Chapter 11 Entertainment Products and Marketing

Objectives  Identify types of entertainment products.  Define evergreen products.  Describe location based entertainment (LBE)  Explain the significance of impulse spending.  Explain why marketing is involved in entertainment product development.  Discuss the difference between primary and secondary markets.  Explain the importance of programming.

Case Study - Ticketmaster  When people consider products, they often think of tangible goods such as toys or clothing. Services are also products. The entertainment industry offers a great variety of services, including live and filmed entertainment. Ticketmaster sells tickets for events as an entertainment service.  When Ticketmaster formed in 1981, the company was a group of college students with bright ideas. Under the guidance of entrepreneur Robert Leonard, its goal was to upgrade phone systems in each of its clients’ box offices. It would create a network of ticket offices where, for a fee, customers could buy tickets for just about any event. The business took off. It became the exclusive supplier of tickets for the majority of professional sports events, dance performances, concerts, shows, and plays. In 1990 Ticketmaster bougth out Ticketron and dominated the industry. Then the popular band Pearl Jam filed a lawsuit that questioned Ticketmaster’s prices, but the proceeding was discontinued in However, Ticketmaster was about to face its next challenge – the growing popularity of ticket sales through the Internet. Ticketmaster began on online auction service in an effort to regain profits lost to scalped, or resold tickets.  (100 Total Points/25 Points Each)  1) Are tickets entertainment products? Why?  2) What was a challenge to Ticketmaster?  3) Do online ticket sales benefit the entertainment events? Why?  4) How do you think Ticketmaster’s online auctions will affect ticket prices?

Section 11.1 Types of Entertainment Products

Entertainment Products  Entertainment products can include both tangible and intangible goods and services.

Film and Music Merchandising  Theaters provide their media based services – motion pictures, plays, and musical productions – for which customers pay and receive tickets.

Concessions  Theaters also provide “concessions” or snack bars that sell refreshments such as popcorn, soda, and candy.  Studios also issue related or extended products of films, such as toys, games, or clothes.

DVD/Video Rentals and Sales  Film producers have two choices for DVD and video distribution – to rent or to “sell through”, which is selling to the customer.  Currently 40 % of revenue from DVD’s and videos comes from “sell through.”

Evergreens  “Evergreens” or films or products that are popular year after year, are important primarily because new generations of viewers who may be unfamiliar with the films buy them.  Ex.: The Wizard of Oz

Music CD’s and Distribution  Worldwide sales of recorded music total $40 billion a year.  “Record Clubs” – organizations in which members receive free records if they agree to purchase additional records within a certain period.  “Rack Jobbers” – independent vendors who distribute, price, and control their own inventory within a store. Ex.: Individuals that come into retail stores and set up displays with CD’s.

Electronic and Video Games  Video and electronic games as media based entertainment products have been growing in popularity since first introduced.  Sales of Xbox and Playstation help to account for a portion of this $10 billion a year industry.  Electronic Arts (EA), the largest independent developer of video games, competes with major movie studios in terms of creative output.

Marketing Games with Music  Cross-marketing in video game distribution is common.  Game-makers work with films, tv shows, sports teams, and cartoon characters.  Popular music has a big role in video games. Ex.” Trent Reznor of Nine Inch Nails began making music for the video game Quake in 1996.

Electronic Game Tie-Ins  The potential is huge for tie-ins with films, music, and sports, because game buyers are also the primary market for all forms of entertainment.  “Advergaming” is the marketing concept that drives video game marketing. Advertisers see the games as a good way to reach target markets, and they create games that are really ads but look and play like games.

Print Books and Magazines  Second to theater, the print media – books, magazines, comics, newspapers – is one of the oldest sources of entertainment.

Book Categories  Trade books are published for general bookstore sales and public library circulation.  This group of books includes: fiction, humor, poetry, arts, music, how-to, self- help, and many others.

Magazines  As entertainment products, magazines offer a good opportunity to marketers who are looking for ready-made target markets.  20,000 magazine titles are on the market.  Only 160 of these titles earn 85% of the total magazine revenue.  Some examples are _______________.

Theme Parks and Water Parks  Theme parks and water parks not only provide recreation based entertainment services, but they also sell tangible goods.  Paramount Studios own five amusement/theme parks, and Six-Flags, Inc. owns 39 regional theme parks in the U.S. and Europe.

Location-Based Entertainment (LBE)  LBE is the industry term for entertainment that includes amusement, them, animal, and water parks.  Ex.: Disney World  Ex.: Six Flags promotes the fact that it has a park within an 8 hour drive of 98% of the U.S..

Impulse Spending  Customers’ “impulse spending” or buying without prior planning, is common in theme parks, since the park environment is set up to urge patrons to spend money at every opportunity.

Theme Park Tie-Ins  LBE venues are usually owned by major entertainment conglomerates, and use themes, characters, stories, or other intellectual property of their owners.  “Intellectual property” is an idea, concept, or written or created work that is unique and is protected by copyright laws. It has value in the marketplace. Ex.: Nonowners can license the use of characters or films in exchange for fees.  Ex.: One of Disneyland’s oldest and most popular attractions, “Pirates of the Caribbean was adapted as a blockbuster movie.

