Module - Globalisation, film and TV in the digital age

GLOBALISATION, FILM
AND TV IN THE DIGITAL
AGE
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3
Table of Contents
1 CURRENT TECHNOLOGICAL REVOLUTION
2 CURRENT ERA OF GLOBALISATION
3 GLOBALISATION, MIDDLE CLASES, CONSUMERISM AND GLOBAL IMAGINARY
4 BRAND EMPIRES
5 BLOCKBUSTERS: HIT BRANDS
6 DISRUPTION OF THE HOLLYWOOD LANDSCAPE
7 INDEPENDENT FINANCIERS AND PRODUCERS
8 EMERGING GLOBAL COMPETITORS
9 FILM AUDIENCES IN EUROPE
10 TV AND FILM ARE MELTING INTO ONE MEDIUM
11 THE ROLE OF TV IN THE DIGITAL AGE
12 TECHNOLOGY, ECONOMICS AND THE SOCIAL ROLE OF TELEVISION
13 DIGITAL: NEW OPPORTUNITIES

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Table of Contents
4 BRAND EMPIRES

5
CURRENT TECHNOLOGICAL REVOLUTION

• 1947 First transístor (Bell Labs)
• 1959 First microchip (Texas Instruments)
• 1969 Arpanet
• 1971 First microprocessor (Intel)
Information and Telecomunications
5

Source: The Economist
• Each upswing stimulated investment and an expansion of the economy
• The long booms petered out as the technologies matured, returns to investors declined with the dwindling number of
opportunities
• Creative destruction: after a period of much slower expansion came decline followed by a wave of innovations which
destroyed the old way of doing things and created the conditions for a new upswing
• That’s why America shrugged off its lethargy in the early 1990s and started bounding ahead again
The long economic waves are shortening, from 50-60 years to around 30-40 years
The present fifth technological revolution
is approaching maturity
6

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4 BRAND EMPIRES

9
CURRENT ERA OF GLOBALISATION

The integration of economies, industries, markets, cultures and
policy-making around the world
A process by which national and regional economies, societies, and
cultures have become integrated through the global network of trade,
communication, immigration and transportation
Includes: culture, media, technology, socio-cultural, political, biological
factors, e.g. climate change
After the fall of the Berlin
Wall, some talked about the
rise of a “one world way” of
doing business and living
But recent events have
suggested that some of
those thoughts were
misplaced as we see the
success of a number of
varying economic and
national systems
Globalisation: A Definition
Source: Financial Times Lexicon
9

Some economists argue that today's economy favours big
companies over small ones
• Big ecosystems: economic growth is increasingly driven by the
ones that cluster around Apple or Google
• Scale and skills: the ecosystems need to be managed by a
core company with the resources to provide technological
leadership
• Globalization puts more of a premium on size than ever before
• To capture the fruits of innovation it is no longer enough to be a
big company by American standards
• To be able to stand up to emerging-world giants, companies are
backed by something even bigger: the State
• Many of the most important challenges for innovators involve
vast systems, such as education and health care, or giant
problems, such as global warming
• To make a serious change to a complex system, you usually
have to be big
Schumpeter in 1909: Small companies are
more inventive.
Schumpeter in 1942: Big firms have more
incentive to invest in new products because
they can sell them to more people and reap
greater rewards more quickly.
In a competitive market, inventions are quickly
imitated, so a small inventor's investment often
fails to pay of.
Globalisation Wants Bigger
10

Some improvements may not be
due to globalization but to national
policies on education and land
reform, for example.
Improvements may have been
possible without the current form
of globalization and its negative
consequences
The percentage of people in developing countries living below US$1 per day
has halved in only twenty years
Life expectancy has almost doubled in the developing world since WWII, is
starting to close the gap to the developed world where the improvement has
been small
Child mortality has decreased in every developing region of the world
Democracy has increased dramatically from almost no nation with universal
suffrage in 1900 to 62.5% of all nations in 2000
The proportion of the world’s population living in countries where per capita
food supplies are under 9,200 kilojoules per day decreased from 56% in the
mid-1960s to below 10% by the 1990s
1950 – 1999: global literacy increased from 52% to 81% of the world,
women made up much of the gap: Female literacy as a percentage of male
literacy has increased from 59% in 1970 to 80% in 2000
Africa, the great exception: Just
6% of Africans qualify as middle
class, which the Pew Research
center defines as those earning
$10-$20 a day; the number of
middle-income earners in Africa
barely changed in the decade to
2011
Globalisation: Positives and Negatives
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13
Table of Contents
3 GLOBALISATION, MIDDLE CLASSES, CONSUMERISM AND GLOBAL IMAGINARY
4 BRAND EMPIRES

14
GLOBALISATION, MIDDLE CLASSES,
CONSUMERISM AND GLOBAL IMAGINARY

The global middle class is comprised by those households with daily
expenditures between US$ 10 and US$ 100 per person in PPP terms
From around 2018 onwards, the world will be predominantly middle class
for the first time in history, and no longer predominantly poor
The emerging middle classes display very heterogeneous characteristics: there
is not a new middle class, but a variety of new middle classes
Members of the new middle classes have the means to invest in health care,
education and financial services
They can afford to buy cars, housing, smartphones, durable consumer goods as
well as luxury brands
For businesses, a useful sweet
spot occurs when significant
numbers begin earning the
equivalent of over US$10 per
day, and enter our global middle
class
The sweet spot produces a “middle
class effect” where the size of the
middle class is directly proportional
to economic growth. Hitting the
sweet-spot accelerates growth,
which, in turn increases the middle
class, producing a virtuous circle
Sources: Economist, Pew Research Center
The Emerging Many Middle Classes
14

• By 2030, 2/3 of the global middle
class will live in the Asia-Pacific
region, up from just under one-third
in 2009
• Although North America’s and
Europe’s middle class populations
will stay roughly constant, their
share of the population will be
drastically reduced — Europe’s by
more than half, to 14% by 2030
• A significant proportion of the new
Asian middle class are also
expected to be at the upper end of
the income bracket, with impressive
spending power
Rise of the Global Middle Classes
15

In normalising global experiences, the media have helped create a “global consciousness” or
“global imaginary” as a “shared sense of a thickening world community, bound together by
processes of globalisation that are daily shrinking our planet”
The lived experience of globalisation and the mental and cultural models of the world it
creates serve to further encourage even greater globalisation of the economy, culture and
politics
This can be an enriching process for many people, opening their minds to new ideas and
experiences, and strengthening the universal values in a global culture of peace and
understanding
Some critics say, the concentration of major entertainment and advertising industries in the
USA as contributing to the decreasing diversity of global cultures
The middle class has
always been associated
with more than its
disposable income
Historically, it has been
seen as a social class
striving for political,
societal and economic
liberties, as a guarantor
of social stability and as
pillar of democracy
Globalization: Global Imaginary
16

One of the major dimensions of the mental models
created by globalization has been the commodification
– or commercialization – of daily life
The themes and underlying values of many American
and European movies, television programmes and
advertisements “normalize” materialistic assumptions
about what counts as “a good life” or “a life worth living”
As a result, one part of the cultural impact of
globalization has been to create a global consumer
culture
World consumption spending
Mental Models: Global Consumption
17

But, is this so called
global mental model
just a superficial
commercial gimmick?
Is global consumption
really producing the
homogenization of
culture and societal
values or is
globalization, improved
communication and
access to information
leading to deepening
and splintered value
systems?
Mental Models: Global Consumption,
Global Mental Model?
18

Q) To what extent has globalization been
realized?
• Globalization is still superficial
• The real layer of globalization is restricted to the
capital markets
• In most other areas, institutions remain intensely
local
• Trade, e.g., is still predominantly regional
• Intra-European trade accounts for roughly 60% of
all European trade
• Most companies are predominantly national,
governments remain very national
• Consumer markets are national, they are
segmenting even further within regions as
consumer education improves and consumers
are able to demand products that precisely meet
their needs
Q) Are there aspects of globalization that lead
to greater homogenization?
• Homogenization and an affirmation of
distinctive cultural identities will occur
simultaneously
• In terms of large economic and political
institutions, cultures, ideologies are becoming
more homogeneous
• There aren't as many alternatives and regime
types
• To be an advanced society, a country has to
be a democracy, and it has to be connected to
the global marketplace
• On a cultural level, it's not clear that
homogenization is proceeding nearly as
rapidly.
• To a certain extent, there is a real resistance
to cultural homogenization
Globalization: Interview With Professor
Francis Fukuyama (Merryl Lynch Forum, 2009)
19

