Cinema as industry
● Main actors:– Producers / executives – Filmmakers / directors & scriptwriters– Cast & crew + post-production– Distributors – Exhibitors Theatre-owners – Audiences (viewer / spectator)– Reviewers/critics
Geopolitics of cinema
• 1914 90% of films shown in the world are French
• 1928 90% films are American massive exportation – total vertical integration (production, distribution & exhibition) becomes an industry of its own
• Domination of Hollywood cinema with heavy marketing & merchandising strategies
• Other cinemas Bollywood, European, Asian, South American
Hollywood studio system● Hollywood = ‘dream factory’● 1917 vertical integration (Zukor production company
+ Paramount-distribution + 1,000 theatres by 1926)● 1913-1929: 5 majors (Paramount, Fox Film Corp, MGM,
Warners Bros, RKO) + 3 ‘little majors’ (Universal pictures, United Artists, Columbia)
● 1930-48: 8 majors controlled 95% USA films - oligopoly – Stable of stars, scriptwriters, directors & designers ‘house look’– Assembly line process – 600 films annually (standardisation, genre
sophistication)– Block-booking & coercion for exhibition– Specialisation in types of films = distinctive look criteria for box
office success
● Depression era: economic difficulties & bankruptcy –Wall Street interference emergence of B-movies (double feature production) to supplement programme
● 1948-51: exhibitors put anti-trust action against majors relinquished theatres (60% of capital investment) emergence of independent films & more foreign imports
● House of Un-American Activities Committee blacklisting + implicit censorship
The Majors● Fox: 1930’s popular musicals + 1950’s Westerns
(actors: Temple, Fonda, Brando, Monroe, Peck – directors: Kazan, Ford, Mankiewicz) now owned by Murdoch (NewsCorp)
● Paramount: comedy & light entertainment, epics (actors: Fairbanks, Swanson Dietrich, Marx Bros - directors: B. de Mille, Griffith) now owned by Viacom
● Warner Bros: gangster films, backstage musicals, social realism & political films no stables but contract directors, actors & crews (Hawks, Bogart, Cagney, Flynn, Dean, Davis, Bergman, Crawford, Bacall) now Time-Warner
The Majors
● MGM: lavish productions (Wizard of Oz, Gone with the Wind) & special FX high investment in pre-production, tight rein on production (galaxy of star actors: Garbo, Garland, Rooney, Tracey) – MGM-UA, Turner, Paretti, Crédit Lyonnais
● RKO: practice of ‘unit production’ by contracted independent directors – variety of genres: big hits (Astaire & Rogers films, King Kong, Citizen Kane) & B-movies (film noir & horror) bought by Hughes then sold to TV company
The little Majors● Universal: Valentino movies, horror movies
(Frankenstein, Dracula) - % of profits offered to actors to attract stars (Stewart,Welles, Dietrich, Leigh) – post 1948: thrillers, melodramas, Westerns – 70/80’s: Jaws, E.T. – sold to Matsushita in 1990 (Jurassic Park)
● United Artists: founded by Chaplin, Fairbanks, Griffith, Pickford against oligarchy (The Gold Rush, Modern Times) - post 1948: became major (James Bond series, Rocky, One Flew over the Cuckoo’s Nest, Annie Hall) - sold to MGM in 1981
● Columbia: Produced B-movies sold to big 5 in 1930’s – contract directors & actors (Capra, Vidor, Hayworth) created TV subsidiary Screen gems in 1950 & backed foreign productions – sold studios in 1972 – bought by Coca-Cola in 1982 then Sony in 1989
Market evolutions● 1960’s : Popularity of television ● Studios rented space to television companies● Involvement in production of TV programmes● 1970’s: emergence of blockbusters (Jaws, StarWars)● 1980’s: VCR threat – became source of additional
revenue● 1990’s: Studios bought by large conglomerates (= only
part of activities) + intro of digital techniques● 2000’s: Current practice: independent producers put
package together then sell to major studio + lowering costs of filmmaking allows for independent movie making & internet promotion
American vs. European cinema● Viewed from USA European cinema construed as
global concept – 2 meanings:– Predominance of art cinema + more sexually explicit– Only true rival to Hollywood to be infiltrated & dominated
● French resistance (exception culturelle) – quota on US films (180-200 annually) – slow erosion nonetheless
● 1991 - 59% films in France from US vs 35% in 1981 ● UK 80% films shown from US
● Attempts at national heritage cinemas (Cyrano de Bergerac, Manon des Sources, A Room with a View, Howards End)
American vs. European cinema● In 2000:
– 595 films produced in Europe vs. 460 in US– Average cost of US film: $54.8m vs. $7.2m in
UK, $5m in France, $2m in Italy US budgets include marketing budgets (promotion, copies, etc.)
