Distribution Channels – Warner Bros

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Kumar Abhishek (A001)Prity Aggarwal (A004)Deeksha Aggarwal (A006)Govind Krishnan (A030)Mayank Kumar (A031)Apporva Parikh (A043)

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Motion pictures and its distribution

The motion picture industry began as a carnival novelty but over the years has evolved into one of the most important tools for communication and entertainment.

Before the proliferation of movie theatres, entertainment was affordable to only a wealthy few.

The effective distribution of movies has made it possible for movies to become the number one mass entertainment medium reaching a wide scale of audience and helping producers recover their costs.

Here we look at the different channels or mediums of distribution that is used by Warner Bros for movies.

Warner Bros. has a robust distribution system that spans 90 countries and supports 6,500 films, 50,000 television episodes and a wide range of ancillary products.

Warner Bros

Warner Bros. Entertainment Inc. was formally incorporated as Warner Brothers Pictures in April 1923 and was founded by four brothers Harry, Albert, Sam and Jack.

It became a subsidiary of Time Warner following the merger and Time Inc. and Warner communications in March 1989.

Warner Bros. Television Group, Warner Bros. Home Entertainment (21% market share in DVD and Blu-ray sales) are market leaders in their respective fields.

• Distribution is the process of a making a product or service available to the consumer for use or consumption through direct channels or indirect channels through intermediaries.

• Based on the number of channels distribution is classified as 0-level, 1-level and 2-level type of distributions. • The figure below shows the different distribution channels for making a good available to the consumer.

Distribution Channels

• The movie distribution industry can be classified into three types. • There are major distributors, who produce, finance, and distribute their own films. • They also finance and distribute pictures initiated by independent filmmakers who either work directly for them or have projects 'picked up' after some

progress has been made. • The other two are independent distributors and mini-majors. Warner Bros. belongs to the first category - they distribute independent films in addition to

their own.

Zero level distribution0-level distribution also known as direct selling refers to the channel in which there is no intermediary between the producer and consumer. Warner Bros makes its movies directly available to the public through its online channel wbshop.com

Online portals

• WB’s directly distribute the movies in the form of DVDs and blue rays through the online shopping portal wbshop.com

• Provision for direct download of the movies

App Editions Two of its blockbuster movies The Dark Knight and Inception were also offered on a mobile app edition charging the same price of $10 as buying the movie from iTunes store

Advantages:

• No revenue sharing as its direct selling. • Amount of sales is directly controlled. • Selling through these channels also creates movie hype

and promotion that will lead to more revenues from other mediums.

Disadvantages:

• Lack of awareness among movie goers about wbshop.com. • Availability limited to a few countries. • Consumers view it as expensive compared to video rentals. • Lack of big screen experience demotivates buyers.

1-Level DistributionBuying / Renting movies through other commercial websites • Distribute movies through various other commercial websites like iTunes,

Amazon, Bestbuy, pinterest.com etc.• Customers can buy DVDs, Blu-ray discs or perform a direct download. • They can also rent the movie online for a specific period of time.

Video Streaming• Licenses Netflix to let Netflix users stream its movies.• Rent out movies on YouTube and Facebook.• Google Play store also offers movie rentals of Warner Bros

Pay per view and Video on Demand• Provided by the cable or satellite company• They allow subscribers to watch movies and sporting events as and when they

desire• Partnered with various cable/satellite companies like Comcast, Time Warner

Cable, Dish network in the US, Sky network in the UK

Television Networks• Television arm of Warner Bros. holds the TV distribution rights to the films in the

Warner Bros.• Pictures library - a massive collection of movies licensed to other cable television

typically after a few months from the theatre and DVD release of the movies.

Advantages: • Tremendous reach of online channels such as YouTube, Netflix,

Facebook leads to volume of sales. • Users flock to Amazon and other e-commerce sites making the

sales easier due to more visibility. • Pay per view and Video on demand are convenient for

customers.

Disadvantages: • Revenue sharing eats up WB‟s share of the pie. • Release dates have to be timed to perfection for theatre sales to

do well

2-Level DistributionTheatres

• Distributor secures a written contract with a theatrical exhibitor which will tie down the exhibitor to pay a percentage of the gross ticket sales after deducting a “floor” or house allowance. Warner Bros. makes deals with several theatres and multiplexes to showcase its movies.

• Entered into an agreement with iMax to produce movies in the wide screen format

International Markets

• In markets outside the US and Canada Warner Bros. enters into joint ventures and agreements to distribute movies or has a country specific division to take care of it.

• In specific markets they have come up various measures to ensure the proper distribution of their movies.

• they offered Pay-Per-View and Video-On-Demand services in China through a joint venture with China Home Cinema, the TV arm of CCTV.

• In India its parent company Time Warner started a WB channel that features a mix of Hollywood films and television dramas from the WB vault.

Advantages: • Wider audience reach in several countries • Theatres make the biggest impact on sales by creating a

positive experience.

Disadvantages: • Revenue sharing eats up WB‟s share of the pie. • Competition with the local film industry

Vertical Integration Vertical integration is the ownership of production, distribution and exhibition by the same studio. French studio Pathé was the

first to do this and had a chain of 200 cinemas in France and Belgium.

The Warner Bros Pictures Group brings together the Studio’s motion picture production, marketing and distribution operations into a single entity. The Group, which includes Warner Brothers Pictures and Warner Brothers Pictures International, was formed to streamline the Studio’s film production process and bring those businesses’ organizational structures in line with Warner Brother’s television and home entertainment operations.

Vertical Integration of Channels

Production

• Warner Brothers produced their first film, ‘My four years in Germany’ in 1918.

• The Warner Brother Studio is situated in Burbank, California and is considered one of the foremost motion picture post production facilities in the world. It is home to 35 soundstages, including one of the world’s largest stages.

Distribution

• Warner Brothers have their own distribution company, ‘Warner Distribution’. It is now one of the world’s largest distributors of feature films, television programs and animation to the international television marketplace.

• The studio distributes around 18-22 films a year. They release them in over 120 countries either directly to theatres or in conjunction with partner companies.

Promotions

• Warner Brothers made deals with fast food companies to promote The Dark Knight movie. They collaborated with Burger King where Batman figurines were included in meals.

• The campaign for the new batman film was released 15 months prior to release and witnessed participants from enthusiasts across the world.

Example of Vertical Marketing System

Production: Produced by Warner Brothers, in association with Heyday Films.

Distribution: Warner Brothers Pictures Company (Distribution)

Marketing: The film was marketed by several of Time Warner’s companies. Including HBO, CNN, another Time Warner company, was able to use its position as a news station

with worldwide reach to promote the film through its Larry King Special programme which interviewed actors before the red carpet premiere.

Exhibition: Warner Brothers used its International cinema chain (New Line) to show the film to a worldwide audience. The studio focuses on worldwide growth of the cinema

industry in order to promote the future success of Warner Brothers Pictures productions.

Conclusion

Distribution and Channel strategy plays a key part in Marketing Planning. Warner Bros.

Over the years has had a robust distribution strategy and is among the most successful movie studios.

It has been able to maintain its position because of its strategy of adopting various distribution channels and offering its films available on different platforms thus catering to a wide range of customers with different preferences.

The focus on online distribution channels that are cheap for the customer also has helped it to reduce piracy.