Q) Do you believe that homogenization
will ever occur on a deeper level?
• It could be that culture will ultimately
become homogenized, just like
political institutions
• A much slower process
• In the 1950s and '60s, Asia looked up
to the US as a model of modernization
• Now, Asians look at American urban
decay and the decline of the family
and they feel that America is not a very
attractive model
• Communications technology has
allowed both Asians and Americans to
see each other more clearly, and it
turns out they have very different value
systems
Q) Can global corporations have a homogenizing
effect on culture?
• There is a global consumer culture that is spread by
companies like McDonald's and Coca-Cola
• If you look beneath the surface and ask people in
different countries where their loyalties lie, how they
regard their families, how they regard authority, there
will be enormous differences
• People examining a culture pay too much attention to
the kinds of consumer goods that people buy
• That's the most superficial aspect of culture
• A culture really consists of deeper moral norms that
affect how people link together
• These deeper qualities, the so-called moral norms,
define economic activity
• For instance, Chinese culture is family-centric limiting
business transactions to extended family
Fukuyama: Homogeneisation of Culture?
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Table of Contents
4 BRAND EMPIRES

Source: McKinsey
Map of the Worldwide Film Industry
23

Brands have
transformed the
process of marketing
into one of perception-
building.
That is to say, image is
now everything.
Consumers make the
buying decisions based
around the perception
of the brand rather than
the reality of the
product.
Matt Haig in “Brand Failures”
Brand promise
What the brand says it will do for the
consumer
Includes a value proposition and a promise of
quality or satisfaction
The branding cycle is only complete after the
consumer validates the proposition through
his/hers own experience
This is why Word of Mouth (WoM) is so crucial
in the movie business (person to person, social
networks, etc)
The opinion movie goers on the first week
end can make or break the reputation of a
new release
Brand-building driver
An emotional or rational performance
or reputation attribute that can be
statistically verified as driving
purchase intentions or behavior
Drivers must be first hypothesized
through qualitative research, and then
quantitative analysis conducted to
generate a hierarchy of brand drivers
Taking account of the competitive
landscape, one of these prospective
brand-building drivers is then chosen
and it is at this point that the creative
process begins
Source: Admap
Brands: Perception Building
24

There was no such concept as brand and branding
when Shakespeare created (between 1591 and 1595)
his world of the Montagues versus the Capulets.
But, he was close.
He was considering the nuances of a feeling for words
and names and the perceptions they bring to a specific
audience.
Source: Pintney Bowes
The perception of “Brand Montague” to Juliet’s family, the
Capulets and how those feelings might change if only Juliet
could re-brand Romeo with a simple change of his last
name.
If only her family might perceive Romeo the way that she did.
Juliet saw his essence, not his family title.
She saw the man who had touched her mind, won the value
of her loyalty and the gift of her heart.
The Power of Branding
25

Mind share: how well the public knows your brand and cares about it
Mind share often precedes market share
A brand that has the trust and allegiance of the consumer and that puts forward a simple, direct “high concept” idea, is
positioned to survive in an increasingly crowded marketplace.
To cut through the daily clutter of messages and products, a brand needs to do more than identify a product: It must
give it a personality.
By our allegiance to certain brands, we say something about ourselves.
Brands transcend particular products and carry with them a whole cultural statement.
Entertainment companies, whose products are purely cultural, have long recognized this trend.
Acting on it, have not merely created strong brands; they have built brand empires.
They have carved out pieces of our collective psyche that transcend any single product.
We have a relationship with these companies that disposes us to accepting, or at least giving a courtesy look at, any
product with their brand on it.
Source: Vogel, Entertainment Industry Economics
Brands are a cultural statement
26

Entertainment brands: a simple, powerful ideia
Family, taste, money, or fun
Through entertainment brands, consumers can gain entrance to a world that embodies a simple, powerful idea:
family, taste, money, or fun.
Disney doesn´t simply mean animated features or theme parks anymore: it means family.
Bloomberg is not just a terminal on a trader´s desk; it is instantaneous financial news and analysis.
The NBA isn´t about watching tall men put the ball in the basket with a high degree of accuracy; it´s about a fast, urban,
street lifestyle, whit all the glitz and glamour of showbiz.
The old definition of a brand carrying a product´s attributes has become secondary to the way a brand makes a
lifestyle statement.
Consumption of a brand´s products empowers the consumer with the qualities of the brand.
The base principle remains the same: consume and become.
27

Consumers like the endorsement of a company name they recognize
But the new offerings of the brand have to fill a need or supply a distinct pleasure of their own.
Entertainment brands have had to compete in an increasingly crowded marketplace, where, though the pie keeps
growing, the slices are getting smaller as more products compete for audiences.
It is no longer sufficient merely to turn out a hit movie, television show, magazine, or book, because in many cases
these products cannot be profitable on their own.
A hit must become a franchise and, in so doing, become the hub from which a wide-reaching variety of
products emanates.
Hits and, even more so, phenomena, behave like brands.
By occupying every available niche in popular culture, hits become long-lived, wide-reaching brands.
Hits become brands
28

TV channels such as HBO have clear
identities that transcend distribution
Whatever the distribution platform, the
channel identity imposes itself and exels
through its “personality”, unique and
clearly defined look and feel
Source: Forrester
Movie mega brands
Studio Director Actor Producer
Disney Spielberg Clooney Cameron
Warner
Brothers
Scorsese De Niro Lucas
Dreamworks Scott Streep Mann
“Our fans are our biggest evangelists. They
have made Disney part of their lives. They live
it, they breath it and they tell people about it.”
Steven Clark, Head of D23 Fan Show,.2009
Source: Reuters
Film and TV brands
29

A hit product that doesn´t move out into the wider economy and cultural realm is doomed.
The X-Files occupied its favored place in the cultural spectrum, it was as a real TV brand like many others.
But as a television show, books, movies, a traveling road show, home videos, hats, t-shirts, and other merchandising, it
became a mega brand with revenues in excess of more than $1 billion.
Lara Croft: She wasn’t a TV show, she became by being a heavily armed digital figure who was the main character in the
Tomb Raider video games.
With millions games sold, several books, a best-selling action figure, high-priced fashion gear, and films where she became
Angelina Jolie, her revenues were tremendous.
Jurassic Park was a hit book, but Universal and Steven Spielberg built a brand empire.
Became a brand that meant dinosaurs.
The big cultural concept is that we are all fascinated by dinosaurs.
Without marketing multiple revenue streams there would be no profit, no long-term business.
Multiple Revenue Streams
30

Source: McKinsey
Map of the US film industry
31

Warner Bros (Time Warner) Pictures. Biggest player in the film
industry. Harry Potter, Superman, Batman, The Matrix, Star Wars
Paramount Pictures (Viacom) Star Trek, War of the Worlds, the
Mission Impossible series, Transformers and Tropic Thunder
Walt Disney Pirates of the Caribbean, National Treasure, Meet
the Robinsons and Enchanted
Columbia Pictures (Sony) Casino Royale, Da Vinci Code,
Spider-Man series, Step Brothers
Universal Studios (Comcast) Bourne series, The American Pie
series, Knocked Up, American Gangster, The Incredible Hulk
20th Century Fox (21st Century Fox) X-Men series, Mr. and Mrs.
Smith, Star Wars Episodes II and III, the Fantastic Four
Disney, Burbank, California is the only of the Big
Six whose parent company is still located near
Los Angeles (actually, on Disney's studio lot and in
the same building)
Sony, Tokyo, Japan
Comcast, Philadelphia, Pennsylvania
Viacom, New York, NY
21st Century Fox, New York, NY
Time Warner, New York, NY
Business functions are still usually performed in or
near Los Angeles, even though the runaway
production phenomenon means that most films are
now mostly or completely shot on location at
places outside Los Angeles
The Hollywood Majors
32

Films that succeed in the US market also tend to succeed in foreign markets
Convergence of popular taste may be coming about, but against a backdrop of cultural contestation
Success: Hollywood offers unmatched competitive advantages
• Dense regional cluster
• Technical and organizational capacities
• Specialized but complementary producers
• Unique pool of talent from many countries
• Extensive distribution networks, joint ventures or long-term agreements with local distribution
• Averted confrontation with regulators with self regulation (Hays Code of Conduct 1930)
• US government efforts to push open foreign doors and promoting its products abroad (US State Department,
Commerce Department, other agencies, Marshall Plan for Europe)
• Unique ability to make big-budget films that appeal powerfully to popular tastes in many different cultures
• Motion Picture Association of America (MPAA) industry mouthpiece and lobbying organization, MPEA (Motion
Picture Export Association)
• Independent motion-picture distributors: AFMA (the American Film Marketing Association)
• American films garner at least 1/2, sometimes more than 2/3, of total box-office receipts
The Hollywood Cluster Advantage
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4 BRAND EMPIRES