– Distribution larger across member states for European films but more US films achieve box office success (1 to 10 ratio) & dominations of US in market share (73% US, 15% national, 8% non-national European, 4% others)
International Film Industry
● Cinema advertising = only 1% of total advertising expenditure in UK & Europe
● Revenue = direct & indirect charges for access to consumers
● For some = royalties from merchandising● 3 categories of release window:
– Cinema box office (theatrical) = main source– Video (rentals, retail)= grew strongly in 1980s’– Television = also rapid growth since 1990’s (movie-
based subscription channels)
Exhibition window● Cinema-going: General upward trend in cinema
admissions despite some slumps– USA: 1.48b admissions in 1998 – 1.54b in 2004 (+4%)– UK: 139m in 1997 – 171m in 2004 (+23%)– France: 130m in 1995 - 195m in 2004 (+50%)
● Heavy investment in cinema screens / multiplex phenomena– USA: 31,865 screens in 1997 36,594 in 2004 (+15%)– UK: 2,564 screens in 1998 3,474 in 2004 (+35%)– France: 4,762 in 1998 5,295 in 2004 (+11%)
Secondary and tertiary windows=Even more lucrative sources of income over last
decade● But box office performance determining (popularity)
– Important knock-on effects in later stages of distribution– And on price that can be negotiated for rights in subsequent
release windows= impact on per-viewer profit
● Till early 1990svideo accounted for majority of film expenditure
● Now subscription TV movie channels, VOD, DVD
US Box-OfficeOverseas Box-
Office Pay-Per-View
Video
Pay Television
Free Television
Typical sequence of windows for distribution of feature films
2-3 months after 1st release
4-6 months after 1st release
6-9 months after 1st release
At least 12 months after 1st release
At least 2 years after 1st release
Merchandising
● Main earners in ancillary markets = children’s films producers
● E.g. : Disney – Character brands exploitation– Theme parks– Licensing of production of clothing, toys, etc.
● Time Warner / New Line Cinema: – $2.9 billion worldwide box office receipts for all 3 Lord
of the Rings films – $3 billion+ consumer spending on Lord of the Rings
home entertainment & merchandise
International business – US domination
● Bulk of domestic consumer expenditure on films generated by and ploughed back into dominant US industry
● India only competitor – most prolific film-producing nation (1,000 films annually)
● Main factors favouring Hollywood majors:– Size of demand (large domestic market to support output)– Size of supply (large scale of productive activity)
● High budget well-promoted films & risk spreading– Structure well integrated production & distribution
Major studios
● 7 majors today: Paramount Pictures, Universal, 20th Century Fox, Warner Bros, Disney, MGM, Sony/Columbia Pictures
● Total majors’ films production: around 140 per yr– 90% of domestic box-office– Gain top positions in international markets
(above 50% of total revenues)
Independent sector
● Companies within and outside US that develop, finance & distribute films independently from majors
● In some cases, independence is not absolute some successful firms backed by larger parent corporations with cross-ownership with Hollywood majors (e.g. New Line Cinema owned by Time Warner, Miramax owned by Disney)
● US independent cinema 3 times more films than majors but less than half gain theatrical release
Film = hit-or-miss business
● Risky & highly expensive business– Constant upward pressure on production
budgets (brand-name star fees)● Highly speculative● Majority lose money
– Only 2 out of every ten films make profits– For majors, virtuous cash-flow circles
(revenues from 2 hits support other films)
● Funding to be raised in advance for devt, production & marketing
● Returns only after film is shown (on average 3 yrs or more later)
● ‘House nut’ – cinema-owner takes cut directly from receipts to cover costs of running the venue
● Then, rest divided betw exhibitor & distributor (usually 10:90 split)
● Distributor deducts commission and costs, including advertising & promotion
● Remainder goes to equity investors or financiers then to producer
New Technologies= Reduction of entry barriers● Production - use of digital cameras & editing –
reduces capital and labour costs● Low promotion costs possible – (e.g. The Blair
Witch Project = use of chat-sites & word-of-mouth across Internet to create hype & draw attention long before critics had access to the film)
● Distribution – subscription TV (extra channel capacity due to digital compression & additional film services enabling consumer selection) + PPV + near VOD– Possibility of direct gateway thru Internet (bypass
distributors & exhibitors)
