Chapter 8 Hollywood International The Hollywood Majors ColumbiaTriStar

Chapter 8: Hollywood International

The Hollywood Majors ä Columbia—Tri-Star ä Disney ä MGM/UA ä Paramount ä 20 th Century Fox ä Warner Bros. ä Universal

Factoring Costs ä ä Gross vs. rental Negative cost – all costs incurred by a film production ä ä ä Salaries for talent Pay for technical crew, costs of set design, etc. Lab costs Publicity and promotion ‘Points’ ä Percentage of box office gross taken by top directors, stars

Factoring Costs ä Returns due profit participants ä Distribution fee ä Split with exhibitors ä By late 1990 s, average neg cost was $60 million ä Average cost for publicity was $20 million

Ancillary Markets ä Home video ä DVD, VHS ä Pay cable, pay-per-view ä Broadcast television ä Product licensing ä Product tie-ins

Diversification: Time Warner ä Media operations in four core areas ä Entertainment ä ä ä ä Film and television production Broadcasting Records Music publishing Cable Network Programming Cable Television Systems Publishing ä ä ä Books Magazines Direct marketing

Product Placement • Studios derive revenue from on-screen placements • Placement agencies (e. g. , Associated Film Promotions) negotiate deals for clients with studios • Result: Film is an advertising medium

Center for the Study of Commercialism, 1990 study ä TOTAL RECALL: 55 references to 28 brand name products ä GHOST: 23 references to 16 brand name products ä PRETTY WOMAN: 20 references to 18 brand name products

Product Tie-Ins ä ä Studios license hit films/characters for promotional campaigns related to a film WHO FRAMED ROGER RABBIT: ä ä $12 million in ads by Mc. Donald’s $10 million in ads by Coca-Cola These ads featured the animated characters from the movie Tie-ins help defray a studio’s marketing costs

THE INDUSTRY TODAY ä ä ä The Major Studios are Subsidiaries of Large Communications Empires Film Production Feeds the Ancillary Markets Synergy: All Revenue Streams In-House BUT production costs are high and profit margins are low Film Becomes Software for Interactive and Home Entertainment Systems

International Influence of Hollywood ä Adoption of Hollywood style by foreign filmmakers ä Emigration of foreign filmmakers to the American industry ä Remakes of foreign films ä The Vanishing (1988, 1993)