Big data
With the help of massive amounts of data and the experience of previous box office
results, Hollywood typically assumes there is a built-in audience for a certain genre
Strategic objective: blockbuster
Once a film becomes a blockbuster nothing is more obvious and safe and
eventually lucrative than to repeat the recipe with simple variations – sequel after
sequel
One size fits all
Studios have a lot of strengths — more advantages than disadvantages — but they
are not nimble, they can’t tailor each project to specific filmmakers
Barriers to entry
The fight for distribution is still a narrow gate, despite all the new media platforms
The business has been around for 80 years but there are still just six or seven
studios. Wide-release studio distribution remains the great barrier to entry and the
great goal
Hollywood joke A producer is
always looking for a story to turn
into a movie that's been very
successful in the past and that
no one has ever seen before
Jeffery Deaver, blockbuster
author: There’s some truth in it.
"I'm always looking to give
readers the characters they're
familiar with and yet arc the story
differently and introduce new
types of conflict"
Source: www.nzherald.co.nz
Source: thewrap.com
Blockbuster addiction: the same old recipe
36

Source: Box Office Mojo
The major studios have reduced their output over
the past decade, focusing on fewer—albeit larger—
tent poles with the international marketing power of
pre-existing concepts and merchandise appeal
Tent Poles
37

• Pegg decries he effect that genre
entertainment has had on mainstream
culture
• We’ve been infantilized by our own taste
• It is a kind of dumbing down in a way,
because it’s taking our focus away from real
world issues
• Films used to be about challenging,
emotional journeys or moral questions that
might make you walk away and re-evaluate
how you felt about… whatever
• Now we’re walking out of the cinema really
not thinking about anything, other than the
fact that the Hulk just had a fight with a robot
Simon Pegg: actor (Star
Trek, Mission Impossible),
producer, writer (Shaun of
the Dead 2004, Hot Fuzz
2007, The World's End
2013, comedy series
Spaced 1999–2001,
StarTrek Beyond 2015) Source: The Hollywood Reporter
«Films used to be emotional journeys…»
38

• Recent developments in popular culture
were predicted by the French philosopher
and cultural theorist Jean Baudrillard in his
book, America, in which he talks about the
infantilization of society
• It is the idea that as a society, we are kept
in a state of arrested development by
dominant forces in order to keep us more
pliant
• We are made passionate about the things
that occupied us as children as a means of
drawing our attentions away from the
things we really should be invested in,
inequality, corruption, economic injustice
etc
It makes sense that when faced with the
awfulness of the world, the harsh realities that
surround us, our instinct is to seek comfort,
and where else were the majority of us most
comfortable than our youth?
These concerns have also been monetised
and marketed and the things that made them
precious to us, aren’t always the primary
concern [to those controlling the properties].
Even the most morally complicated genre
material, like Ex Machina and Mad Max: Fury
Road, are ultimately driven by market forces,
and somebody somewhere will want to soften
the edges so that toys and lunch boxes will be
sold.
«Now, its all about seeking comfort in
Our childhood memories and monetizing lunch boxes»
39

• JK Rowling became a billionaire
author
• The publishers and related license
holders also enjoyed massive
gains
• Film series, video games, licensing
of over 400 Harry Potter products
• The brand value is estimated to be
at $15 billion
• Scholastic had released four new
images of Potter characters for the
re-release of The Sorcerer's Stone;
will release the first fully color-
illustrated version of book
• The last and the final installment
of the movie series, Harry Potter
and the Deathly Hallows – Part 2,
had a budget of $250 million
(shared with part 1) but it had a
box office collection of $1.342
billion
• Time Warner’s following quarterly
performance reflected the impact:
Sales jumped 5% to $8.2 billion,
driven by 7% revenue growth at
Warner Bros, which in turn
benefited from DVD and Blu-ray
release of Harry Potter and the
Deathly Hallows: Part 2
HARRY POTTER: 35 YEARS
40

• General Electric: owns
80% of NBC Universal,
which wholly owns
Universal Orlando
theme park resort that
houses The Wizarding
World of Harry Potter
• Hasbro Inc.: rights to
Harry potter trading
card games, role-
playing games, candy
and youth electronics
• Johnson & Johnson:
the Harry Potter bath
and dental products
Source: Talk Markets
• The Coca-Cola
Company:
exclusive rights to
tie-in their
products in the
first two movies;
reportedly paid
$150 million.
• Mattel, Inc.: shares
game rights with
Hasbro, has the largest
contract as master toy
licensee, the contract
included Harry Potter
Scene It, plush toys and
action figures
• Scholastic Corporation:
exclusive publishing
rights to Harry Potter
books; though JK
Rowling owned rights to
the series and sold e-
books on Pottermore
website, Scholastic kept
the revenue share
HARRY POTTER: MERCHANDISE
41

Source: Rentrak , Financial Times
Strength: they have built-in awareness with audiences
When they work, they can be a licence to print money
Seven of the 10 top-grossing movies globally in 2014 were
sequels, 20 years ago only one of the top 10 — Clear and
Present Danger, starring Harrison Ford — was a sequel
Disney’s Marvel unit has set a new bar for franchise
movies, creating an interconnected “universe” of
films populated by many of the same characters
Warner Brothers, part of Time Warner, is trying to get
its own “universe” off the ground, based on characters
from DC Entertainment, which it owns
Next year WB will release Batman vs Superman:
Dawn of Justice, a movie which throws together two of
its best known characters
Legendary Entertainment, a co-producer of the Dark
Knight Batman films, is also getting in on the act,
striking a deal with Warner Bros to unite the “monster”
franchises of King Kong and Godzilla, greenlighting a
movie set for 2020, Godzilla vs Kong.
FRANCHISE MOVIES, FILMS WICH CAN SPIN OFF
SEQUELS
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4 BRAND EMPIRES

45
DISRUPTION OF THE HOLLYWOOD
LANDSCAPE

Source: Financial Times
The disrupters: financial crisis, digital distribution, globalisation
The financial crisis: obliged to find new ways to spread the sizeable risk of film production
• The studios’ landscape has been disrupted. Forecast: box office revenue will flatten in 2018
• The flush years of DVD home entertainment are gone
• Revenues carved up between studios and digital upstarts
• Rise of the independent financiers, private equity
• Most big studios, with the exception of Disney, now rely on external investors to co-finance big films
• Portfolio or slate investments to mitigate risk
• Incentives or tax breaks to cut filming costs
• International markets, especially China, can serve to provide a large boost
• Other revenue sources becoming ever more important: view-on-demand streaming services
• Video games and merchandising continue to provide additional income
Disruption: the hollywood studios
Landscape is changing
45

Commercial weight and cultural impact is now felt in virtually every corner of the
world Exports grown much more rapidly than domestic markets, exceed domestic box-
office receipts, main importers of Hollywood products: Europea, Japan, Canada,
Australia, Brasil, Korea
Commercial, cultural confrontations: Canada, European countries, France, the
“cultural exception” (GATT, WTO) Cultural products are intimately bound up with
matters of social identity and consciousness
Runaway production activities from Hollywood to cheaper locations in Canada,
Mexico Not a threat as a center of creativity, deal-making but outflow of capital and
work to competitor film industries
New dynamic production centers: Paris, Beijing, Hong Kong, Tokyo, Mexico City,
Mumbai, Sydney, Nigeria
Foreign studios thinking about their own export markets, budgets in developing
countries are increasing rapidly
The traditional models for creating, distributing and monetizing content have
changed
U.S. studios paying more attention to international box office, even more than they
pay to U.S. box office
Source: Yale University
Top 10 grossing films of
2015
Foreign market ratio
(Takings outside the U.S.
market as a percentage of
global receipts)
1: Jurassic World: 60.7%
2: Avengers: Age of Ultron:
67.4%
3: Furious 7: 76.8%
4: Inside Out: 51%
5: Minions: 68.1%
6: Cinderella: 62.9%
7: Pitch Perfect 2: 35.6%
8: Home: 54.2%
9: Mission: Impossible – Rogue
Nation: 64.5%
10: Ant-Man: 53%
Source : Box Office Mojo
Globalization is an insistent and problematical
Process confronting Hollywood
46

• US media conglomerates no longer unchallenged champions of cultural globalization
• Large multinational media corporations in Europe and Japan have significant stakes in US film, television,
music, publishing other cultural-products
• Continued leadership by no means automatically assured (Detroit)
• Unpredictable shifts in the structure of consumer preferences for motion-picture entertainment
• Digital: streaming, SVOD dispatch films directly and cheaply to individual purchasers and open the market to smaller
independent production and distribution from a wider circle of locations
• Great increase of cinematic material available to consumers, broadening the market and making inroads on
audiences for blockbuster films
• Digital irrelevance: marketing more complex, better quality more expensive products, but uncertainty remains
• Consumers' choices molded by a limited number of firms with the resources to mount extravagant marketing
and promotional campaigns
• Even if the audiences for blockbusters stabilize or shrink , the phenomenon of large-scale revenues on products
at the top end of the market is likely to continue
Source: Yale University
47
Globalization is an insistent and problematical
Process confronting Hollywood

