Chapter 9: Hollywood International This multimedia product and its contents are protected under...

Chapter 9: Hollywood International

Chapter 9: Hollywood International

This multimedia product and its contents are protected under copyright This multimedia product and its contents are protected under copyright law. The following are prohibited by law:law. The following are prohibited by law:any public performance or display, including transmission of any image any public performance or display, including transmission of any image over a network; over a network; preparation of any derivative work, including the extraction, in whole preparation of any derivative work, including the extraction, in whole or in part, of any images; or in part, of any images; any rental, lease, or lending of the program.any rental, lease, or lending of the program.

Copyright © Allyn and Bacon 2007

The Hollywood MajorsThe Hollywood Majors

Columbia—Tri-StarColumbia—Tri-Star DisneyDisney ParamountParamount 2020thth Century Fox Century Fox Warner Bros.Warner Bros. Universal Universal


The Falling Box Office The Falling Box Office

Overseas market increasingly importantOverseas market increasingly important Box office revenue in the U.S. falls off almost Box office revenue in the U.S. falls off almost

immediatelyimmediately Ex. Star Wars Episode III: The Revenge of the SithEx. Star Wars Episode III: The Revenge of the Sith

Box office revenue has been sagging for yearsBox office revenue has been sagging for years 2002-2004 revenues remained flat at 9.5 billion2002-2004 revenues remained flat at 9.5 billion Halfway through 2005: overall decline in earnings that Halfway through 2005: overall decline in earnings that

was the most sustained since 1982was the most sustained since 1982 Box office must compete with video games online Box office must compete with video games online

gaming, and home viewinggaming, and home viewing


Factoring CostsFactoring Costs

Gross vs. rentalGross vs. rental Negative cost – all costs incurred by a film productionNegative cost – all costs incurred by a film production

Salaries for talentSalaries for talent Pay for technical crew, costs of set design, etc.Pay for technical crew, costs of set design, etc. Lab costsLab costs

Publicity and promotionPublicity and promotion ‘‘Points’Points’

Percentage of box office gross taken by top directors, stars, Percentage of box office gross taken by top directors, stars, investors.investors.

Percentage of DVD revenue taken by top directors, stars, Percentage of DVD revenue taken by top directors, stars, investors.investors.


Factoring CostsFactoring Costs

Returns due profit participantsReturns due profit participants Distribution feeDistribution fee Split with exhibitorsSplit with exhibitors By late 1990s, average neg cost was $60 millionBy late 1990s, average neg cost was $60 million Average production cost in 2004 was $64 millionAverage production cost in 2004 was $64 million Average cost for advertising in 2004 was $34 millionAverage cost for advertising in 2004 was $34 million


Ancillary MarketsAncillary Markets

Home videoHome video DVD, VHSDVD, VHS

Pay cable, pay-per-viewPay cable, pay-per-view Broadcast televisionBroadcast television Product licensingProduct licensing Product tie-insProduct tie-ins


Diversification: Time WarnerDiversification: Time Warner Creates Media programming and controls distributionCreates Media programming and controls distribution

Keeps in-house all revenues from productsKeeps in-house all revenues from products Media operations in five core areasMedia operations in five core areas

Entertainment Entertainment Film and television productionFilm and television production BroadcastingBroadcasting RecordsRecords Music publishingMusic publishing

Cable Network ProgrammingCable Network Programming Cable Television SystemsCable Television Systems AOLAOL PublishingPublishing

BooksBooks MagazinesMagazines Direct marketing Direct marketing


Product Tie-Ins

Studios license hit films/characters for Studios license hit films/characters for promotional campaigns related to a filmpromotional campaigns related to a film

WHO FRAMED ROGER RABBIT: WHO FRAMED ROGER RABBIT: $12 million in ads by McDonald’s$12 million in ads by McDonald’s $10 million in ads by Coca-Cola$10 million in ads by Coca-Cola These ads featured the animated characters from the These ads featured the animated characters from the

moviemovie Tie-ins help defray a studio’s marketing costsTie-ins help defray a studio’s marketing costs Product licensing revenue in 2001: $70 BillionProduct licensing revenue in 2001: $70 Billion


Center for the Study of Commercialism, 1990 study

TOTAL RECALL: 55 references to 28 TOTAL RECALL: 55 references to 28 brand name productsbrand name products

GHOST: 23 references to 16 brand name GHOST: 23 references to 16 brand name productsproducts

PRETTY WOMAN: 20 references to 18 PRETTY WOMAN: 20 references to 18 brand name productsbrand name products


Product Placement

• Studios derive revenue from on-screen placements

• Placement agencies (e.g., Associated Film Promotions) negotiate deals for clients with studios

• Result: Film is an advertising medium


THE INDUSTRY TODAY

The Major Studios are Subsidiaries of Large The Major Studios are Subsidiaries of Large Communications EmpiresCommunications Empires

Film Production Feeds the Ancillary MarketsFilm Production Feeds the Ancillary Markets Synergy: All Revenue Streams In-HouseSynergy: All Revenue Streams In-House BUT production costs are high and profit margins BUT production costs are high and profit margins

are loware low Film Becomes Software for Interactive and Home Film Becomes Software for Interactive and Home

Entertainment SystemsEntertainment Systems


International Influence of HollywoodInternational Influence of Hollywood

Adoption of Hollywood style by foreign Adoption of Hollywood style by foreign filmmakersfilmmakers

Emigration of foreign filmmakers to the Emigration of foreign filmmakers to the American industryAmerican industry

Remakes of foreign filmsRemakes of foreign films The VanishingThe Vanishing (1988, 1993) (1988, 1993)


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