering them the possibility of critical acclaim and award nominations without the expense of development and production

There is a downside for the studios: If the film becomes a box office hit, the studio doesn’t keep the lion’s share of the profits.

60


The mini-majors are fast rising in the ranks, one steady percentage point at a time. The mini-majors perform the same functions as the majors whom they directly compete with: They finance, produce, market and distribute films. But they operate without the safety net of a diversified parent company.

The most recent reporting period for total domestic grosses—January 1 to March 10, 2013—shows the market share of mini-majors continuing their rise. Four mini-majors appear in the top ten rankings in the first quarter: The Weinstein Company earned the second slot and Lionsgate claimed the fourth, shrinking the gap between them and the major studios even further.

The Mini-Majors V. The Big Six61


Participant Media, founded by Jeffrey Skoll in 2004, was created for that very niche that Lincoln fills: stories that are both socially conscious and commercially viable. Formidable track record; The Best Exotic Marigold Hotel (Fox Searchlight), The Help and The Soloist (both Disney), Syriana and Contagion (both Warner Brothers), Promised Land (Focus Features) and Snitch (Summit). Is co-financing The Fifth Estate, based on the true story of WikiLeaks founder Julian Assange in conjunction with Dreamworks Studios. It formed the PanAmerican Film Initiative with plans to develop and co-finance 10 to 12 films for the Latin American Market. Expanding beyond the film world, Participant will launch a cable network later this year expected to bring its socially relevant stories to over 40 million subscribers. Exclusive distrib deal with Lionsgate.

GK Films, launched in 2007 by Graham King and Tim Headington, which releases much of its projects through major studios. Impressive awards, co-financed the Academy Award nominated Argo (Warner Brothers), produced Hugo (Paramount), The Town (Warner Brothers), the Academy Award-winning animated film Rango (Paramount) and World War Z (Paramount). Exclusive distrib deal with Warner bros.

Cross Creek Pictures hit the ground running with its first production, the Academy Award-nominated Black Swan (Fox Searchlight). Cross Creek, run by president Brian Oliver and CEO Timmy Thompson, has been a financier to watch since its 2009 inception. The company is currently in a three-year deal with Universal Pictures, which will distribute at least six pictures that Cross Creek produces and funds. The first release from this deal is Rush, directed by Ron Howard and co-financed and co-produced by Exclusive Media.

Six major financiers (and producers)62


Exclusive Media, founded in 2008 by Nigel Sinclair and Guy East, holds a minority stake in Millennium Entertainment and recently launched a U.S. distribution company, Exclusive Releasing. Has a co-development and co-production deal with Cross Creek Pictures, a pact that has created The Ides of March (Sony) and The Woman in Black (CBS Films). Also produced End of Watch (Open Road), co-financed and produced the upcoming Snitch (Summit) and A Walk Among the Tombstones (Universal), and financed the JFK drama Parkland.

Media Rights Capital (MRC), the independent financing powerhouse founded in 2003 by co-CEOs Modi Wiczyk and Asif Satchu, boasts investors like AT&T and Goldman Sachs. Financed the runaway blockbuster Ted as well as The Adjustment Bureau (both Universal) plus Elysium (TriStar Pictures). Since 2011, the company has a deal with Universal Pictures to distribute up to 20 of its films through 2016. MRC scores bonus points in the TV world too: This is the company that brought to Netflix its game-changing original content with House of Cards.

Annapurna Pictures, founded by Megan Ellison with a mission to produce the type of elegant, adult dramas that have largely been abandoned by the majors. The company fast-tracked its way to critical acclaim in 2012, producing and financing The Master (The Weinstein Company) and the Academy Award Best Picture nominee Zero Dark Thirty (Sony), Lawless and Killing Them Softly (both The Weinstein Company) and the upcoming, yet-untitled feature from Spike Jonze.

63

Six major financiers (and producers)


Lionsgate Entertainment Acquired independent studio Summit Entertainment, producers and distributors of the blockbuster Twilight Saga films and producer of Oscar-winner The Hurt Locker, finished 2012 in fifth place among the studios’ market share, claiming 11.6% of the US domestic box office. Lionsgate became known for producing films considered too controversial for major studios, such as American Psycho, Affliction, Gods and Monsters and Farenheit 9/11

The Weinstein Company Oscar wins for Best Picture, Best Director and Best Actor (for The King’s Speech in 2011 and The Artist in 2012), claimed 2.4% of the 2012 domestic total, slightly down from its 2011 market share of 2.9%. Ranks second only to Universal in market share for the first reporting period of this year, earning 15.2%. Brothers Harvey and Bob Weinstein created The Weinstein Company in 2005 after leaving Miramax Films, which they co-founded in 1979. The company also encompasses Dimension Films, founded in 1993 by Bob Weinstein, as a genre primarily focusing on action, horror and comedy films.