The entertainment industry — like so many others — is undergoing enormous
changes as a result of globalization and the extraordinary growth of the worldwide
middle class
The impact of globalization on the entertainment industry has resulted in a
significant shift in the global box office
Until recently, the U.S. generated two-thirds of the global box office, while the rest
of the world contributed a third
Today, the reverse is true: nearly 70 percent of the global box office is
generated outside of the U.S
Today the traditional models for creating, distributing and monetizing content have
changed. U.S. studios are paying more attention to international box office than
they used to — in some cases, more attention than they pay to U.S. box office
Virtually no big-budget
movie in Hollywood is
approved without
considering what its box
office potential could be
in China
Likewise, foreign studios
are starting to think about
their own export markets
Budgets in developing
countries are increasing
rapidly
Globalization of entertainment: impact on
Box office
48

Source: Financial Times, Imax
China has become the fastest source of growth for Hollywood
New multiplexes springing up in urban centres, screens being added at a tremendous rate, China is on course to
eclipse the US box office as the world’s largest cinema market by 2017
Forthcoming competition US-Chinese studios to grab market share
One option for Hollywood would be to change its film release dates, the north American release calendar is wedded to
US holidays, with the biggest movies released in the summer for maximum impact
Theatrical distributors have zealously guarded these windows, because tinkering with the model would undermine
cinema-going which often propels a film’s financial performance through its life on DVD, cable and TV
Should Hollywood change release patterns to reflect the international market?
Some argue that films will continue to come out under a windowing system for a significant amount of time
US studios are active in China: DreamWorks Animation formed a joint venture with Chinese partners in 2012 to create
original Chinese content for the market
Other studios deals with local producers to ensure their films qualify as Chinese co-productions, to grab a far larger share
of the box-office
IMPACTS OF CHINA ON US FILM BUSINESS MODEL
49

European films reach their highest market share, driving
growth at the EU box office
Rise of 0.6% (€40 million) in gross box-office (GBO) takings in
the 28 EU member states compared to 2013
GBO figures increased in 14 member states and decreased in
13 (from among the 27 states where data are available)
France, Spain and Poland were the countries that attained the
highest figures, with +€15 million, while Italy and Germany fell
by €46 million and €43 million, respectively, representing the
biggest declines
Despite the improvement, GBO for 2014 still represented the
second-lowest level from the past five years
Source: The European Audiovisual Observatory
The growth in cinema attendance was driven
primarily by the success of European films
Cumulative admissions grew in line with the trend
during 2013
US blockbuster attendance decreased
significantly compared to previous years, causing
the market share for US films to drop from its
record level of 69.5% in 2013 to 63.1%
The estimated market share for European films
in the EU reached its highest level since 1996,
when the Observatory started collecting data,
jumping from 26.2% to 33.4%
EUROPEAN FILMS OF THE RISE IN EUROPE 2014
50

Sources: Eurodata, The
Hollywood Reporter,
Freemantle Media
• 2009: Nearly 20% of the top-rated series
on European TV were American
• 2014: Only slightly more than 10%
• US shows shift from main to smaller
channels, smaller audiences
• BBC and ITV to Channel 4 and
Channel 5 in the U.K., to Quatro in
Spain, to TV3 and Kanal 5 in Sweden
• Growing strength of top-notch Europe-
made drama
• Rise of digital channels
• British Telecom agreement to carry
all AMC shows exclusively on digital
pay TV eroding the attractiveness of
the remaining U.S. series which are
even less likely to make it to
• Spread of SVOD (Netflix, etc)
• Steady upgrade of pay TV demand for scripted
content
• Piracy: Demand for day-and-date release of U.S.
series
• Sweden: first 300,000 TV viewers may be lost to
piracy
• S investment in local European content
• NBCU + PBS: Carnival Films UK (Downton
Abbey), deal with leading German network RTL,
deal in France with TF1 to co-finance and produce
procedural series directly for the European market
• Demand continues by the many platforms, emerging
markets and smaller channels
• CSI spinoff CSI: Cyber has sold out in Europe,
and the new CBS drama Zoo has been licensed to
multiple markets, including the U.K., Germany and
India, despite debuting to soft ratings domestically
U.S. series are on the decline in European prime-time FTA TV but spreading to digital channels and streaming
Drama series on prime time free-to-air tv
51

Shortening the exhibition window
52

Since the rise of the VCR in the 1980s, studios have waited at least 90 days after a movie debuts on the big screen
before making it available elsewhere, regardless of when it stopped playing in theaters.
Hollywood has complained that the 90-day “window” encourages piracy and fails to acknowledge shifting consumer
behavior but 72% of consumers weren’t aware of the 90-day delay
The industry continues to wrestle with shrunken DVD sales, a rise in digital competitors and worrisome attendance trends
at the multiplex, most movies play for less than two months, but cinema owners argued that people wouldn’t go to the
multiplex if they knew they could watch a film at home in less than three months.
Paramount Pictures struck a deal with two major cinema chains to make new movies available to watch at home just
two weeks after they leave most theaters.
Big-budget movies typically play longer, making them less likely to undercut the traditional turnaround for a home
release unless they flop.
The average movie that opens nationwide runs in more than 300 theaters for 51 days.
Source: The Wall Street Journal
53
Shortening the exhibition window

Joe Pichirallo, Chairman, Tisch School of the Arts’
Undergraduate Film & Television program at NYU
In the 90’s, scriptwriters, directors, producers had to
be entrepreneurial: write a script, find an agent or go
to a studio
Studios used to be underwriters of producers and
would cover their costs with the idea that somewhere
down the line they would come up with material they’d
want to make
Today, those deals are almost gone
Now creators have to deal with a shrinking universe in
terms of mainstream sources of support
Universal appeal
Foreign markets have become much more important for
getting the initial greenlight
A project has to be planned to potentially play from
Leicester Square to the Champs-Élysées, to the
Shinjuku in Tokyo, China and Russia and South
America, the growth territories
Discerning audiences
Growth has to be found in exhibition and in the
theatrical experience
There’s movie demand, but that’s quickly followed by
discernment
Audiences are not moved by the spectacle movie like
they were a couple of years ago
Maybe it’s over-familiarity
Source: thewrap.com
And audiences are becoming more discerning
54

Spielberg
• An "implosion" in the film industry is inevitable
whereby a half dozen or so $250 million
movies flop at the box office and alter the
industry forever, change the paradigm."
• What comes next -- or even before then -- will
be price variances at movie theaters, where
"you're gonna have to pay $25 for the next
Iron Man, you're probably only going to have
to pay $7 to see Lincoln.”
• His 1982 film E.T. the Extra-Terrestrial stayed
in theaters for a year and four months
• Lincoln came "this close" to being an HBO
movie instead of a theatrical release, he had
to co-own his own studio in order to get
Lincoln into theaters.
Source: Hollywood Reporter
• Some ideas from young filmmakers
"are too fringe-y for the movies."
“Big danger”.
• Teamed with Microsoft to make a
"TV" show for Xbox 360 based on
the game Halo and he is making a
movie based on the Electronic Arts
game Need for Speed.
Lucas
• Lamented the high cost of
marketing movies and the
urge to make them for the
masses while ignoring niche
audiences. He called cable
television "much more
adventurous" than film
nowadays.
• "I think eventually the
Lincolns will go away and
they're going to be on
television“.
• "The pathway to get into
theaters is really getting
smaller and smaller."
Lucas and Spielberg
• Vast differences between
filmmaking and video games
because the latter hasn't been able
to tell stories and make consumers
care about the characters.
• The industry is at an extraordinary
time of upheaval, where even
proven talents find it difficult to get
movies into theaters.
Spielber and Lucas predict American film
Industry implusion (@USC SCHOOL OF CINEMATIC ARTS, 2013)
55

Lincoln was nominated for the Best Picture
Academy Award
Steven Spielberg spent over a decade
developing it for the big screen
Even with his blockbuster name
attached, the dialogue-heavy, distinctly
American historical drama still wasn’t a
sure bet since it would need to be
profitable both domestically and
internationally
In the end, Lincoln was distributed
domestically by Disney/Touchstone Pictures
but co-financed with DreamWorks and other
partners, including Participant Media
The case of Lincoln
56

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59
INDEPENDENT FINANCIERS AND
PRODUCERS

The industry landscape had to adapt to the global shift in box office
power
Until the 1980s, the domestic US box office accounted for the vast
majority of a film’s total revenue—upwards of 80 percent—while
today, foreign receipts generate over 70 percent of revenue
This meant opportunity to chancier, non-mainstream material
That shortfall led to the rise of independents seeking, both
creatively and financially, to make the kinds of films the studios
became reluctant to back
From 2002 to 2011 the number of
movies released by the Big 6 studios
and their affiliates dropped by 43
percent, (169 films in 2011, down from
296 in 2002)
The number of releases by
independent producers jumped by 74
percent over the same period (469
films in 2011, up from 270 in 2002),
according to MPAA reports
Source: ssninsider.com
The rise of the independent financiers
59

