Hollywood

Why is Hollywood such a successful film industry?

Hollywood

Vertical integration of the Hollywood film industry

Vertical integration was a key feature of the Hollywood studio system up to 1948.

The ‘Big Five’ studios were:

"The Big Five," major studios realized they could maximize their profits by controlling each stage of a film's life:

• production (making the film),

• distribution (getting the film out to people),

• exhibition (owning first-run cinemas in major cities).

• "The Little Three" studios also made pictures, but each lacked one of the crucial elements of vertical integration.

• Together these eight companies essentially controlled the entire market.

They also controlled the terms under which you could see their films. Prestige or “A-Movies” used studio stars and lavish production values, and then could only be seen initially in studio-owned, first-run cinemas.

When the studios released these films to cinemas they didn't own, they forced those owners to buy A-pictures in combination with a number of, often mediocre, B-pictures (no stars, bargain-basement genre pictures) and shorts, a practice called "block booking."

Moreover, the studios often made the exhibitors buy the films blind, not allowing them to see what they were getting before they got it.

The end of Hollywood's Golden Age

In 1948 the studios were ordered to give up their cinemas, opening the market to smaller producers.

This, coupled with the advent of television in the 1950s, seriously compromised the studio system's power and profits. Hence, 1930 and 1948 are generally considered bookends to Hollywood's Golden Age, the period when these eight companies secured 95 percent of all film rentals and close to 70 percent of all box-office receipts.

So, Vertical integration has gone, making the Hollywood studios more competitive?

Case study:

All owned by Rupert Murdoch

Type Subsidiary of News Corporation

Industry Film

Founded May 31, 1935,[1] by merger of Fox Films (founded in 1915) and 20th Century Pictures, Inc. (founded in 1929)

Founder(s) William FoxJoseph M. SchenckDarryl F. ZanuckRaymond GriffithWilliam Goetz

Headquarters Fox Plaza, Century City, Los Angeles, California, United States

Products Motion pictures, television films

Owner(s) Independent (1915–1985)News Corporation (1985–present)

Parent Fox Entertainment Group

Divisions 20th Century Fox AnimationFox Animation StudiosFox 2000 Pictures

Subsidiaries Fox Searchlight PicturesFox AtomicFox Interactive20th Century Fox Home EntertainmentFox Television StudiosBlue Sky Studios20th Television/20th Century Fox TelevisionFox Star Studios

Website www.foxmovies.com

Type Subsidiary of News Corporation

Industry Film, television

Founded 1990s

Headquarters Fox Plaza, Century City, Los Angeles, California, United States

Key people Jim Gianopulos, Chairman, CEO

Products Motion pictures, Television programs

Revenue  $13.28 billion USD (2004)

Operating income  $2.9 billion USD (2004)

Net income  $1.85 billion USD (2004)

Owner(s) News Corporation

Employees 12,500 (2004)

Parent News Corporation

Type Public

Traded as NASDAQ: NWSNASDAQ: NWSAASX: NWSASX: NWSLVNASDAQ-100 ComponentS&P 500 ComponentS&P/ASX 50 Component

Industry Mass media

Founded Adelaide, Australia (1979)[1][2]Delaware, United States (12 November 2004)[3]

Founder(s) Rupert Murdoch

Headquarters 1211 Avenue of the Americas,New York, NY 10036, USA

Area served Worldwide

Key people Rupert Murdoch(Chairman and CEO)Chase Carey(President & COO)

Products Cable network programming, filmed entertainment, television, direct broadcast satellite television,publishing, and other

Revenue  US$ 33.706 billion (2012)[4]

Operating income  US$ 2.212 billion (2012)[4]

Net income US$ 1.179 billion (2012)[4]

Total assets  US$ 56.663 billion (2012)[4]

Total equity US$ 24.684 billion (2012)[4]

Employees 48,000 (2012)[4]

Subsidiaries List of subsidiaries

Website NewsCorp.com

Some of those names for this year:

• BV = Buena Vista – a subsidiary of Disney

• P/DW = Paramount Dreamworks

• Gold = Samuel Goldwyn Studios (ex-MGM)

The interesting one:

• LGF = Lionsgate – (Canada) the most commercially successful independent company in North America

Type Public

Traded as NYSE: TWXS&P 500 Component

Industry Mass media

Predecessor(s) Time Inc.Warner Communications

Founded 1990

Headquarters Time Warner Center,10 Columbus Circle,New York City, New York,United States

Area served Worldwide

Key people Jeffrey L. Bewkes(Chairman & CEO)

Products Television, movies, entertainment, cable,broadcasting, radio, web portals

Revenue  US$ 28.7 billion (2012)[1]

Operating income  US$ 6.1 billion (2012)[1]

Net income  US$ 3.5 billion (2012)[1]

Total assets  US$ 68.304 billion (2012)[1]

Total equity  US$ 29.954 billion (2011)[1]

Employees 34,000 (2012)[1]

Subsidiaries List of subsidiaries

Website www.TimeWarner.com

US Weekend box officeFebruary 15-17, 2013

UK Box Office for 2012

• Momentum Pictures – a successful British film Distributer

……Owned by Paramount Pictures.

British Involvement?

• Most of these films have British actors, many in the lead role.

• Is it important to British audiences to see British stars on screen?

Media Ownership

• Have the big studios managed to find a modern equivalent of vertical integration?

• Why do you think that the big studios own smaller production companies?

• Why not just focus on making big, mainstream releases?

• Can the British film industry compete?

Case Studies

• Find out what information you can about at least one American film production company. Do they have links to wider media ownership?

• Do the same for a UK film production company

hint: Aardman, Film4, New Line Cinema, etc

Look at co-productions