Relativity finished 2012 with 4.3% of the overall domestic box office, up from its market share of 4% in 2011. For the period of January 1 to March 10 of this year, the company claimed 5.1% of market share. Founded in 2004 by CEO Ryan Kavanaugh as a film company and has since expanded to seven other divisions ranging from music to sports. Kavanaugh, with a background in venture capital, sought a more efficient way to approach film financing, devising a model to predict the profitability of a potential film project based on mathematical tools rather than on traditional Hollywood finance methods. Relativity’s releases include 21 and Over, Identity Thief, Les Miserables, The Bourne Legacy, Bridesmaids, The Fighter and The Social Network.

Six major mini-majors, they produce(and also finance)

64


Open Road Films Founded in 2011 and didn’t waste any time breaking into the upper tier of the studios’ market share, claiming 1.3% of 2012’s overall domestic box office and 4% of first-quarter revenues of 2013. Open Road Films is a joint venture by the country’s two largest theater chains, AMC Entertainment and Regal Entertainment (more than 12,500 screens across the U.S.) forming their own domestic theatrical distribution company. The partnership effectively puts these exhibitor into a role usually reserved for studios: the distribution and marketing of films. Earliest releases were Killer Elite starring Robert De Niro, Clive Owen and Jason Statham, thrillers Silent House and Silent Hill: Revelation

Film District jumped over the 1% market share hurdle in 2011, claiming 1.2% of the year’s total domestic box office. Founded in 2010 by CEO Peter Schlessel, Graham King and Tim Headington, Film District was formed to acquire, produce, finance and distribute wide-release, commercials films with a goal of four to eight per year. Releases include horror story Insidious starring Patrick Wilson and Rose Byrne, Soul Surfer, Don’t Be Afraid of the Dark, the Ryan Gosling art-house action movie Drive, The Rum Diary starring Johnny Depp.

CBS Films Hovering just under the 1% market share benchmark, CBS Films debuted on the market share list in 2010, after the release of its first film, Extraordinary Measures the medical drama starring Harrison Ford and Brendan Fraser. The mini-studio earned .8% of total domestic box office for 2012 and .7% of the total for the first quarter of this year.Started in 2007 as the theatrical film division of CBS Corporation, CBS Films has a target of producing and distributing four to six star-driven films per year, with budgets of up to $50 million.

65

Six major mini-majors, they produce(and also finance)

Source: Blomberg Business Week

Prevailing web business model: Ad sharing, the YouTube modelOnly profitable for the most viral videos, creators in general don’t get advance payments, rewards low-budget productions and punishes anyone who can’t attract a massive number of viewers.

A new business model is being propelled by the subscription services (Netflix, Hulu, Amazon, etc)

Upstart producers Agreements with Verizon and other companies provide the capital to boost production quality above what old-school YouTube pays, upstarts remain a cheaper than a studio like Fox or Paramount, series budgets of hundreds of thousands, and not millions.

Subscription services will lead to new types of content: People are buying content in the same way they’d buy a TV show.

Professional, but cheaper new typeProduction and contents by entrants

66

68

Table of Contents




4 BRAND EMPIRES










69

EMERGING GLOBAL COMPETITORS

Source: McKinsey

Indian film industry69

Source: Forbes, Statista

Indian Cinema70

Source: McKinsey

Map of the Worldwide Film Industry71

Bollywood: Mumbai (Bombay), the largest is the Hindi film industry commonly referred to as "Bollywood", produces around 20% of films

Telugu cinema, Tamil cinema, Malayalam cinema, Bangla cinema, and Kannada cinema, which are located in Hyderabad, Chennai, Kochi, Kolkatta and Bangalore commonly referred to as "Tollywood"(Telugu), "Kollywood"(Tamil), "Mollywood"(Malayalam), "Sandalwood"(Kannada)

The remaining majority portion is spread across northern, western, and southern India (with Gujarati, Punjabi, Marathi, Oriya, Assamese Cinema)

Source: Wikipedia

Indian Cinema: Several Clusters72

Actors of Indian origin have made an impact on American TV:

Kunal Nayyar of "The Big Bang Theory," Mindy Kaling of "The Mindy Project," Archie Punjabi of "The Good Wife," Dev Patel of "Newsroom," Nimrat Kaur of "Homeland," Aziz Ansari of "Parks and Recreation," Aasif Mandvi of "The Daily Show with Jon Stewart" and "The Brink," and Kal Penn of "House" and "Battle Creek."

