Chapter 8 – Entertainment Industry Lesson 8.1

Entertainment Marketing

Objectives Explain financial strategies in the

motion picture industry Calculate film revenue, and discuss the

importance of foreign markets for movies

Describe financing for auto racing.

Essential Question – In what ways do movies make money?

The Global Entertainment Industry is expected to reach $1.4 TRILLION by 2015.

In 2011, the gross box office sales (movies at the theater) was $10.1 BILLION in the United States!

In 2011, the global box offices sales reached $32.6 BILLION!

The entertainment industry is considered the second largest export (after agriculture) in the US!

Entertainment industry has the largest payroll of any business in this country!

The Profit makersFor the last ten years, movie ticket sales

have increased in the USOnly 50% of movies actually make a profit! Studios average cost of film production and

marketing is $89.4 million per year!Selling of DVDs and international box-office

sales are sometimes larger sources of income than the actual ticket sales

Titanic was the first movie to earn more than $600 million in North America

International box office sales were over $1.2 billion

Titanic was still being shown in movie theaters three days before the DVD was released!

What are the top 10 highest grossingmovies?

Wide release – is a movie released in more than 2,000 theaters at one time

Preview – is the release of a movie the evening before its official opening. Usually held between 6-10pm.

Matinees – or pre-evening shows, generally have less audience and lower-priced tickets

Low-budget movies – generally those costing less than $250,000 to produce and have low advertising budgets.

Profit – the money left after all bills have been paid.

Profit from an American film depends largely on its popularity overseas

Generating Film Revenue – -To figure profits, moviemakers look at several

elements of the film process: Ratio of tickets sold:cost of production Income from licensed merchandise, soundtracks,

relationships to theme parks, global releases and domestic/foreign ticket sales

Blair Witch Project – cost $50,000, grossed $36 million during first three weeks!

Worldwide distribution revenue is critical for movie profits

Income from an international release of a movie can increase box office take by 50-100% over domestic ticket sales

Domestic vs International sales for Harry Potter movies

Harry Potter and the Sorcerer’s stone

HP and the Chamber of Secrets

Domestic $317m $262m

International $658m $604m

Not always profitable - Theater owners and movie distributors in

India said they would no longer show dubbed versions of English-language films

Want to prevent corruption of Indian taste 1.3 BILLION people in China = great

market for movies, but, unfortunately: Pirated movies are abundant Chinese government must approve the

content, film location and distribution of films “Django Unchained” pulled

(on wiki)

Difference between entertainment and sports is determined by the viewer

Car racing – sport or entertainment? Racers have the same problem film

producers have –

Where do race groups get money to finance their form of entertainment?Mutual fundSponsors

Mutual fund – investments from stocks Sponsors – they pay for the car and

upkeep. Can have numerous sponsors, but usually one big one

Chapter 8.2

Objectives

Understand the different kinds of entertainment distribution

Discuss promotional strategies for motion pictures.

Essential Question – how are movies distributed?

Distribution of Home Entertainment In the early days it was just…

How they made cartoons in the 1930’s

Distribution of Home Entertainment

Now we have….

Cable Mania

In the late 1990’s, the number of cable TV networks, esp those with digital channels, increased greatly.

Original cable space was limited, but digital cable allowed more channels

Cable TV programs are sent through the air, picked up by a master antenna and delivered to homes via cables

Cable Mania (cont’d)

Books’ guess 29 million households in US would have an HDTV by 2008

Actual = 35 million in US in 2008 Now = 53% of all homes have HDTV

Approximately 125 million homes in the US Means approx 63 million households have a

HDTV Wow!

MOU – (memorandum of understanding) written agreement that contains voluntary technical standards.

Source: Cable & Telecommunications Association for Marketing

Satellite Television

Satellite TV competes with cable But blows cable out of the water

when it comes to rural areas

Internet Entertainment

Ignore the book, lets talk

Mega-Distribution

Broadcast webs – (not the WWW) are groups of TV networks, production studios, and related entertainment firms that produce shows inhouse for their groups.

Vertical integration – one company controls several different areas of the same industry

Example - Disney

Vertical Integration Example

Universal Pictures

Universal Theme Parks

USA Network

Music & publishing business

USA Interactive (Subsidiary)

HSN.com

Ticketmaster.com

Hotel Reservations Network

Expedia.com

Movie Marketing

Trailers – Movies shown in theaters and on video include advertisements for other movies/related music/merchandise

Transformers 3Avatar Paranormal Activity 3Step Brothers

The Blair Witch Project – developed a web page that made the story look like a real news article. Trailer

See it at home

For a HakimBuck- what does DVD stand for? Digital video discs

No longer need to travel to first and second run theaters to see films DVD’s/Blue ray

Point-of-purchase (POP) displays – set up next to the checkout area and are an effective promotional tool

Examples…

POP displays

DVDs – how do we get them? Walk in stores Redbox/Blockbuster Express Netflix Online Streaming

Extra Credit

In your travels, if you see a POP display, take a picture! Picture can be either on a phone or camera

Show me the picture, tell me where the POP display is and the extra credit is yours!

Homework You need to survey 15 people, that live in different addresses and see if they have either: cable, satellite, digital air, or none. The people surveyed CAN NOT be from our class!!

Your survey results, and the student’s name you asked, needs to be inputted in either Microsoft Excel or Word in a logical manner I can understand, with your name in it and submitted into the Usershares (I:) folder

In Word/Excel Create a graph or chart of your choice using your survey data

Results will be tallied and your document graded for: Completion How well I can understand it

Due: Three days from today’s class

Understand the distribution of music Discuss the legalities of music

distribution Explain two kinds of theater promotion

Essential Question – What is theater promotion?

Listening to music of your choice is a popular form of entertainment for all ages

The music industry is constantly changing to keep up with new technology

How CDs are made

Digital music is delivered to TVs through both cable and satellite providers

Listened to by as many as 75% of subscribers, daily

Where do you listen to digital music?

Concerts – › A major source of revenue for musical artists› Traditionally, fans stood in line to buy tickets

– but not anymore› The internet offers a fast and convenient

alternative for purchasing tickets› Pre sales- take place at web sites affiliated

with the concert artist, such as fan club web sites

› Bieber Fever!

MP3- what’s it stand for?› Mpeg Layer 3› Tougher for musicians to “sell” their music

now because people are downloading it for free

RIAA – (Recording Industry Association of America) uses software to track computer users online to see who is illegally downloading MP3s

Many musicians are bypassing record companies to market directly to their fans through the Internet.

Benefits› Don’t have to pay high costs› Can release one song at a time instead of

a whole CD

Word-of-mouth is a major source of promotion for Broadway shows

Still use typical distribution channels (posters, TV ads, and newspaper ads)

The Oscars – 6,000 members determine each Academy Award, or Oscar.› They vote on motion pictures, directors,

studios and actors› Second highest TV viewership after the

Super Bowl The Grammys – Awards for music

artists and music producers

The Emmys – awards for television shows

The Tony Awards – awards for theatrical (theater) shows