Include

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Ownership within the your chosen

sector

Who are the big companies

Vertical integration

What is it?
Examples of it within the film industry

Horizontal integration

What is it?
Examples of it within the film industry

Conglomerate

Definition

Multinational

Definition

Sector: Film
Job: Editor
Ownership within film
The film industry is a very large, international, rich sector. Films are made and shown all
across the world, but there is a few house hold name film companies that are more popular
than others. There is a group called The Big Eight which is the top eight film studios.
1) Sony Pictures
2) Warner Bros.
3) Walt Disney
4) Universal
5) Lionsgate
6) 20th Century Fox
7) Paramount Pictures
8) Weinstein Co.
All of these companies lead the film industry in making films, and are leading the way in the
film industry sector. All of these companies have made over 15 films each, and have made
over a million dollars in their 2012 gross.
(Source: http://www.the-numbers.com/market/2012/distributors)
Vertical Integration
Definition: When a company branches out something (like a film) to different areas but
along the same path. Like a company making and distributing their own products, helping to
improve efficacy and cost.
An example of a big company who has done this is Warner Bros. in a big film of theirs
Harry Potter and the Deathly Hallows: Part Two. This was a big part of the film franchise
being the second half of a two part film, and Warner Bros. wanted to branch the film out as
much as possible through their sub branches. HBO is a premium and cable satellite TV
company that is part owned by Warner Bros., this lead to HBO showing a special showing of
the behind the scenes making of the movie before its release, giving a lot of people access for
a peak at the film and raised interest in it, outside from the original fan-base. Another branch
they used was CNN and news network station, they used celebrity Larry King to interview
the cast of Harry Potter and reached out to more people while helping gain viewership for
CNN. Finally Warner Bros. used their own chain of international cinemas to show the film,
helping them save money with distribution. They have also made massive profits from the
merchandise that came with the movie, with clothing, toys and even food being an output
Sam Salameh

from the movie.

(Source: http://ablmedia.blogspot.co.uk/2012/11/vertical-integration-in-warner-bros.html)
Horizontal integration
Definition: When a company branches out into a different area, while staying in the same
area. Creating new material while staying on the same path of the current business. For
example an animation film company, making a live action film. Staying in the boundaries of
film but a different type.
Horizontal integration is a very popular plan to do in the current day, a lot of companies
around the world are taking new routes while keeping the same business model. Especially in
film, a big example being Walt Disney, the word Disney is a household name and that is
part due to horizontal integration. Disney started as a small animation company that created
small cartoons, it is not a huge business making films, toys, books and cartoons. This
branching out is horizontal integration, Disney moved from doing small time cartoons based
at children and families, to big live action blockbusters like Pirates of the Caribbean. This
widely expanded Disney allowing them to reach a new level of audiences of all ages, a
variety of different fan-bases and a high increase of profits and growth; including all the sub
brands that came with the films. Disney have moved onto other branches like books and
made many new films to go along with their growth, growing out with horizontal integration
has let Disney have a big controlling factor of the film industry.
(Source: http://www.marketing91.com/horizontal-integration-explained-examples/)
Conglomerate
Definition: When a film institution or company, enters different type of media and bases it
around the original idea. For example a big company making films, moves into making a TV
series bases on the movie, or a range of books. It is very popular to do with books, people
take their published books and make a movie bases on the book; that is the whole idea of the
harry potter film franchise being based of the books by J. K. Rowling. An example of a big
film company in the Big Eight doing this is Disney once again, moving into toy production
based of their movies, TV series based off their movies and books based of their movies. Its
a cycle that Disney keep doing that keeps them growing and positive in profits. An example
of them doing this is creating a book line based on the movie 101 Dalmatians. Virgin
media is also a great example as they own multiple sectors, for example being the TV service
it already is, it has other businesses like trains and planes.
(Source: https://www.google.co.uk/webhp?sourceid=chromeinstant&ion=1&espv=2&ie=UTF-8#q=conglomerate%20definition%20media)
Multinational
Definition: When a company has more than one sector of its business in another country,
branching out across the world. For example a news company like BBC, having offices in
America. A lot of outsourcing is done in India because it is a cheap place to base offices in
with cheap labour. A lot of media companies move offices to different countries, mostly with
a film location that is regularly used, a lot of companies do this, a big one in the media
industry being Google. Google owning YouTube puts it into a big part of the media
industry, and it has moved from its HQ in America all across the world, for example the
YouTube Space in London.

Sam Salameh

Private Ownership
In the sector of film there is a lot of private ownership, companies owning their own
resources and making their content. Private ownership is defined as being an entity not
owned by the government, is it legally owned by the entity and the government has no hold
over it. This allows much more freedom within film, but costs more as public ownership is
funded by the general public. In film you can be part of a brand, you could be a film company
in a sub sector working for Disney this means you are not privately owned because part of
your company is owned by another. This however allows for a budget and allows funding to
be put into the film. Whereas if you are privately owned then you work under no rule, and are
free to make whatever content you want without running it through a 3rd party. An example of
a privately owned film company is Marv films, it is only owned by Matthew Vaughn, his
company is not joined with a 3rd party, unlike Lucas Films who is no longer privately
owned as they work with Disney. The difference between a private ownership and a public
ownership is that a public company sells shares for its business. Whereas a privately owned
company doesnt rely on shareholders and is an independent business, having shares in a
company means the shareholders have to be kept happy and this could lead to risky ventures.