Veteran Indian actor Anil Kapoor ("Slumdog Millionaire") is the first major Bollywood star to get a meaty role on U.S. television, as the president of a fictional Middle Eastern country on the eighth season of "24."

Source: CNN

Indian actors going global74

1992: electronics salesman Kenneth Nnebue shot a straight-to-video movie in one month, on a budget of just $12,000. Living in Bondage sold more than a million copies, mostly by street vendors, and Nollywood – Nigeria’s movie industry – was born

2009: Nollywood had surpassed Hollywood as the world’s second largest movie industry by volume, right behind India’s Bollywood

2014: the Nigerian government released data for the first time showing Nollywood is a $3.3 billion sector, with 1844 movies produced in 2013 alone

2015: Nollywood Producer Kunle Afolyan exclusive Netflix distribution arrangement for latest film, October 1.

Adds to the 10 Nollywood related titles already on Netflix Nthat paid $12 million movie rights purchase of Nigerian novel Beasts of No Nation, to star Idris Elba

Source: Fortune

Nigerian film industry: internacionalization76

The industry “in desperate need of a financial makeover”. Pirating is a big problem in Nigeria and Africa

Nigeria’s film regulatory agency now posts existing laws, enforcement actions, and arrest details for film copyright infringement online

Need for stronger copyright laws, campaign to expose violators, including posting photos and films of alleged pirating operations

Of the industry’s $3 billion valuation less than 1 percent was tracked from official ticket sales and royalties, the rest came from pirated reproductions sold by unauthorized vendors for roughly $2 each

As a result, producers and financiers see only a fraction of the movie industry’s economic value

Key players in the global movie industry still have little idea what Nollywood is about

“The volume won’t matter until we can connect the art to the money with better content and profits”

Critics note that while Nollywood has volume, it lacks production value, and African actors have yet to breakout globally

Source: Fortune

Nigerian film industry: low profitability77

Competition in African digital entertainment is heating up

VOD: African digital content startups and the entry of subscription-based video on demand are trying to change this equation

With financial backing of $25 million from New York’s Tiger Global and Sweden’s , iROKO Partners licenses and streams Nollywood content to global subscribers, who pay $1.50 a month

“The focus is to take this popular movie industry, digitize it, and put the right framework around it to capture the proper value,” founder Jason Njoku said of Nollywood and iROKO’s platform

Profits will lead to larger budgets and better quality content

Channels and contents

2014: Africa Magic (Naspers, S.A.) African satellite TV channel $8 a month Africa Magic Go VOD package

IROKO has set its developers to creating smaller Nollywood movie files and more direct download options

Kenyan startup Buni.tv’s new Buni+ a $5 a month streaming movie service but reliable Internet is still a problem in African countries

Startup, SOLO is bridging the device and broadband gap by offering entry level smartphones (around $75)

Source: Fortune

Nigerian film industry: competition heating up78

• One of the key differences in China, is that watching a movie is an entertainment luxury, ticket prices are expensive. In 2010, the average ticket price went up to 40.4 RMB (around $6.3), which is close to the standard ($7.8) in the U.S.

• A market structure where demand easily outstrips supply – a rarity in western film markets.

• One of the main drivers of cinema-viewing in China is the audio and video qualities found in movie theaters. The alternatives such as TV or monitor screens (where poor-quality pirated content can be consumed) cannot compete in this regard, and the result is a revenue-distribution split that is incredibly uneven.

Source: www.chinahollywood.org

China: demand outstrips supply79

Foreign movies are limited by 4 areas: • Production, where filmmakers are required to apply for

government licenses• Importing Films, which is a state monopoly business that

is exclusively managed by the China Film Group (CFG), the largest and state-owned studio, and are subject to government censorship as well as a quota system (20 movies through box office split deals, and roughly 50 foreign movies are imported through buying outright rights)

• Distribution, which is exclusively operated by CFG and Huaxia Film Distribution Company

• Exhibition, where the annual screening time of foreign movies at theaters cannot exceed one-third of the total screening time.


