LO1 Understanding the Creative Media Sector

Understanding the ownership and structure of the media

sector
Discuss ownership within the film industry.
In the film industry, the big six studios are !arner "ros#, $aramount $ictures, !alt
%isney, Columbia $ictures, Universal Studios and &'
th
Century (ox# (ilms released by
!arner "ros# include ) Streetcar *amed %esire and all of the +arry $otter franchise,
$aramount $ictures released the Indiana -ones films, !alt %isney are res.onsible for all
%isney films, including $irates Of /he Caribbean, Sno0 !hite and Slee.ing "eauty,
Columbia $ictures have released S1yfall, /he )ma2ing S.iderman and Men In "lac1 3,
Universal Studios have released Mulholland %rive, 4an +elsing and *anny Mc$hee, finally
&'
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Century (ox have been res.onsible for )vatar, %ie +ard and )lien# )ll of the big six
o0n a large amount of other film com.anies, so !arner "ros# o0ns Castle 5oc1, +"O
(ilms, *e0 Line and /urner 6ntertainment, along 0ith !arner "ros# )nimation# $aramount
$ictures o0ns $aramount 4antage, Insurge $ictures, $aramount )nimations, M/4 (ilms
and *ic1elodeon Movies# !alt %isney o0ns %isney *ature, Marvel Studios, Lucasfilm,
%isneytoon Studios, Lucasfilm )nimation, Marvel )nimation, $ixar, !alt %isney )nimation
Studios, /he Mu..ets Studio, /ouchstone $ictures and U/4 Soft0are Communications#
Columbia $ictures o0ns Sony $ictures Classics, Screen 7ems, )ffirm (ilms, Stage 8
(ilms, Sony $ictures )nimation, Sony $ictures 5eleasing, /riStar $ictures and /riStar
$roductions# Universal Studios o0ns (ocus (eatures, !/
&
$roductions, !or1ing /itle
(ilms, Illumination 6ntertainment and Universal )nimation Studios# (inally, &'
th
Century
(ox o0ns (ox Searchlight, (ox (aith, "lue S1y Studios, &'
th
Century (ox )nimation and
&'9 of *e0 5egency $roductions# Mini:ma;ors .erform all the same functions as the
ma;or studios, ho0ever the all o.erate 0ithout the safety net of a .arent com.any, the
mini:ma;or film com.anies are Lionsgate (ilms, /he !einstein Com.any, 5elativity Media,
O.en 5oad (ilms, C"S (ilms, %ream!or1s Studios<)nimation, 7aumont (ilm Com.any
and M7M Studios<$ictures# /hey are all .lausible challengers to the big six film
com.anies ho0ever due to the fact that they have no su..ort or bac1 u. from a large,
diversified .arent com.any, they dont have such a successful image to bounce off and
have less guidance related to management and business in general than the ma;or film
com.anies#
What is vertical integration?
4ertical integration is 0hen a .arent com.any organises several different businesses on
the same line, ho0ever they are all at different .oints in their develo.ment e#g# 0hen a
manufacturer o0ns its distributor or su..lier# )n exam.le of this is 0hen a com.any such
as $aramount Motion $ictures 7rou. o0ns $aramount $ictures, $aramount 4antage and
$aramount )nimations, each of these sub:com.anies has different .ur.oses, but they all
contribute to .roducts o0ned by their .arent com.any# $ositive as.ects of vertical
integration include that it is easier to ta1e over other com.anies and easier for those
com.anies 0hen you integrate this 0ay, as they are still inde.endent but ans0er to their
.arent com.any, it also enables the .arent com.any to com.ete 0ith other, inde.endent
com.anies as they have control over a 0ider range of com.anies 0hich gives them larger
grounds to com.ete on# More negative as.ects of vertical integration include that, if the
mar1et that the .arent com.any is 0or1ing 0ith colla.ses, then the integrated com.anies
are all at ris1 and a huge amount of money 0ill be lost, additionally, if there is only a small
amount of integrated com.anies, meaning that there are only a small amount of buyers
and sellers, money can also be lost and com.anies can fail#
LO1 Understanding the Creative Media Sector
What is horizontal integration?
+ori2ontal integration is 0here several com.anies 0ho all do similar things are turned into
one, much larger com.any# )n exam.le of hori2ontal integration could be a grou. of small
com.anies, all 0ho do sto.:motion animation ;oining together to ma1e a large com.any
0ho can su..ly more animators and .roducts to different .laces# One .ositive use of
hori2ontal integration is that the com.any has a much greater mar1et .resence, also there
is a better economy of scale, so the .roduction .rice .er unit is smaller but creates and
large amount of .rofit# %isadvantages of hori2ontal integration include the fact that the
com.any can get too big too =uic1ly, leading to an issue 0ith resource distribution, there
also may be issues 0ith having too many staff or having the ;obs done by se.arate staff
being doubled u. e#g# having too many managers#
What is a conglomerate?
) conglomerate com.any is a combination of t0o or more cor.orations 0ho are engaged
in different areas of business but are ;oined under the same cor.orate grou.. )n exam.le
of a conglomerate is /ime !arner, 0hich included several tenuously lin1ed businesses,
including Internet access, content, film, cable systems and television# %ue to the fact that
they had a 0ide range of different services, it allo0ed them to have economies of scale
and cross:.romotion of services and .roducts#
What is a multinational company?
) multinational com.any is one that o.erates different cor.orations across t0o or more
countries# /hey have come under a lot of criticism for o.erating outside of the +uman
5ights )ct by ignoring the 0elfare of their 0or1ers# )n exam.le of a multinational com.any
0ithin the film industry is Sony $ictures 6ntertainment, 0hich is the entertainment arm of
the -a.anese multinational technology and media conglomerate, Sony, and is based in
California#