Independents
Independent films are a big part of the film industry, and can make or break a company.
Otherwise known as an Indie Film is a film made outside of the major film companies like
FOX, Warner Bros. and Disney. It is very important to the film industry as it keeps it alive, it
employs thousands of people and many film festivals like Sundance Film Festival are seen
there to compete for best of show and to be recognised. Big companies like Warner Bros. and
Disney looks for indie films that are popular, and look into hiring the creators to make more,
however with a bigger budget and production crew. This is how an indie film and its
developers can go from making indie films to blockbusters. An example of this happening, is
a director called Noam Murro started by making independent films like Smart People,
then Warner Bros. saw his work liked it and hired him to direct the blockbuster 300: Rise of
an empire.
Cross-media
Cross-media is the term used describe the distribution of content over different types of
media, for example a picture being shared over the internet, or a clip from a movie being
shown on TV. Cross-media is a great way for a film company to advertise their film, for
example a big tactic Disney uses is sharing behind the set photos on social media like
Facebook. Another example if Warner Bros. when filming the Harry Potter films sent a
clips of the movie to different news networks to show on the news, this would keep up the
excitement of the film while proving for cheap advertising. However it can be risky to do, as
some film companies give away too much and end up spoiling the film, Disney did this
with Pirates of the Caribbean in the build up to the third instalment in the franchise. Disney
released a trailer on the internet, on YouTube, Facebook and Twitter and the trailer ended up
spoiling a lot of the film leading to the franchises loss in popularity. Cross-media is used
across all industrys but mostly in film, using all different types of media reaches a much
bigger audience and can draw in new fans.

Sam Salameh

Share of ownership
This is the number of shares the big film companies own of the mass media, so whoever has
the highest share of ownership controls the most of mass media therefore being the
dominating company. In the film industry this is important, as the company with the most
ownership will be the most powerful therefor getting more publicity. Currently (2015) the
Walt Disney Corporation is the most powerful and has the most share of ownership, owning
multiple film studios and film franchises including the biggest of all Star Wars. No company
in the past three years have come close to gaining as many shares as Disney, after Disney
brought controlling shares in Marvel Studios and Lucas Films they became the
controlling factor and a big power.
Mergers and Takeovers
Many companies in the film industry merge with other media companies to work together,
the main sector this is done in, is superhero movies. There has been many takeovers in film,
more current big takeovers would be Walt Disney taking over Lucas Films to be able to gain
the film rights to big franchise Star Wars. However it can sometimes be a bust there are
always risks, for example Warner Bros. merged with DC Entertainment to make movies
based off their line of Superhero comics, but a lot of the films fell flat (apart from the
Batman Trilogy). This merges and takeovers are done for a lot of reasons in film, it may be
for more ideas for films and the chance to make a new franchise or it might be a way to get
more publicity. When Disney merged with Marvel Studios Disney were able to profit from
the films by adding a bigger budget and were able to make a toy line from the films and a
series of video games. Merging is normally done as a tactical move, to boost sales and to
form alliances and generate publicity, whereas takeovers is aggressively buying out a
company to eliminate it as competition, however some companies are quite happy to be
brought out as it could end in a profit.
Cross-media regulation
In cross-media, like in all media there are a set of rules that need to be followed both for
viewer discretion and copyright issues. In film this is to do with companies like Disney and
Lionsgate, stick to the rules of publishing their media across other media. For example when
uploading an image to Instagram a widely used photo sharing application, that their picture
does not break any copyright laws with partnered companied like Marvel studios. Also that
the picture that is being uploaded is PG friendly as it is on the internet where children can
easily see it. An example of this happening is Warner Bros. sharing pictures of old cartoons
created back in 1968, but the pictures were censored because of regulations from other media
sites and companies, deeming the old cartoons racist and breaking regulations. The main
point of the regulations is too stop one singular company becoming too powerful, if these
regulations were not in place Disney would be able to control the whole of the film industry,
and there would be no room for any other company like Lions Gate and Warner Bros. to
flourish.