China: regulations80

• The industry is operating in a linear way between the production and theatrical exhibition sectors.

• The purpose of making movies in China is to supply theatrical markets.

• Ancillary distribution windows and movie- related products have not been effectively developed.

• This is set to change. Any relaxing of the regulations will encourage a competitive environment in domestic distribution, which will likely lead to a drastic rise in the number of theater screens – exacerbated by digital projectors that will undoubtedly lower P&A costs.

• Market is blockbuster driven.• With the deregulation in foreign films and the evolution of the market

environment, aside from blockbusters, middle-budget and independent movies, as well as made for TV-movies and mini-series could have the chance to be circulated in the Chinese theatrical market.

Sources: chinahollywood.org, ejumpcut.org

The 2002 film Hero, by Zhang Yimou, stormed through China. Box office receipts of 2.5 billion yuan out of 9 billion total revenue for all films in that year made it the top grossing film in the entire history of Chinese cinema up to that point. Hero signified the final institutionalization of a new era in Chinese filmmaking, one that single-mindedly pushes for market success.

China: blockbuster driven81

http://www.chinahollywood.org/

• Certain types of TV shows can be re-purposed for the cinema in China.

• Chinese media institutions have started to treat intellectual property rights seriously.

• Online video websites competitively bidding for the copyright of television drama series.

• More Chinese television stations have been willing to acquire and localize foreign TV formats. For example, China’s Got Talent, Shanghai Dragon Television, the most popular program on Sundays in 2010.

• These trends reveal that China’s entertainment industries are slowly becoming more intellectual property friendly.


China: copyright friendly?82

82

Table of Contents




4 BRAND EMPIRES










83

FILM AUDIENCES IN EUROPE

Source: A profile of current and future audiovisual audience, European Commission, 2014

The two most important criteria by far when choosing which film to see are the genre and the story, which enable audiences to weigh up the film’s premise and potential benefits (relaxation, emotion, entertainment, etc.). Behind these come the cast, familiarity with the protagonists and setting, whether the film is a prequel/sequel to another movie, part of a saga, or based on a book viewers have enjoyed.

Key facts about film choice criteria in general• 92% of film viewers think film genre is important for their choice. • 88% think story is important. This is also very consistent across countries. There are slightly fewer film

viewers to consider it 'very important' than for 'genre' (48% vs. 53%).• 72% think actors and cast are important (only 25% think this is 'very important'). • 52% think a prequel/sequel is important (only 13% think this is 'very important').

Most important criteria to chose a film: genre and story

Film audiences in Europe85

Self-definition as a Film Viewer

3% of respondents said they do not watch films.

• One half of film viewers define themselves as cinema “likers”• One third consider themselves as cinema “fans”. • One fifth have a more negative attitude towards film.

• 30% chose 'I love cinema and I am a cinema fan'. This sentence was most often chosen in Spain (40%) and the UK (36%) and least chosen in Lithuania (13%), Croatia (21%) and France (25%).

• 49% chose 'I like some films very much although film is a secondary area of interest for me'. • 11% chose 'I watch films because there are so many of them but I don't feel particularly attracted to

film'. • 8% chose 'I don't watch many films and I don't think this will change'.


86

Film audiences in Europe

• Film viewers mainly choose to watch films on television because it is cheaper• On DVD because it is more convenient (they can watch whenever they want and• select the language)• In cinemas because it is the first window (the films are• recent) and it provides the most complete film experience.

• 84% of film viewers like 'watching films at home because it is• cheaper' • 81% like 'watching DVDs because they can watch the films• anytime they want' • 74% like 'going to the cinema because of the complete film• experience' • 66% like 'going to the cinema because they like watching the• latest films'

Prefered platforms


87

Film audiences in Europe

87

Table of Contents




4 BRAND EMPIRES










88

TV AND FILM ARE MELTING INTO ONE MEDIUM

Marvel’s most recent string of films: each film contributes to an overall narrative that flows from film to film. Functions a lot like a TV showrunner does, except the individual episodes of his show each cost more than $150 million to produce.

Warner Bros., Fox, Sony Universal and Paramount are following suit with their own comic properties,

Greater emphasis is being placed on continuity and serialized story-telling. It’s the TV-ization of film.

Streaming as a legitimate method of distribution

Another way in which the film industry is becoming more like TV: The growth of video-on-demand as a legitimate (read: profitable) method of mainstream distribution.

