SOURCES

http://www.theguardian.com/business/2009/aug/31/disney-marvel-buy-out

http://www.disneymovieslist.com/best/best-disney-movies.asp

http://www.boxofficemojo.com/franchises/chart/?id=marvelcomics.htm

Companies Involved

Walt Disney became the parent company of Marvel Entertainment, which became their subsidiary company. The companies that were involved in this deal are Walt Disney and Marvel Entertainment. Disney own multiple subsidiary companies that are in the same stage in production as them, that is know as horizontal integration. Horizontal integration allows companies to to dominate sectors in the production cycle. Walt Disney are also vertically integrated, which means they own companies in multiple stages in the production cycle.

What are the companies famous for?

The companies that are involved are famous for two slightly different things. Walt Disney are famous for their cartoons such as Mickey Mouse and Marvel entertainment are famous for their comic books, movies and programs. Disney’s most successful movies are The Lion King, Beauty and the Beast, Aladdin, The Little Mermaid and Finding Nemo. Marvels most successful comics are The Avengers, Ironman 3, Spider-Man, Spider-Man 2 and Spider-Man 3.

When and why the deal took place

Walt Disney became the parent company of marvel entertainment on Monday 31 August 2009. this deal was worth 4.24 billion and took place because Disney wanted to be even more horizontally integrated so that they was dominating. This is Disney’s attempt to become a monopoly. Marvel was also filed for bankruptcy in 1996 as they had a lot of debts which caused a lot of problems for the company. This forced marvel to have another parent company which could manage their debts, this company was Walt Disney.

The deals influence in the film industry

This deal made a big impact on the agreed takeover is for a mixture of cash and stock, with Disney shares accounting for roughly 40% of the buyout price. Both companies take characters which capture the popular imagination and promote them vigorously around the world on every possible media platform and through third-party licensing deals. This means there is very small competition, which means they are a monopoly. This means Disney has enormous power and dominating the cartoon side of the film industry. This takeover has combined two different target audiences together, which has made the Disney's target audience huge.

Impact on other major film companies

The impacts this takeover has on other film companies are related to their up and coming domination of their specific market, because they are now dominating they have a budget advantage over their competition. This allows them to use more famous stars in their production, which will attract more people to the film. This would also make the competition levels between the other members of the major six to increase. Because of the widened market by Disney, the other companies might have to consider expanding their target market.

Issues of ownership deal

The three main issues with this particular ownership deal are to do with Disney not having full ownership over Marvel and being inexperienced with certain thing; such as comic books. The first issue consists of Disney wanting to create a movie that includes a range of marvel characters, but only have full ownership over one of them (Ironman). The second issue is the duration of each production, because of their lack of experience with marvel movies, the production duration will most likely increase and cause more money to be wasted. The third issue is the lack of experience with creating and selling marvel comic books, this could jeopardise the quality of the comic books and could also take long to produce. Overall these issues could make Disney lose money in the long run.

Summary

Throughout my research I have discovered how beneficial it is to be a parent company, Being horizontally or vertically integrated allows a company to dominate a market and become a monopoly or an oligopoly. Companies can also benefit from gaining more income if a well known character or actor is included in a film they create, this is beneficial as the viewer would want to see more films with the characters and actors they like more. Some companies may also decide to become a subsidiary company if their company is failing, to stop them from becoming bankrupt and to pay off all their debts.

Ways a film industry makes money from

audiences

Product Placement

Sponsorship

Private Investment Development Funds

Corporate Investment

Product placement is when a product or service is referenced or shown in a film. So the company pays for their product to be shown in the film or to be referenced in some sort of way. This is beneficial for both companies because it advertises a product and adds to the films production budget, which will ultimately result in a better final result.

Sponsorship is similar to product placement, but includes more money and a heightened use of that companies product. A company or organisation would financially support the film so that they have the ability to put their product or service in their film.

Private investments are individuals investing money into a film, normally to get some of the revenue after the film is finished. A private invest could be any individual not directly related to a company in the public sector.

Development Funds are indirect sales where funds are made available by a manufacturer or company to help affiliate, channel partners, resellers, VARs or distributors. That help sell their product and create local awareness about the company and/or brand.

Corporate investment is when another film company decides to help create the film, which allows both companies to increase the amount of ideas produced for the production and the budget accumulated. This allows them to increase the quality of the production because they can afford to perform more stunts and might be able to get a more famous actor to act in their film.

Product Placement

Product placement is when a product or service is referenced or shown in a film. So the company pays for their product to be shown in the film or to be referenced in some sort of way. This is beneficial to both parties because it advertises the product for one, which will result in a sales increase and it is beneficial for the other because it adds to their budget. An example of a recent film that has used product placement to fund their film is World War Z, as you can see in the image there is a vending machine filled with Pepsi’s. this is indirectly advertising Pepsi, because it is shown in the production, but isn’t telling you to buy one. Another famous example is ‘Back To The Future II’ which used a record amount of product placements to fund their production, they used brands such as Texaco, Pepsi and Nike because of how significantly their brands logos have changed over a few decades were made relevant to their movie.

Independent film company funding

Independent film companies will use a range of strategies to fund their production such as product placement, sponsorship, private funds, development funds and corporate investment, which have all been explained in previous slides on how they work and why film companies would use them. Development funds are basically like funding schemes, which are events held to create brand awareness and to also possibly promote the upcoming film production. Examples of events taken place to increase brand awareness are film festivals and music festivals which promote specific brands and allow sneak peaks of some production work. Some advertisements broadcasted on television can be a part of development funding, these advertisements can sometimes be interviews with the star actors in the production or insights on how the film is being made.

Sponsorship Deals

Sponsorship consist of a individual or group to support something which could be an event, activity, person, or organisations financially or through the provision of products or services. A big blockbuster film that used sponsorship was ‘The Avengers Assemble’, they used sponsorship from Acura cars to help fund and support their production, which was beneficial for both parties because marvel received the funds and support required for their production and Acura Cars received advertisement within the production, which they could use to their advantage and they received some of the revenue after the production turned out to be a success. This type of funding runs at a risk because if the avengers movie failed to be a blockbusters hit then, Acura cars would have lost out on a lot of money.