Sam Salameh

Sources of Income
In film there is a lot of ways to make income off a film, just looking at Disneys toy lines and
books from their films. However to make money off the film is a wide field that can be
approached from different angles. First of all if a studio spends more to make more, then it
normally pays off by this I mean putting a film in 3D. This offers a whole new way to
experience the film and ticket prices for 3D movies are more expensive than a standard ticket.
Another way is that studio can sell the movie to anyway who wants it, so then the person
wanting to use it isnt swarmed with copyright issues. Also the studio might pay celebrities to
endorse the film, making people want to see it as their favourite celebrity has recommended
it. An example of a studio doing this is when Lions Gate Entertainment released the Hunger
Games they had a red carpet event where multiple celebrities praised the film and
recommended to watch it, therefore reaching a bigger audience and generating more profits
for the film.
Product Diversity
In the film industry there is a lot of diversity, films have to be different otherwise they
wouldnt get any recognition. Wherever it is from time setting, genre or characters in the
film, studios tend to go for diversity in films to make them different from the other studios.
For example Disney make a lot of animated films, and focus on making fairy-tale type
stories, whereas Warner Bros. make cartoons but in the humour genre and more recently
dont focus on animated films. There is a lot of controversy around the subject, as people
complain there is not enough diversity within the actors in films. For example in 2013 only a
quarter or all 3,932 speaking characters from films were from underrepresented ethnic groups
and backgrounds. So even though films try to be different it has to do it with caution,
otherwise they could end up upsetting people and that is not good for the image of the
company. A big player in product diversity was Disney when they did the leap from cartoons
to live action films, it opened up a whole new market and a new breed of live action films.
Profitability of product range
This is the amount of profit a particular product or service makes in a particular period, and in
films in normally used to measure the success of film franchises. When a film has more than
2 films it becomes a franchise or series, much like the Hunger Games movies by Lion Gate
that have recently come out as there is 3 films. Studios study the profitability to see if the
franchise is worth carrying on, unless it has been pre-planned as a single film; like Reservoir
Dogs by Quentin Tarantino. DC Entertainment and Warner Bros. did this when it came to
making the Green Lantern superhero movie, the film didnt take off and wasnt very
profitable so both agreed not to carry it on. However with a different movie that did take off
was the Batman films by DC Entertainment and Warner Bros. the first Batman film
Batman begins made a big profit total of $206,852,432 leading to the creation of the
trilogy.
Organisational objectives
These objectives are the overall objectives of the film studio, normally carried out in the long
term. These kind of objectives help employees and the studio to stay on target and not get
side-tracked. In film these are normally set as release dates for films, the studio will set a date
for a film to be released so the staff and directors know exactly how much time they have to
work on the film. Objectives like these are so important in film, as content needs to
constantly be produced otherwise they will fall behind, big studios do this is for multiple
reasons: motivation, time management, planning and availability. An example of a recent film
Sam Salameh

that is still in production being given a release date is Captain America: Civil War the
newest instalment from Disney and Marvel Studios, the film is still in production but has been
given a release date of May 5th 2016.
Licenses and Franchises
Disney is a major player with franchises, owning clothing, toys, books and even amusement
parks based off their films. I have already gone into detail about franchises earlier on in the
essay, but Disney is a great example of having licenses and franchises, recently owning the
licence for Star Wars they have released a whole new range of toys and clothing based on
their new ownership and already owning their Micky Mouse franchise, are at the front of the
film franchise sector. Another example is Warner Bros. opening a franchise in Harry Potter
clothing and toys, branching out to even a video game franchise.

Competitors
There is plenty of competition in the film industry, with films going head to head for better
reviews, views and profit. This goes from independent films to big blockbusters, the big
example of a competition that is still going on, for views, fans and diversity it between
Disney with Marvel Studios and Warner Bros. with DC Entertainment. The two mergers are
still going head to head in the battle for the superhero film favourites, with Marvel releasing
family friendly movies that reach out to a younger audience, compared to DC releasing films
aimed more at a mature teenage audience above the age of 13. This is just one of the many
rivalries in the film industry but perhaps the most famous, with Marvel releasing multiple
films yearly and DC coming with a whole new trilogy of movies; it is evident how much
competition there is.
Customers
Different films reach out to different audiences, its the same with studios too. Disney focus
on making family friendly entertainment that is PG acceptable and doesnt stray from that.
However not all studios and creators have the same strategy, some companies focus on an
older audience with mature content and illegal acts being committed. For example Quentin
Tarantino who is an independent film creator focuss his film on an adult audience, with lots
of violence, crime, mature scenes and drug use. Whereas Disney will mainly focus on family
films as that is their main demographic. To give off an idea of how much Disney has been
working towards their family friendly view, is with their global revenue from the last 9 years.
Starting in 2003 with a $33.75 billion revenue, then 7 years later in 2010 having a $38.06
billion revenue and when all the family friendly Superhero movies came out in 2012
having a $42.28 billion revenue. Lastly entering 2015 with a huge $52.47 billion revenue.
(Source- http://www.statista.com/statistics/273555/global-revenue-of-the-walt-disneycompany/)

Sam Salameh

National and Global competition and trends

With competition in the film industry, it doesnt consist of just what is in the studios country
its whats happening all over the world. For example western films may be back in fashion,
as people are showing more interest in history, or spy films with lots of action might be
trending. This is where the competition lies as they first to make a film based on the current
trend normally gets the best coverage, in this current day the trend is Superhero movies and
Disney and Warner Bros. are rushing to get them out as soon as possible. However that isnt
the only trend as in another country crime films might be trending, so a film studio might
think it will be good to follow that trend, so the competition is moved to another country.
Disney is the biggest film production company but can only focus on one major trend at a
time, so to get some coverage other smaller production companies will try go for another
trend Disney is avoiding and compete for that coverage. However it is important not to
exploit the trend in film, if too many films are being made then the trend may lose traction
and the excitement could die down.

Sam Salameh