The “TV-ization” of film

Serialising Film

Source: digitaltrends.com

90

The Critics’ Choice Movie Awards and the Critics’ Choice Television Awards are meshing Golden Globes-style into one three-hour awards show beginning 2016.

The new entity, the 21st Annual Critics’ Choice Awards, will be simulcast live January 17 on A+E Networks’ A&E, Lifetime and LMN.

Critics’ Choice Movie & TV Awards Merge to Become One Show

Source: deadline.com

91

TV and film are melting into a single medium

TV is making things happen faster.

Now common for a broadcast show with 22+ episodes per season to be split into fall and spring mini-seasons, each with their own major arcs.

On cable, the mini-seasons are even shorter, perfect for binging.

Event series – shows designed to self-terminate after a preset number of episodes – are on the rise.

Also on the rise: film talent -- like Kevin Bacon and Halle Berry -- committing to broadcast TV shows, but only on reduced orders (The Following only makes 15 episodes a season and Extant’s second season will be just 13 episodes), further blurring the lines between the media.

Shows like Marvel’s Agents of Shield and the upcoming Agent Carter limited series are erasing that line entirely, as they fully exist in the Marvel Content Universe, sharing talent both in front of and behind the camera.

The TV industry is becoming more like film


Tv, Film: blurring the lines92

Now the decision on which distribution method is much more arbitrary

Before: Simply projecting an image onto a theater screen required a completely different process than sending that same image into millions of homes. Films were shot, edited, projected on film.TV has largely been a medium of video.

When TV projects chose to shoot on film back in the day, it was usually on lesser stocks and sizes than the feature world, as the end result was a video conversion anyway (at least ‘til the ‘90s).

Now most movie screens are just gigantic digital TVs, feature films and scripted TV shows are shot on largely on the same digital equipment.

When directors like J.J. Abrams and Quentin Tarantino choose to shoot projects on 35mm film, it’s now purely a creative choice, and no longer a necessity dictated by the medium.

It used to make sense to choose a distribution method (film, television, or Internet) before you did anything else. Now, that decision is much more arbitrary.


The impact of technology93

David Lynch ("The Elephant Man," "Blue Velvet"): "Today, television is much more interesting than film, it seems that the art factory has gone to cable“. Returns to TV with "Twin Peaks" the cult series of the 90s. It is said that his innovative style made possible shows such as "Six Feet Under" (HBO, 2001- 2005)

Dustin Hoffman: "In the golden age of Hollywood we never thought we were going to do TV. Today, the only creative risks are taken into films with small budgets and TV stations as well financed as HBO “ ("Sopranos"). Hoffman debuted as a TV actor in the series "Fear“ directed by film director Michael Mann ("Heat, "Collateral")

The tradition of film directors working for the TV is old. "Alfred Hitchcock Presents" (1955-62) was the first TV series made for TV by a great film director (226 episodes of 25 minutes). “Band of Brothers“ the series co-produced by Tom Hanks and Steven Spielberg (HBO 2001).


«TV is much more interesting then film»

From film to TV94

• Movie-making isn’t as lucrative as it used to be. TV is much more consistent. “Once a TV show is green lit, it’s not going into turnaround. You’re going to get paid, and you have work for the next year” (Turnaround is when the rights to a film are purchased by one studio and then sold to another. This delays production time, sometimes indefinitely)

• There used to see a lot of resistance from actors demanding their quote, but now they know you have to roll the dice and bet on what they’re doing instead of getting a big fat upfront fee

• Stability. Sign on for a season and the checks keep rolling in for months, nice in a constantly fluctuating industry where actors are worth whatever the fans think

• Royalties. Potential for unending royalties and residuals if the show goes into syndication. The producers and studio see the majority of this windfall, but actors can make a nice chunk of change from nonstop repeats

• Quality. Dramas are more complex, comedies funnier and subtler. The number grows every year. The small screen is no longer the domain of those who can’t cut it in theaters. “TV has gotten more sophisticated,”. “If you look at what’s on Fox now, as opposed to five, six years ago, TV show feel more cinematic.”

