industry structure costs revenues the movie business industry structure costs revenues

the major studios Warner AOL/TW (usa) Disney Disney (usa) Columbia Sony (japan) 20th C. Fox News Corp. (aus) Paramount Viacom (usa) Universal/MCA Seagram (can)

studio power = distribution why do studios dominate distribution? expertise steady flow of films capital links to theaters

movie costs costs steadily rising $60m to $70m+ per movie $25m marketing for major mainstream film $85m/$170m studio/distributor split

cost of some 2000 movies Gladiator $100m MI 2: $100m Grinch: $125m+ Perfect Storm: $120m Dinosaur: $150m

movies: 1 in 5 profitable movie cost us box office Postman $110m $20m Beloved $73m $26m Babe 2 $90m $22m Titan AE $85m $27m Avengers $21m XFiles $123m $83m

some winners movie cost us box office B. Witch $.05m $140m Titanic $550m/$1.3b Something…Mary $45m $180m F.Monty $6m $101m Pvt. Ryan $125m $130m R.Hour $30m

why so expensive? perceived need for stars star salaries $20m + for Carrey, Gibson, Ford, Cruise, Travolta, Willis, Williams, Roberts $15m+ for Goldberg, Bullock, Moore efforts to limit star salaries, perks

controlling costs production outside US (esp. in Canada) exchange rate incentives proximity

revenues US box office/theaters $8.5b in 2000 Not enough to generate profits, but basis for film’s success or failure wide release platforming

opening weekend mania emphasis on opening weekend marketing push Friday data Ed Zwick estimates marketing value: USA, abroad improvements in theaters

impact: opening weekend mania need for stars need for good word of mouth need for simple story need for likeable story (LOP, LCD) audience considerations

opening weekends Pokemon 2 $50.7m Grinch $55m Charlie’s Angels $40m Waterboy $39m Toy Story 2 $80m Miss Imp 2 $71m Star Wars/Phantom Menace $61.8m

word of mouth title opening 2nd Avengers $10m -65% Sphere $16m -54% Mary $14m -9% W.Singer $19m -23%

box office, Nov. 16-18, 2001 Harry Potter $93m Monsters’ Inc $23m Shallow Hal $12.7m $41.3m Dom.Disturb. $5.6m $33.9m Heist $4.7m $14.9m The One $4.2m $38.4m K-Pax $3.3m $45.5m

value of foreign box office movie US overseas Titanic $600m $1.3b Ph Menace $431 $491 J. Park $357 $563 Ind Day $306 $506 Lion King $312 $453 Term 2 $204

revenues: foreign box office value of foreign box office @50% revenue overseas strategy action films v. other genres

revenues: video, dvd $20b in rentals and sales, 2000 video advisers 2nd chance for a movie distribution (consolidation, options) editing videos

product placement advertising in movies does it influence movie? growth of product development packages movies, television

other revenue sources pay per view premium cable network TV soundtracks merchandising movie sales, dvd