ECO 316- Movies & Music - MOVIES Vertical...

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Unformatted text preview: MOVIES Vertical Integration—studios distribution company 18,000 theaters in 1947 Change in movies in 1948: A. Idk B. Justice Department tries to break up ‘cartel’ C. Television MPPC- Motion Picture Patent Company (film trust) A. To decrease competition, instability, and patent wars B. 1909 causes underground market of ‘independents’ with illegal shit C. General Film (subsidiary of MPPC) tries to take down independents 1915- courts rule MPPC acted as a monopoly 1915 Shift in movie making from Europe to US due to: A. Immigrant labor B. US corporate structure C. Optimistic endings in US films D. Non-union in US E. WWI Films being sold to: A. Regional salesmen (through state’s rights) B. Road show: producer contracts with theaters (very high transaction costs) Hodkinson suggests nationwide distribution and better films but less films = more revenue A. Distributor provides cash advance to producer for exclusive rights B. Results in distributors getting steady stream of ‘better’ films- everyone gets more profits Block Booking—theater must purchase movies on all or nothing basis (makes it too difficult for independent film makers to get into the game) A. Evolves into “full line forcing”- which includes purchasing news, cartoons, etc. with movies B. Evolves again into “blind booking”- bid on right to show movies unseen Eight major studios have 95% of revenue and 20% of theaters What Shapes the Industry Today A. Technology—in filmmaking process, distribution, exhibition (more toward digital) Econometrics—statistics for prediction of how movies will do, etc. DVDs—both substitutes AND compliments (can increase or decrease revenue) B. Capital—financial innovations in financing, production, distribution, and exhibition Oligopolies- studios Perfect Competition—services (catering, movie changes, etc.) C. Exhibition- 1948 Paramount II case—studios give up theaters Leads to NOT producing movie every week move toward quality Decrease in supply increase in price TV growing in popularity steep decline in admissions Exhibitions dominated by several firms regal, AMC, redstone, Cinemark USA • 57% of Screens garner 80% of the revenue D. Productions and Distribution (Studios) Major studios with substantial assets (libraries) and production facilities • Disney, sony, paramount, 20 th fox, universal, warner bros. Mini Majors—don’t have distribution to be major • New line cinema, lions gate, Weinstein Minor—usually self financed—use majors for distribution How does economy impact movies? Admission Cycles—contra-cyclical to economy A. Recession—steady/increased admissions, recession lingers- admission falls B. Seasonal cycles—admissions higher during holiday and summer C. Endogernity/game theory- don’t release movies at the same time (tactic agreement) Price Elasticity A. Movie price inelastic (tickets are low, people spend money on other shit like concessions) B.B....
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This note was uploaded on 09/27/2011 for the course INS 316 taught by Professor Mitchell during the Fall '11 term at Missouri State University-Springfield.

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ECO 316- Movies & Music - MOVIES Vertical...

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