• TV stars have a new goal. In the past, many built a following by being in your living room every week, then moved to the movies. But now, big TV stars are staying put

Source: brobible.com, thewrap.com

Why are actors, directors, producers doing Tv? Money, stability, cinematic quality, new goals

95

• The main TV channels are afraid to fail• American series have invaded the primetime: Criminal Minds, Mentalist, CSI,

three episodes in a row, back to back, every night• But, some unique and different content is produced

Canal Plus and Arte: original productions that aim to match the quality of the best international TV drama such as The Killing or Breaking Bad

• “Les auteurs” are being pushed to TV spurred by the success of homegrown series like Engrenages or Les Revenants

• And by the failure of most of the films at the box office The least profitable film cost EUR 10.3 million ("Le Premier Homme“), a return of only 2%The independent film "La Vie d'Adèle" cost only 4 million and had a return of 219%

• Also, a debate on how to eliminate or reduce the “paternalistic” state funding


TV is the “le nouveau cinema”

In France, Home of “Cinéma D’auteur”96

99

Table of Contents




4 BRAND EMPIRES










100

100

THE ROLE OF TV IN THE DIGITAL AGE

101

Our culture and economy is increasingly shifting away from a focus on a relatively small number of "hits" (mainstream products and markets) at the head of the demand curve and toward a huge number of niches in the tail.

As the costs of production and distribution fall, especially online, there is now less need to lump products and consumers into one-size-fits-all containers.

In an era without the constraints of physical shelf space and other bottlenecks of distribution, narrowly-target goods and services can be as economically attractive as mainstream fare.

Video not available on broadcast TV on any given day, and songs not played on radio: the potential aggregate size of the many small markets in goods that don't individually sell well enough for traditional retail and broadcast distribution may rival that of the existing large market in goods that do cross that economic bar.

Source: wired.com

The theory of the long tail102

Source: PGA, Global Content Compass 2014

Two problems: creating outstanding products and creating awareness that they exist

Digital distribution is changing the economics of how Hollywood makes its money after releaseMany companies can’t depend on videos, DVDs or digital to prop up their numbersThey have either gone to co-financing or international financing deals

Productions that succeed in grabbing a small slice of the audiences’ attention and loyalty remain a mysterious exercise.

Hit broadcast-network shows have a fraction of the audience that they needed to stay on the air 20 years ago but consumers still want something that looks as good as ever.

Once film or TV products are created they must be brought to viewers’ attention in a sea of digital irrelevance. Whatever the quality of the production, digital awareness still has to be invented.Producers must develop digital strategies and take advantage of new cost savings opportunities and hope to find ways to make money.

How to grab the audience’s attention?103

There are many ways to identify audiences for specific subjects or ideas via the internet, social media and surveys, tools like never before, the cost of doing what could only be done with the backing of a studio has decreased.

Social media has the indispensable tools to create awareness, to create buzz, through digital marketing techniques in order to stand out from the crowd.

Sources: ny magazine, emarketer

«The trick is to get them seen and to compensate the people who make them.»

THE ROLE OF DIGITAL MARKETING104

Brands are crucial to survive in the sea of digital irrelevance, but not enough

Story is fundamental to stand out in a sea of digital irrelevance, but not enough

Production quality (money) is critical to stand out in a sea of digital irrelevance, not enough

Marketing is essential to navigate in a sea of digital irrelevance, but not enough

There is no single answer, but TV exposure has become indispensable

Lost in a sea of digital irrelevance

Aldous Huxley Feared the Truth Would Be Drowned in a Sea of Irrelevance Quoted by Neil Postman in “Amusing Ourselves to Death” (1985)

BRAND, STORY, PRODUCTION QUALITY, MARKETING…105

105

Table of Contents




4 BRAND EMPIRES










106

106

TECHNOLOGY, ECONOMICS AND THE SOCIAL ROLE OF TELEVISION

107

The evolution of TV

From black & white to colour, From standard definition to high definition From 4K to 8K, which is 16 times better than HDThe TV set develops more into a giant tablet9000 television channels in the 28 countries of the EU TV organisations had to innovate, because technology and the expectations of their customers have changed. New business models.

Almost all traditional broadcasters have become multi-channel-media organisations, providing their programmes on all relevant platforms and devices, anytime and anywhere.

Their programmes generate more tweets and fans than anything else.

YouTube is not called television, despite being the biggest streaming platform in the world and the second biggest search engine. Netflix or Amazon are not television despite producing good series and dramas.

Netflix, and Amazon and many other new players want to become as successful as television is today.

They want to catch the eyes of millions of people that watch on average 3 hours and 40 minutes of television every day.

Thesis on the future of TVSPEECH BY INGRIDDELTENRE, EBU DIRECTOR GENERAL, SEPTEMBER 2014

108

The whole customer experience will improve.