Special Entertainment Events  Special entertainment events, such as circuses, fairs, and ice shows provide entertainment services.  Ex.: Disney on Ice.

Section 11.2 Media Product Marketing

Media Marketing Channels  The major media include film, tv, radio, print, and the Internet.

Marketing Film and Distribution  When a studio or indie develops and produces a film, it usually focuses on the goal of getting the film seen by as many paying customers as possible.  Therefore, a large part of planning a film involves marketing and merchandising.

Primary and Seconday Markets  Primary Market – the primary market in film distribution is the target audience which is the theaters that show the films in first release.  Secondary Market – the secondary market is the target audience after a film has been in first run at theaters, and it includes tv, discount theaters, home rental and sales, cable tv, and airlines.

Exhibitors  Exhibitors – theaters that sell tickets and show films to an audience – the primary market.

Film Exhibitors  The field of exhibitors is primarily made up of large theater chains.  Eight major chains control 20,000 theaters, or 65% of the industry in the U.S..

Gross Revenue  The exhibitors “gross revenue” is total income from sales before costs, expenses, and taxes are deducted.  The exhibitor breaks down gross revenue in two are areas: 1) 70% from ticket sales, 2) 30% from concession sales.

Trailers  The film studio and exhibitor also use “trailers” or previews of coming movies shown before the main feature, to create interest in new releases.

Marketing Television  Reruns, or previously aired shows, are a great source of revenue for studios and networks, because the basic costs of production are already paid, and the show can be televised in different markets over and over, thus continually generating profits.  Ex.: Everybody Loves Raymond

Syndication  “Syndication” is selling television programs to individual stations, not networks.  Many actors make more money on reruns than on the original show.  Actors collect payments called “residuals” every time shows are aired.

Programming  Television target audiences are specialized by “programming” which is the schedule or times for broadcasting shows on television.

TV Time Slots  Dayparts Time  Early morning 6 A.M. – 9 A.M.  Daytime 9 A.M. – 3 P.M.  Early Fringe 3 P.M. - 5 P.M.  Early News 5 P.M. – 7 P.M.  Access 7 P.M. – 8 P.M.  Prime Time 8 P.M. – 11 P.M.  Late News 11 P.M. – 11:30 P.M.

Marketing the Music  The music industry earns $40 billion a year worldwide. Of all the entertainment businesses, the music business affects the most nationalities, cultures, and income levels.  Producing a commercial album can cost $125,000 to $225,000 and more.  Production costs may include studio time and professional musician’s fees, but do not include marketing or promotion, which can be five times the production costs.  The performers, or talent, may receive a 15% royalty fee from the retail price of each album sold.

Getting on the Air  Airplay, or time on the radio, is very important to record companies, because if a performer’s music does not get airtime, the music does not sell.

Payola  To create a successful music act, performers need radio exposure.  “Payola” is an illegal payment by record companies, or labels, to radio stations to persuade them to play the label’s records. This is not “ethical.”  “Ethical” means ______________.

Performers as Marketers  Today popular music is integrated with other media. For example, popular bands or performers sing product jingles.

Jingles  “Jingles” are catchy tunes or songs that promote a product, accompany tv, radio, or internet advertisements.  An example is ___________.

Ad Campaign  An “ad campaign” is a promotional plan that combines selling, advertising, public relations, and the use of different media to reach the target market.

Internet Marketing  The internet is a popular source of music. As a result of free illegal music downloads and file sharing, record labels and broadcasters revised their products.  Ex.: Apples ITunes Music Store offer downloading services for reasonable pricing per song.

The Internet and Print Media  “E-publishing” one seemed futuristic, but by the end of the 20 th century, most print media became available to consumers on the internet.  Though book publishing still remains a primarily paper and ink print medium, some Web publishers like mightywords.com have been able to earn revenue with unprintable Web pages. In 2000, the publisher sold over 400,000 copies of Stephen King’s “Riding the Bullet.”  “E-Zines” or magazines on the internet also have a presence in cyberspace. Ex.: PC Magazine  Almost all major newspapers have Web sites.  Ex.: Los Angeles Times, New York Times

Marketing the Music Industry  (100 Total Points/10 Points Each)  Choose 10 of your favorite artists.  List the artist’s name, his/her CD name, and their Label.

Checking Concepts/Critical Thinking/Cross-Curriculum Activities  (100 Total Points/10 Points Each)  1) Name three entertainment products.  2) Explain primary and secondary markets.  3) Define evergreen products.  4) Describe impulse spending.  5) Differentiate between theme parks and water parks.  6) Describe the customers of electronic and video games.  7) Explain the importance of programming.  8) Explain why you think large media companies have so much control over entertainment.  9) You are a freelance writer who has a script to sell to a major studio. Highlight (list) the most important point you want to get across to a studio executive about your script.  10) Explain what you think video games might be like in the year 2050.