The studios still needed for distribution
The caliber and budgets of today’s independent films bear little resemblance to the small, off-beat projects
with limited art house distribution
More independent producers are seeking to make the kinds of films that came from the majors in the past,
including high-profile projects with sizable budgets and top-tier actors and directors
Many ultimately end up with studio distribution, offering them the possibility of critical acclaim and award
nominations without the expense of development and production
There is a downside for the studios: If the film becomes a box office hit, the studio doesn’t keep the lion’s
share of the profits.
60

The mini-majors are fast rising in the ranks, one steady
percentage point at a time. The mini-majors perform the
same functions as the majors whom they directly compete
with: They finance, produce, market and distribute films.
But they operate without the safety net of a diversified
parent company.
The most recent reporting period for total domestic
grosses—January 1 to March 10, 2013—shows the market
share of mini-majors continuing their rise. Four mini-majors
appear in the top ten rankings in the first quarter: The
Weinstein Company earned the second slot and Lionsgate
claimed the fourth, shrinking the gap between them and the
major studios even further.
The Mini-Majors V. The Big Six
61

Participant Media, founded by Jeffrey Skoll in
2004, was created for that very niche that Lincoln
fills: stories that are both socially conscious and
commercially viable. Formidable track record; The
Best Exotic Marigold Hotel (Fox Searchlight), The
Help and The Soloist (both Disney), Syriana and
Contagion (both Warner Brothers), Promised Land
(Focus Features) and Snitch (Summit). Is co-
financing The Fifth Estate, based on the true story
of WikiLeaks founder Julian Assange in conjunction
with Dreamworks Studios. It formed the
PanAmerican Film Initiative with plans to develop
and co-finance 10 to 12 films for the Latin American
Market. Expanding beyond the film world,
Participant will launch a cable network later this
year expected to bring its socially relevant stories to
over 40 million subscribers. Exclusive distrib deal
with Lionsgate.
GK Films, launched in 2007 by Graham King and Tim
Headington, which releases much of its projects through major
studios. Impressive awards, co-financed the Academy Award
nominated Argo (Warner Brothers), produced Hugo
(Paramount), The Town (Warner Brothers), the Academy
Award-winning animated film Rango (Paramount) and World
War Z (Paramount). Exclusive distrib deal with Warner bros.
Cross Creek Pictures hit the ground running with its first
production, the Academy Award-nominated Black Swan (Fox
Searchlight). Cross Creek, run by president Brian Oliver and
CEO Timmy Thompson, has been a financier to watch since
its 2009 inception. The company is currently in a three-year
deal with Universal Pictures, which will distribute at least six
pictures that Cross Creek produces and funds. The first
release from this deal is Rush, directed by Ron Howard and
co-financed and co-produced by Exclusive Media.
Six major financiers (and producers)
62

Exclusive Media, founded in 2008 by Nigel
Sinclair and Guy East, holds a minority stake
in Millennium Entertainment and recently
launched a U.S. distribution company,
Exclusive Releasing. Has a co-development
and co-production deal with Cross Creek
Pictures, a pact that has created The Ides of
March (Sony) and The Woman in Black (CBS
Films). Also produced End of Watch (Open
Road), co-financed and produced the
upcoming Snitch (Summit) and A Walk Among
the Tombstones (Universal), and financed the
JFK drama Parkland.
Media Rights Capital (MRC), the independent financing
powerhouse founded in 2003 by co-CEOs Modi Wiczyk and Asif
Satchu, boasts investors like AT&T and Goldman Sachs. Financed
the runaway blockbuster Ted as well as The Adjustment Bureau
(both Universal) plus Elysium (TriStar Pictures). Since 2011, the
company has a deal with Universal Pictures to distribute up to 20 of
its films through 2016. MRC scores bonus points in the TV world too:
This is the company that brought to Netflix its game-changing
original content with House of Cards.
Annapurna Pictures, founded by Megan Ellison with a mission to
produce the type of elegant, adult dramas that have largely been
abandoned by the majors. The company fast-tracked its way to
critical acclaim in 2012, producing and financing The Master (The
Weinstein Company) and the Academy Award Best Picture nominee
Zero Dark Thirty (Sony), Lawless and Killing Them Softly (both The
Weinstein Company) and the upcoming, yet-untitled feature from
Spike Jonze.
63
Six major financiers (and producers)

Lionsgate Entertainment Acquired independent studio Summit
Entertainment, producers and distributors of the blockbuster
Twilight Saga films and producer of Oscar-winner The Hurt Locker,
finished 2012 in fifth place among the studios’ market share,
claiming 11.6% of the US domestic box office. Lionsgate became
known for producing films considered too controversial for major
studios, such as American Psycho, Affliction, Gods and Monsters
and Farenheit 9/11
The Weinstein Company Oscar wins for Best Picture, Best
Director and Best Actor (for The King’s Speech in 2011 and The
Artist in 2012), claimed 2.4% of the 2012 domestic total, slightly
down from its 2011 market share of 2.9%. Ranks second only to
Universal in market share for the first reporting period of this year,
earning 15.2%. Brothers Harvey and Bob Weinstein created The
Weinstein Company in 2005 after leaving Miramax Films, which
they co-founded in 1979. The company also encompasses
Dimension Films, founded in 1993 by Bob Weinstein, as a genre
primarily focusing on action, horror and comedy films.
Relativity finished 2012 with 4.3% of the overall
domestic box office, up from its market share of
4% in 2011. For the period of January 1 to March
10 of this year, the company claimed 5.1% of
market share. Founded in 2004 by CEO Ryan
Kavanaugh as a film company and has since
expanded to seven other divisions ranging from
music to sports. Kavanaugh, with a background in
venture capital, sought a more efficient way to
approach film financing, devising a model to
predict the profitability of a potential film project
based on mathematical tools rather than on
traditional Hollywood finance methods. Relativity’s
releases include 21 and Over, Identity Thief, Les
Miserables, The Bourne Legacy, Bridesmaids, The
Fighter and The Social Network.
Six major mini-majors, they produce
(and also finance)
64

Open Road Films Founded in 2011 and didn’t waste any
time breaking into the upper tier of the studios’ market share,
claiming 1.3% of 2012’s overall domestic box office and 4% of
first-quarter revenues of 2013. Open Road Films is a joint
venture by the country’s two largest theater chains, AMC
Entertainment and Regal Entertainment (more than 12,500
screens across the U.S.) forming their own domestic
theatrical distribution company. The partnership effectively
puts these exhibitor into a role usually reserved for studios:
the distribution and marketing of films. Earliest releases were
Killer Elite starring Robert De Niro, Clive Owen and Jason
Statham, thrillers Silent House and Silent Hill: Revelation
Film District jumped over the 1% market share hurdle
in 2011, claiming 1.2% of the year’s total domestic box
office. Founded in 2010 by CEO Peter Schlessel,
Graham King and Tim Headington, Film District was
formed to acquire, produce, finance and distribute
wide-release, commercials films with a goal of four to
eight per year. Releases include horror story Insidious
starring Patrick Wilson and Rose Byrne, Soul Surfer,
Don’t Be Afraid of the Dark, the Ryan Gosling art-
house action movie Drive, The Rum Diary starring
Johnny Depp.
CBS Films Hovering just under the 1% market share benchmark, CBS Films debuted on the market share list in 2010,
after the release of its first film, Extraordinary Measures the medical drama starring Harrison Ford and Brendan Fraser.
The mini-studio earned .8% of total domestic box office for 2012 and .7% of the total for the first quarter of this year.
Started in 2007 as the theatrical film division of CBS Corporation, CBS Films has a target of producing and distributing
four to six star-driven films per year, with budgets of up to $50 million.
65
Six major mini-majors, they produce
(and also finance)

Source: Blomberg Business Week
Prevailing web business model: Ad sharing, the YouTube model
Only profitable for the most viral videos, creators in general don’t get
advance payments, rewards low-budget productions and punishes anyone
who can’t attract a massive number of viewers.
A new business model is being propelled by the subscription services
(Netflix, Hulu, Amazon, etc)
Upstart producers Agreements with Verizon and other companies
provide the capital to boost production quality above what old-school
YouTube pays, upstarts remain a cheaper than a studio like Fox or
Paramount, series budgets of hundreds of thousands, and not millions.
Subscription services will lead to new types of content: People are
buying content in the same way they’d buy a TV show.
Professional, but cheaper new type
Production and contents by entrants
66

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69
EMERGING GLOBAL COMPETITORS

Source: McKinsey
Indian film industry
69

Source: Forbes, Statista
Indian Cinema
70

Source: McKinsey
Map of the Worldwide Film Industry
71

Bollywood: Mumbai (Bombay), the largest is
the Hindi film industry commonly referred to
as "Bollywood", produces around 20% of films
Telugu cinema, Tamil cinema, Malayalam
cinema, Bangla cinema, and Kannada
cinema, which are located in Hyderabad,
Chennai, Kochi, Kolkatta and Bangalore
commonly referred to as
"Tollywood"(Telugu), "Kollywood"(Tamil),
"Mollywood"(Malayalam),
"Sandalwood"(Kannada)
The remaining majority portion is spread
across northern, western, and southern India
(with Gujarati, Punjabi, Marathi, Oriya,
Assamese Cinema)
Source: Wikipedia
Indian Cinema: Several Clusters
72