If technology is changing, if consumer expectations are changing, media organisations need to change and adapt as well.

The customer is king.

We all love to say “Content is King”. This is the typical view of a producer. But if the customer does not like the content, or even worse: if the customer does not find the content, our content will not be king. The day has only 24 hours, the availability of content is ever increasing. You have to produce great programmes, but you also need to make sure that this content will be found.For Netflix and Amazon the customer is king. Technology allows a personalization as never before.

Much more cooperation across borders. The industry is globalizing.

Customers’ expectations with regard to quality and innovation can only be met when we are able to build on the economy of scale much more. For traditional broadcasters this translates also in doing fewer things bigger and better.

Communicate with your customer and find innovative solutions to their problems.

Customers want us to listen and dialogue. There is a community out there that is critical, looks for alternatives and finds them. Need to establish a new form of relationship and build on it.

109

Thesis on the future of TVSPEECH BY INGRIDDELTENRE, EBU DIRECTOR GENERAL, SEPTEMBER 2014

Source: Deloitte, Generator Research

«The TV industry has survived this decade of change through reinventing itself technologically across multiple aspects.»

Species with useful adaptations to the environment are more likely to survive and produce progeny than are those with less useful adaptations. (Darwin, Wallace, 1858)

Evolution by Natural Selection110

From the one channel TV to Everything, Everywhere, Anytime

The evolution of cable television111

Overwhelmingly TV continues to be consumed in the usual place: the family couch

Huge media fracas about the use of computers / tablets / smartphones to access Internet video applications.

Only marginally do these innovations change long established habits of consuming TV.

One thing remains: strong appetite for entertainment and news, it has been increasing in all age groups.

What people really want is to watch TV, preferably live, when the program is first broadcast. This is something that increases consumer satisfaction.

Nothing better than gathering the family on the couch for the collective catharsis with the usual dozen channels.


The usual place112

Model today: at-home streaming world

• Large quantities of content, particularly TV, became available to viewers right at their fingertips, all at a very low cost

• Huge sums of money to be made through the aggregation and effective distribution of highly-targeted content that reaches narrow-interest audiences

Source: Chime Media LLC, Clealeap

Model for monetizing content 20 years ago

• Release to a sizable audience at the multiplex, or on VHS, DVD, pay-per-view or cable TV

• It made sense to ignore most of the catalog and to focus on new releases and a few big winners

Streaming video outlets have altered the media industry

1. Broadband and mobile infrastructure grew2. Large investments smoothed out the streaming process3. Lots of contents: studios have decades’ worth of film and video in their archives although nearly 98% of that content is not accessible and available for distribution

Disruption

New model of monetizing content113

Streaming content is an audio or video file on the Internet that is partially downloaded and then played as the remainder of the file is being downloaded. Live streaming is the method of constantly sending and receiving content over the Internet.

Sources: Ericsson Consumer Lab, Computer Hope, Deloitte

Streaming1114

114

Table of Contents




4 BRAND EMPIRES










115

115

DIGITAL: NEW OPPORTUNITIES

116

CHRIS MCGURK, CEO, Cinedigm

The cost of making a movie that’s worthy of theatrical release is now a hell of a lot less than it was a few years ago, and the profusion of digital services like Netflix and Hulu and Amazon is reaching a critical mass.

They’re in an arms race for content, and that’s creating a perfect storm for independent film.

People have to re-screw their heads on about the way a film is released.

It used to be that a movie had to be picked up by an independent distributor and get to 500 screens to be validated as a movie, but it takes $5 million to $10 million in marketing to do that, and it makes it difficult to get a return on your investment.

It’s still really important to get a theatrical release, but it should be done in a smart targeted way, in a few key markets.

It’s important to get those reviews and publicity so they raise awareness of a film for ancillary markets, but you have to do it in a way where you still have a shot at making money.

Source: thewrap.com

«We’re entering a period of tremendous upside for the independent film business. Finally things are coming together in terms of digital technology.»

Independence day?117

Tell compelling stories, cheaper

Some people say there are no good movies being made, but people who are making good movies are just rolling up their sleeves

There used to see a lot of resistance from actors demanding their quote, but now they know you have to roll the dice and bet on what they’re doing instead of getting a big fat upfront fee

This applies to below-the-line people, they complained work is not in L.A. anymore; it’s going everywhere, so roll with it

The last decade was such gluttony and excess — huge budgets for movies that could have been made much cheaper

You just need to do it cheaper, which technology and passion

«Roll up tour sleeves»RIC WAUGH (“SNITCH”)

118

Storytelling in a different way

When you have fewer tools in your tool box, you have to focus on character and story, that parameters making better content.

