The motion picture industry

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The motion picture industry

• Prof. Lenert
• Medst 101

2
Movies are "art" and "industry"

• The business of entertainment
• The demands of the audiences
• The restrictions of government

3
The dream world and capitalism

• "Hollywood is a sophisticated dream factory that
  is in the business of manufacturing and selling
  dreams to the consumer, who is willing to buy the
  celluloid fantasies offered for sale.

4
The social impact

• The ability of the motion picture to capture the
  imagination -- the movie going experience.
• The excitement of the Superbowl
• Star Wars "changed my life."

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Most important reasons for going to a movie
theater

• Escape - 44
• Technical factors - 32
• To see it now - 10
• Theater atmosphere - 9
• None (no reason) - 2
• Not available on video tape - 1

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Why do people see a particular movie?

• (Scale 10 very important 0 Not important).
• Story type - 8.4
• Word of mouth - 7.4
• Stars - 7.0
• Previews - 6.6
• Reviews - 5.8
• Advertising - 5.7
• Adapted from a previously known story - 4.8
• Awards - 4.4
• TV-based promotions - 4.1
• MPAA ratings - 3.8

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The stages

• Conceptualization and financing
• Production
• Distribution
• Exhibition

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Conceptualization and financing

• Strategies to minimize risk
• stars with track record as bankable
• sequels
• portfolio strategies
• Synergy and vertical integration

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Production

• The majors (the studio system)
• Question who is the author of the film Batman?
• The Writer
• The Director
• The Actors
• The Banker
• The Studio

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The minors and independents

• Getting financing is a problem
• Getting recognition is a challenge
• Getting wide distribution is nearly impossible

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Distribution (an economic position)

• The distribution windows of filmed entertainment
  Theaters, VCRs, PPV, Pay Cable, Network TV
• Major distributors (1995 market share) Disney
  23, Warner Bros. 16, Universal 13, Sony
  (Columbia. TriStar) 13, Paramount 10, 20th
  Cen. Fox 8.
• Distributors get a 90-10 split after the theater
  expenses are deducted.

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Exhibition

• Theaters -- there are approximately 27,000 North
  American movie screens.
• Most important exhibitors (1995 data) United
  Artists, Carmike, AMC, General Cinema, Cin.
  Odeon, Loews-Sony, National Amusements, Regal,
  Hoyts, Act III.

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Revenue

• Example Independence Day 1 billion
• Domestic 300 million
• Foreign 474 million
• Video 252 million

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Synergy - Example

• Star Wars I
• 400 million in ticket sales
• 4 billion in movie-related merchandise
• (from sound tracks to edibles).

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The end