Actors of Indian origin have made an impact on
American TV:
Kunal Nayyar of "The Big Bang Theory," Mindy
Kaling of "The Mindy Project," Archie Punjabi of
"The Good Wife," Dev Patel of "Newsroom,"
Nimrat Kaur of "Homeland," Aziz Ansari of
"Parks and Recreation," Aasif Mandvi of "The
Daily Show with Jon Stewart" and "The Brink,"
and Kal Penn of "House" and "Battle Creek."
Veteran Indian actor Anil Kapoor ("Slumdog
Millionaire") is the first major Bollywood star to
get a meaty role on U.S. television, as the
president of a fictional Middle Eastern country
on the eighth season of "24."
Source: CNN
Indian actors going global
74

1992: electronics salesman Kenneth Nnebue shot a straight-to-video
movie in one month, on a budget of just $12,000. Living in Bondage
sold more than a million copies, mostly by street vendors, and
Nollywood – Nigeria’s movie industry – was born
2009: Nollywood had surpassed Hollywood as the world’s second
largest movie industry by volume, right behind India’s Bollywood
2014: the Nigerian government released data for the first time showing
Nollywood is a $3.3 billion sector, with 1844 movies produced in 2013
alone
2015: Nollywood Producer Kunle Afolyan exclusive Netflix distribution
arrangement for latest film, October 1.
Adds to the 10 Nollywood related titles already on Netflix
Nthat paid $12 million movie rights purchase of Nigerian novel Beasts
of No Nation, to star Idris Elba
Source: Fortune
Nigerian film industry: internacionalization
76

The industry “in desperate need of a financial makeover”. Pirating is a big
problem in Nigeria and Africa
Nigeria’s film regulatory agency now posts existing laws, enforcement actions,
and arrest details for film copyright infringement online
Need for stronger copyright laws, campaign to expose violators, including
posting photos and films of alleged pirating operations
Of the industry’s $3 billion valuation less than 1 percent was tracked from
official ticket sales and royalties, the rest came from pirated reproductions
sold by unauthorized vendors for roughly $2 each
As a result, producers and financiers see only a fraction of the movie
industry’s economic value
Key players in the global
movie industry still have
little idea what Nollywood
is about
“The volume won’t matter
until we can connect the
art to the money with
better content and
profits”
Critics note that while
Nollywood has volume,
it lacks production
value, and African actors
have yet to breakout
globally
Source: Fortune
Nigerian film industry: low profitability
77

Competition in African digital entertainment is heating up
VOD: African digital content startups and the entry of
subscription-based video on demand are trying to change this
equation
With financial backing of $25 million from New York’s Tiger
Global and Sweden’s , iROKO Partners licenses and
streams Nollywood content to global subscribers, who pay
$1.50 a month
“The focus is to take this popular movie industry, digitize it, and
put the right framework around it to capture the proper value,”
founder Jason Njoku said of Nollywood and iROKO’s platform
Profits will lead to larger budgets and better quality content
Channels and contents
2014: Africa Magic (Naspers, S.A.) African
satellite TV channel $8 a month Africa Magic
Go VOD package
IROKO has set its developers to creating
smaller Nollywood movie files and more
direct download options
Kenyan startup Buni.tv’s new Buni+ a $5 a
month streaming movie service but reliable
Internet is still a problem in African
countries
Startup, SOLO is bridging the device and
broadband gap by offering entry level
smartphones (around $75)
Source: Fortune
Nigerian film industry: competition heating up
78

• One of the key differences in China, is that watching a
movie is an entertainment luxury, ticket prices are
expensive. In 2010, the average ticket price went up to
40.4 RMB (around $6.3), which is close to the standard
($7.8) in the U.S.
• A market structure where demand easily outstrips
supply – a rarity in western film markets.
• One of the main drivers of cinema-viewing in China is the
audio and video qualities found in movie theaters. The
alternatives such as TV or monitor screens (where poor-
quality pirated content can be consumed) cannot
compete in this regard, and the result is a revenue-
distribution split that is incredibly uneven.
Source: www.chinahollywood.org
China: demand outstrips supply
79

Foreign movies are limited by 4 areas:
• Production, where filmmakers are required to apply for
government licenses
• Importing Films, which is a state monopoly business that
is exclusively managed by the China Film Group (CFG),
the largest and state-owned studio, and are subject to
government censorship as well as a quota system (20
movies through box office split deals, and roughly 50
foreign movies are imported through buying outright rights)
• Distribution, which is exclusively operated by CFG and
Huaxia Film Distribution Company
• Exhibition, where the annual screening time of foreign
movies at theaters cannot exceed one-third of the total
screening time.
China: regulations
80

• The industry is operating in a linear way between the production
and theatrical exhibition sectors.
• The purpose of making movies in China is to supply theatrical
markets.
• Ancillary distribution windows and movie- related products have not
been effectively developed.
• This is set to change. Any relaxing of the regulations will encourage a
competitive environment in domestic distribution, which will likely
lead to a drastic rise in the number of theater screens –
exacerbated by digital projectors that will undoubtedly lower P&A
costs.
• Market is blockbuster driven.
• With the deregulation in foreign films and the evolution of the market
environment, aside from blockbusters, middle-budget and
independent movies, as well as made for TV-movies and mini-
series could have the chance to be circulated in the Chinese
theatrical market.
Sources: chinahollywood.org, ejumpcut.org
The 2002 film Hero, by Zhang Yimou, stormed
through China. Box office receipts of 2.5 billion
yuan out of 9 billion total revenue for all films in
that year made it the top grossing film in the
entire history of Chinese cinema up to that
point. Hero signified the final institutionalization
of a new era in Chinese filmmaking, one that
single-mindedly pushes for market success.
China: blockbuster driven
81

• Certain types of TV shows can be re-purposed for
the cinema in China.
• Chinese media institutions have started to treat
intellectual property rights seriously.
• Online video websites competitively bidding for the
copyright of television drama series.
• More Chinese television stations have been willing to
acquire and localize foreign TV formats. For
example, China’s Got Talent, Shanghai Dragon
Television, the most popular program on Sundays in
2010.
• These trends reveal that China’s entertainment
industries are slowly becoming more intellectual
property friendly.
China: copyright friendly?
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Source: A profile of current and future audiovisual audience, European Commission, 2014
The two most important criteria by far when choosing which film to see are the genre and the story, which enable
audiences to weigh up the film’s premise and potential benefits (relaxation, emotion, entertainment, etc.).
Behind these come the cast, familiarity with the protagonists and setting, whether the film is a prequel/sequel to
another movie, part of a saga, or based on a book viewers have enjoyed.
Key facts about film choice criteria in general
• 92% of film viewers think film genre is important for their choice.
• 88% think story is important. This is also very consistent across countries. There are slightly fewer film
viewers to consider it 'very important' than for 'genre' (48% vs. 53%).
• 72% think actors and cast are important (only 25% think this is 'very important').
• 52% think a prequel/sequel is important (only 13% think this is 'very important').
Most important criteria to chose a film: genre and story
Film audiences in Europe
85

Self-definition as a Film Viewer
3% of respondents said they do not watch films.
• One half of film viewers define themselves as cinema “likers”
• One third consider themselves as cinema “fans”.
• One fifth have a more negative attitude towards film.
• 30% chose 'I love cinema and I am a cinema fan'. This sentence was most often chosen in Spain (40%)
and the UK (36%) and least chosen in Lithuania (13%), Croatia (21%) and France (25%).
• 49% chose 'I like some films very much although film is a secondary area of interest for me'.
• 11% chose 'I watch films because there are so many of them but I don't feel particularly attracted to
film'.
• 8% chose 'I don't watch many films and I don't think this will change'.
86

• Film viewers mainly choose to watch films on television because it is cheaper
• On DVD because it is more convenient (they can watch whenever they want and
• select the language)
• In cinemas because it is the first window (the films are
• recent) and it provides the most complete film experience.
• 84% of film viewers like 'watching films at home because it is
• cheaper'
• 81% like 'watching DVDs because they can watch the films
• anytime they want'
• 74% like 'going to the cinema because of the complete film
• experience'
• 66% like 'going to the cinema because they like watching the
• latest films'
Prefered platforms
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88
TV AND FILM ARE MELTING INTO ONE
MEDIUM

Marvel’s most recent string of films: each film contributes to an overall narrative that flows from film to film.
Functions a lot like a TV showrunner does, except the individual episodes of his show each cost more than $150 million
to produce.
Warner Bros., Fox, Sony Universal and Paramount
are following suit with their own comic properties,
Greater emphasis is being placed on continuity and serialized story-telling. It’s the TV-ization of film.
Streaming as a legitimate method of distribution
Another way in which the film industry is becoming more like TV: The growth of video-on-demand as a legitimate (read:
profitable) method of mainstream distribution.
The “TV-ization” of film
Serialising Film
Source: digitaltrends.com
90