There were more high-quality movies than just a few years ago

Distribution is changing too

There is less money for filmmaking, it’s a huge opportunity

We don’t know where the industry is going to land, but people are consuming more content than they ever have before

We just haven’t figured out how to monetize this audience, but eventually we will

Source: thewrap.com

Focus on characters and storyJASON BLUMHOUSE

119


Investors continue to show strong interest in putting their money to work in Hollywood: The driver is always: how do you create a good story?

The business of film has evolved greatly but its fundamental principles remain the same

“There’s more capital available than there are great stories,” says Nick Meyer, chief executive of Sierra/Affinity, an international film sales and production company.

Storytelling is as central to the success of the film industry as it has always been, he says. “Stories drive intellectual property generation, they drive financing opportunities and they attract the great artists — the directors and casts.”

When the stars align and story, cast and director work, the result can be a financial hit on a global scale

Implications of globalization for smaller, Mind-budget releases

120

Babel ' s $25 million budget came from an array of different sources and investors anchored with Paramount Vantage, which changed its name from Paramount Classics, with Babel as its premiere production and inaugural motion picture

Set in 4 countries on 3 continents, 4 different languages, 4 stories set in Morocco, Mexico, the US, JapanStars Brad Pitt, Cate Blanchett, Adriana Barraza

The majority of the rest of the cast: non-professional actors and some new actors

Best Director Prize Cannes 2006

Seven nominations at the 79th Annual Academy Awards, including Best Picture and Best Director

The USD 25 million film121


“Only invest with experienced producers and financiers,” says Martin Smith, founder of West Bridge Consulting, an advisory firm specialising in arts, media and entertainment.

But how can an investor gain access to such experience? One answer could be to invest in films through film funds, a number of which have emerged over the past few years.

Shelley Media, for example, which requires a minimum investment of £10,000, has delivered an average annual return of 11.5 per cent since launch five years ago. The Enterprise Investment Scheme (EIS) fund has raised a total of £200m and has been involved in successful British films including Mr Turner and Testament of Youth, for example.

Look for films that mitigate production risk through pre-sales

Analysts say that effective finance and distribution models exist for big, so-called “tent-pole” blockbusters that provide core revenue streams

Small independent films can be paid for by a single source and recoup investment with a small release and ancillary market sales

The $50m-$100m films face the greatest difficulties

Financing small independent films122

122

LITERATURE

123

123

Literature

• Mirrlees, T. (2013) “Global Entertainment Media: Between Cultural Imperialism and Cultural Globalization”. New York, Routledge

• Finney, A. (2014) “The International Film Business”. Routledge• Ullin, J. (2009) “The Business of Media Distribution: Monetizing Film, TV and Video Content in an Online World”.

Focal Press• Reiss, J. (2011) “Think Outside the Box Office: The Ultimate Guide to Film Distribution and Marketing for the

Digital Era”. Hybrid Cinema• Perez, C. (2003) “Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages”.

Edward Elgar Publishing Ltd• Vogel, H. (2014) “Entertainment Industry Economics: A Guide for Financial Analysis”• European Commission (2014) “European film in the digital era, Bridging cultural diversity and competitiveness”,

Brussels http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52014DC0272&from=EN• European Commssion (2012) “A profile of current and future audiovisual audience Final report” http

://bookshop.europa.eu/en/a-profile-of-current-and-future-audiovisual-audience-pbNC0414085/• GWI Insight Report (2015)”Digital V. Traditional media Consumption”. GlobalWebIndex (http://

insight.globalwebindex.net/media-consumption)• McKinsey & Company (2015) “Global Media Report, Global Industry Overview” (file:///C:/

Users/Sara%20H/Downloads/McKinsey%20Global%20Report%202015_UK_October_2015.pdf)

124

http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52014DC0272&from=EN

http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52014DC0272&from=EN

http://bookshop.europa.eu/en/a-profile-of-current-and-future-audiovisual-audience-pbNC0414085/



http://insight.globalwebindex.net/media-consumption

http://insight.globalwebindex.net/media-consumption

THANK YOU

FOR QUESTIONS OR COMMENTS PLEASE CONTACT[Insert name of the lecturer][Insert email address of the lecturer][Insert phone number of the lecturer]

FOR YOUR ATTENTION