Chapter 8: Hollywood International. The Hollywood Majors ä Columbia—Tri-Star ä Disney ä MGM/UA ä Paramount ä 20 th Century Fox ä Warner Bros. ä Universal.

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Presentation transcript:

Chapter 8: Hollywood International

The Hollywood Majors ä Columbia—Tri-Star ä Disney ä MGM/UA ä Paramount ä 20 th Century Fox ä Warner Bros. ä Universal

Factoring Costs ä Gross vs. rental ä Negative cost – all costs incurred by a film production ä Salaries for talent ä Pay for technical crew, costs of set design, etc. ä Lab costs ä Publicity and promotion ä ‘Points’ ä Percentage of box office gross taken by top directors, stars

Factoring Costs ä Returns due profit participants ä Distribution fee ä Split with exhibitors ä By late 1990s, average neg cost was $60 million ä Average cost for publicity was $20 million

Ancillary Markets ä Home video ä DVD, VHS ä Pay cable, pay-per-view ä Broadcast television ä Product licensing ä Product tie-ins

Diversification: Time Warner ä Media operations in four core areas ä Entertainment ä Film and television production ä Broadcasting ä Records ä Music publishing ä Cable Network Programming ä Cable Television Systems ä Publishing ä Books ä Magazines ä Direct marketing

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

Center for the Study of Commercialism, 1990 study ä TOTAL RECALL: 55 references to 28 brand name products ä GHOST: 23 references to 16 brand name products ä PRETTY WOMAN: 20 references to 18 brand name products

Product Tie-Ins ä Studios license hit films/characters for promotional campaigns related to a film ä WHO FRAMED ROGER RABBIT: ä $12 million in ads by McDonald’s ä $10 million in ads by Coca-Cola ä These ads featured the animated characters from the movie ä Tie-ins help defray a studio’s marketing costs

THE INDUSTRY TODAY ä The Major Studios are Subsidiaries of Large Communications Empires ä Film Production Feeds the Ancillary Markets ä Synergy: All Revenue Streams In-House ä BUT production costs are high and profit margins are low ä Film Becomes Software for Interactive and Home Entertainment Systems

International Influence of Hollywood ä Adoption of Hollywood style by foreign filmmakers ä Emigration of foreign filmmakers to the American industry ä Remakes of foreign films ä The Vanishing (1988, 1993)