The Critics’ Choice Movie Awards and the Critics’ Choice
Television Awards are meshing Golden Globes-style into one
three-hour awards show beginning 2016.
The new entity, the 21st Annual Critics’ Choice Awards, will be
simulcast live January 17 on A+E Networks’ A&E, Lifetime and
LMN.
Critics’ Choice Movie & TV Awards Merge to Become One Show
Source: deadline.com
91
TV and film are melting into a single medium

TV is making things happen faster.
Now common for a broadcast show with 22+ episodes per season to be split into fall and spring mini-seasons, each
with their own major arcs.
On cable, the mini-seasons are even shorter, perfect for binging.
Event series – shows designed to self-terminate after a preset number of episodes – are on the rise.
Also on the rise: film talent -- like Kevin Bacon and Halle Berry -- committing to broadcast TV shows, but only on
reduced orders (The Following only makes 15 episodes a season and Extant’s second season will be just 13
episodes), further blurring the lines between the media.
Shows like Marvel’s Agents of Shield and the upcoming Agent Carter limited series are erasing that line entirely, as
they fully exist in the Marvel Content Universe, sharing talent both in front of and behind the camera.
The TV industry is becoming more like film
Tv, Film: blurring the lines
92

Now the decision on which distribution method is much more arbitrary
Before: Simply projecting an image onto a theater screen required a completely different process than sending that
same image into millions of homes.
Films were shot, edited, projected on film.
TV has largely been a medium of video.
When TV projects chose to shoot on film back in the day, it was usually on lesser stocks and sizes than the feature
world, as the end result was a video conversion anyway (at least ‘til the ‘90s).
Now most movie screens are just gigantic digital TVs, feature films and scripted TV shows are shot on largely on the
same digital equipment.
When directors like J.J. Abrams and Quentin Tarantino choose to shoot projects on 35mm film, it’s now purely a
creative choice, and no longer a necessity dictated by the medium.
It used to make sense to choose a distribution method (film, television, or Internet) before you did anything
else.
Now, that decision is much more arbitrary.
The impact of technology
93

David Lynch ("The Elephant Man," "Blue Velvet"): "Today, television is much more
interesting than film, it seems that the art factory has gone to cable“. Returns to TV with
"Twin Peaks" the cult series of the 90s. It is said that his innovative style made possible shows
such as "Six Feet Under" (HBO, 2001- 2005)
Dustin Hoffman: "In the golden age of Hollywood we never thought we were going to do
TV. Today, the only creative risks are taken into films with small budgets and TV stations
as well financed as HBO “ ("Sopranos"). Hoffman debuted as a TV actor in the series "Fear“
directed by film director Michael Mann ("Heat, "Collateral")
The tradition of film directors working for the TV is old. "Alfred Hitchcock Presents"
(1955-62) was the first TV series made for TV by a great film director (226 episodes of 25
minutes). “Band of Brothers“ the series co-produced by Tom Hanks and Steven Spielberg
(HBO 2001).
«TV is much more interesting then film»
From film to TV
94

• Movie-making isn’t as lucrative as it used to be. TV is much more consistent. “Once a TV show is green lit, it’s
not going into turnaround. You’re going to get paid, and you have work for the next year” (Turnaround is when the
rights to a film are purchased by one studio and then sold to another. This delays production time, sometimes
indefinitely)
• There used to see a lot of resistance from actors demanding their quote, but now they know you have to roll the dice
and bet on what they’re doing instead of getting a big fat upfront fee
• Stability. Sign on for a season and the checks keep rolling in for months, nice in a constantly fluctuating industry
where actors are worth whatever the fans think
• Royalties. Potential for unending royalties and residuals if the show goes into syndication. The producers and studio
see the majority of this windfall, but actors can make a nice chunk of change from nonstop repeats
• Quality. Dramas are more complex, comedies funnier and subtler. The number grows every year. The small screen
is no longer the domain of those who can’t cut it in theaters. “TV has gotten more sophisticated,”. “If you look at
what’s on Fox now, as opposed to five, six years ago, TV show feel more cinematic.”
• TV stars have a new goal. In the past, many built a following by being in your living room every week, then moved
to the movies. But now, big TV stars are staying put
Source: brobible.com, thewrap.com
Why are actors, directors, producers doing
Tv? Money, stability, cinematic quality, new goals
95

• The main TV channels are afraid to fail
• American series have invaded the primetime: Criminal Minds, Mentalist, CSI,
three episodes in a row, back to back, every night
• But, some unique and different content is produced
Canal Plus and Arte: original productions that aim to match the quality of
the best international TV drama such as The Killing or Breaking Bad
• “Les auteurs” are being pushed to TV spurred by the success of homegrown
series like Engrenages or Les Revenants
• And by the failure of most of the films at the box office
The least profitable film cost EUR 10.3 million ("Le Premier Homme“), a
return of only 2%
The independent film "La Vie d'Adèle" cost only 4 million and had a return
of 219%
• Also, a debate on how to eliminate or reduce the “paternalistic” state funding
TV is the “le nouveau cinema”
In France, Home of “Cinéma D’auteur”
96

99
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4 BRAND EMPIRES
100

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0
THE ROLE OF TV IN THE DIGITAL AGE
101

Our culture and economy is increasingly shifting away from a focus on a
relatively small number of "hits" (mainstream products and markets) at the
head of the demand curve and toward a huge number of niches in the tail.
As the costs of production and distribution fall, especially online, there is now
less need to lump products and consumers into one-size-fits-all containers.
In an era without the constraints of physical shelf space and other bottlenecks
of distribution, narrowly-target goods and services can be as economically
attractive as mainstream fare.
Video not available on broadcast TV on any given day, and songs not played
on radio: the potential aggregate size of the many small markets in goods that
don't individually sell well enough for traditional retail and broadcast
distribution may rival that of the existing large market in goods that do cross
that economic bar.
Source: wired.com
The theory of the long tail
102

Source: PGA, Global Content Compass 2014
Two problems: creating outstanding products and creating awareness that they exist
Digital distribution is changing the economics of how Hollywood makes its money after release
Many companies can’t depend on videos, DVDs or digital to prop up their numbers
They have either gone to co-financing or international financing deals
Productions that succeed in grabbing a small slice of the audiences’ attention and loyalty remain a mysterious
exercise.
Hit broadcast-network shows have a fraction of the audience that they needed to stay on the air 20 years ago but
consumers still want something that looks as good as ever.
Once film or TV products are created they must be brought to viewers’ attention in a sea of digital irrelevance.
Whatever the quality of the production, digital awareness still has to be invented.
Producers must develop digital strategies and take advantage of new cost savings opportunities and hope to find
ways to make money.
How to grab the audience’s attention?
103

There are many ways to identify audiences for
specific subjects or ideas via the internet, social
media and surveys, tools like never before, the cost
of doing what could only be done with the backing
of a studio has decreased.
Social media has the indispensable tools to create
awareness, to create buzz, through digital
marketing techniques in order to stand out from the
crowd.
Sources: ny magazine, emarketer
«The trick is to get them seen and to compensate the people who make them.»
THE ROLE OF DIGITAL MARKETING
104

Brands are crucial to survive in the sea of digital irrelevance, but
not enough
Story is fundamental to stand out in a sea of digital irrelevance,
but not enough
Production quality (money) is critical to stand out in a sea of
digital irrelevance, not enough
Marketing is essential to navigate in a sea of digital irrelevance,
but not enough
There is no single answer, but TV exposure has become
indispensable
Lost in a sea of digital irrelevance
Aldous Huxley Feared the Truth Would Be Drowned in a
Sea of Irrelevance Quoted by Neil Postman in “Amusing
Ourselves to Death” (1985)
BRAND, STORY, PRODUCTION QUALITY, MARKETING…
105

10
5
Table of Contents
4 BRAND EMPIRES
106

10
6
TECHNOLOGY, ECONOMICS AND THE SOCIAL
ROLE OF TELEVISION
107

The evolution of TV
From black & white to colour,
From standard definition to high definition
From 4K to 8K, which is 16 times better than HD
The TV set develops more into a giant tablet
9000 television channels in the 28 countries of the EU
TV organisations had to innovate, because technology and
the expectations of their customers have changed. New
business models.
Almost all traditional broadcasters have become multi-
channel-media organisations, providing their programmes on
all relevant platforms and devices, anytime and anywhere.
Their programmes generate more tweets and fans than
anything else.
YouTube is not called television, despite being
the biggest streaming platform in the world
and the second biggest search engine. Netflix
or Amazon are not television despite
producing good series and dramas.
Netflix, and Amazon and many other new
players want to become as successful as
television is today.
They want to catch the eyes of millions of
people that watch on average 3 hours and
40 minutes of television every day.
Thesis on the future of TV
SPEECH BY INGRID
DELTENRE, EBU DIRECTOR GENERAL, SEPTEMBER 2014
108

The whole customer experience will improve.
If technology is changing, if consumer expectations are
changing, media organisations need to change and adapt as
well.
The customer is king.
We all love to say “Content is King”. This is the typical
view of a producer. But if the customer does not like the
content, or even worse: if the customer does not find the
content, our content will not be king.
The day has only 24 hours, the availability of content is ever
increasing.
You have to produce great programmes, but you also need
to make sure that this content will be found.
For Netflix and Amazon the customer is king. Technology
allows a personalization as never before.
Much more cooperation across borders. The
industry is globalizing.
Customers’ expectations with regard to quality and
innovation can only be met when we are able to build
on the economy of scale much more. For traditional
broadcasters this translates also in doing fewer things
bigger and better.
Communicate with your customer and find
innovative solutions to their problems.
Customers want us to listen and dialogue. There is a
community out there that is critical, looks for alternatives
and finds them. Need to establish a new form of
relationship and build on it.
109
Thesis on the future of TV
SPEECH BY INGRID
DELTENRE, EBU DIRECTOR GENERAL, SEPTEMBER 2014

Source: Deloitte, Generator Research
«The TV industry has survived this decade of
change through reinventing itself
technologically across multiple aspects.»
Species with useful adaptations to the environment are
more likely to survive and produce progeny than are
those with less useful adaptations. (Darwin, Wallace, 1858)
Evolution by Natural Selection
110

From the one channel TV to Everything, Everywhere, Anytime
The evolution of cable television
111

Overwhelmingly TV continues to be consumed in the usual place:
the family couch
Huge media fracas about the use of computers / tablets / smartphones to access Internet
video applications.
Only marginally do these innovations change long established habits of consuming
TV.
One thing remains: strong appetite for entertainment and news, it has been increasing in
all age groups.
What people really want is to watch TV, preferably live, when the program is first
broadcast. This is something that increases consumer satisfaction.
Nothing better than gathering the family on the couch for the collective catharsis with the
usual dozen channels.
The usual place
112

Model today: at-home
streaming world
• Large quantities of content,
particularly TV, became
available to viewers right at
their fingertips, all at a very low
cost
• Huge sums of money to be
made through the aggregation
and effective distribution of
highly-targeted content that
reaches narrow-interest
audiences
Source: Chime Media LLC, Clealeap
Model for monetizing
content 20 years ago
• Release to a sizable
audience at the multiplex, or
on VHS, DVD, pay-per-view
or cable TV
• It made sense to ignore
most of the catalog and to
focus on new releases and
a few big winners
Streaming video outlets have altered the media industry
1. Broadband and mobile
infrastructure grew
2. Large investments smoothed
out the streaming process
3. Lots of contents: studios have
decades’ worth of film and video
in their archives although nearly
98% of that content is not
accessible and available for
distribution
Disruption
New model of monetizing content
113

Streaming
content is an
audio or video file
on the Internet that
is partially
downloaded and
then played as the
remainder of the
file is being
downloaded.
Live streaming is
the method of
constantly sending
and receiving
content over the
Internet.
Sources: Ericsson Consumer Lab, Computer Hope, Deloitte
Streaming
111
4

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Table of Contents
4 BRAND EMPIRES
115

11
5
DIGITAL: NEW OPPORTUNITIES
116

CHRIS MCGURK, CEO, Cinedigm
The cost of making a movie that’s worthy of
theatrical release is now a hell of a lot less than it
was a few years ago, and the profusion of digital
services like Netflix and Hulu and Amazon is
reaching a critical mass.
They’re in an arms race for content, and that’s
creating a perfect storm for independent film.
People have to re-screw their heads on about the
way a film is released.
It used to be that a movie had to be picked up by an
independent distributor and get to 500 screens to be validated
as a movie, but it takes $5 million to $10 million in marketing to
do that, and it makes it difficult to get a return on your
investment.
It’s still really important to get a theatrical release, but it should
be done in a smart targeted way, in a few key markets.
It’s important to get those reviews and publicity so they raise
awareness of a film for ancillary markets, but you have to do it
in a way where you still have a shot at making money.
Source: thewrap.com
«We’re entering a period of tremendous upside for the independent film business.
Finally things are coming together in terms of digital technology.»
Independence day?
117

Tell compelling stories, cheaper
Some people say there are no good movies being made, but people who are making good movies are just rolling up
their sleeves
There used to see a lot of resistance from actors demanding their quote, but now they know you have to roll the dice and
bet on what they’re doing instead of getting a big fat upfront fee
This applies to below-the-line people, they complained work is not in L.A. anymore; it’s going everywhere, so roll with it
The last decade was such gluttony and excess — huge budgets for movies that could have been made much cheaper
You just need to do it cheaper, which technology and passion
«Roll up tour sleeves»
RIC WAUGH (“SNITCH”)
118

Storytelling in a different way
When you have fewer tools in your tool box, you have to focus on character and story, that parameters making better
content.
There were more high-quality movies than just a few years ago
Distribution is changing too
There is less money for filmmaking, it’s a huge opportunity
We don’t know where the industry is going to land, but people are consuming more content than they ever have before
We just haven’t figured out how to monetize this audience, but eventually we will
Source: thewrap.com
Focus on characters and story
JASON BLUMHOUSE
119

Investors continue to show strong interest in putting their money to
work in Hollywood: The driver is always: how do you create a good
story?
The business of film has evolved greatly but its fundamental principles
remain the same
“There’s more capital
available than there are great
stories,” says Nick Meyer, chief
executive of Sierra/Affinity, an
international film sales and
production company.
Storytelling is as central to
the success of the film
industry as it has always
been, he says. “Stories drive
intellectual property generation,
they drive financing
opportunities and they attract
the great artists — the directors
and casts.”
When the stars align and story, cast and director work, the
result can be a financial hit on a global scale
Implications of globalization for smaller,
Mind-budget releases
120

Babel 's $25 million budget came from an array of different
sources and investors anchored with Paramount Vantage,
which changed its name from Paramount Classics, with
Babel as its premiere production and inaugural motion
picture
Set in 4 countries on 3 continents, 4 different languages, 4
stories set in Morocco, Mexico, the US, Japan
Stars Brad Pitt, Cate Blanchett, Adriana Barraza
The majority of the rest of the cast: non-professional actors
and some new actors
Best Director Prize Cannes 2006
Seven nominations at the 79th Annual Academy Awards,
including Best Picture and Best Director
The USD 25 million film
121

“Only invest with experienced producers and financiers,” says Martin
Smith, founder of West Bridge Consulting, an advisory firm specialising in
arts, media and entertainment.
But how can an investor gain access to such experience? One answer could
be to invest in films through film funds, a number of which have emerged
over the past few years.
Shelley Media, for example, which requires a minimum investment of
£10,000, has delivered an average annual return of 11.5 per cent since
launch five years ago. The Enterprise Investment Scheme (EIS) fund has
raised a total of £200m and has been involved in successful British films
including Mr Turner and Testament of Youth, for example.
Look for films that mitigate production risk through pre-sales
Analysts say that effective finance and
distribution models exist for big, so-
called “tent-pole” blockbusters that
provide core revenue streams
Small independent films can be paid for
by a single source and recoup
investment with a small release and
ancillary market sales
The $50m-$100m films face the greatest difficulties
Financing small independent films
122

12
3
Literature
• Mirrlees, T. (2013) “Global Entertainment Media: Between Cultural Imperialism and Cultural Globalization”. New
York, Routledge
• Finney, A. (2014) “The International Film Business”. Routledge
• Ullin, J. (2009) “The Business of Media Distribution: Monetizing Film, TV and Video Content in an Online World”.
Focal Press
• Reiss, J. (2011) “Think Outside the Box Office: The Ultimate Guide to Film Distribution and Marketing for the
Digital Era”. Hybrid Cinema
• Perez, C. (2003) “Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages”.
Edward Elgar Publishing Ltd
• Vogel, H. (2014) “Entertainment Industry Economics: A Guide for Financial Analysis”
• European Commission (2014) “European film in the digital era, Bridging cultural diversity and competitiveness”,
Brussels http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52014DC0272&from=EN
• European Commssion (2012) “A profile of current and future audiovisual audience Final report”
http://bookshop.europa.eu/en/a-profile-of-current-and-future-audiovisual-audience-pbNC0414085/
• GWI Insight Report (2015)”Digital V. Traditional media Consumption”. GlobalWebIndex
(http://insight.globalwebindex.net/media-consumption)
• McKinsey & Company (2015) “Global Media Report, Global Industry Overview”
(file:///C:/Users/Sara%20H/Downloads/McKinsey%20Global%20Report%202015_UK_October_2015.pdf)
124

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