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Chapter 8 Entertainment Industry Lesson 8.1 Entertainment Profits Lesson 8.2 Distribution of Entertainment Lesson 8.3 Marketing and Music Theater Lesson 8.4 Awards and Annual Events Lesson 8.5 Entertainment Marketing Careers Lesson 8.1 Entertainment Profits GOALS Explain profit and cost-cutting strategies in the motion picture industry. Calculate film revenue, and discuss the importance of foreign markets for movies Describe financing in auto racing entertainment. Entertainment Profits In the U.S. a few major corporations take home most of the profits from entertainment marketing. Independent filmmakers create their works without the financing and huge staff of major production studios. They have a hard time getting their movies out but are creative in finding ways. Major movie studios The history of the movie industry starts with the growth of the large studios and their control of the industry. Studios seek out partners to help produce, promote, and distribute films. The large studios take on the role of financial manager in an effort to spread the economic risk of making a movie. Studios today usually have no long-term contracts with movie stars and no longer have huge facilities used for production. A movie studio can have record attendance and still not make money on a film if they have spent too much money to produce or distribute the film. Recent Successes Titanic was the first movie to earn $601 million in North America. Other high grossing movies are Star Wars $461 million, E.T. $400 million, and Jurassic Park $357 million. The Blair Witch Project was an independent film made in just five days for less than $50,000 that brought in as much as $500 million in domestic and foreign ticket sales and video sales. Toy Story was the first purely computer generated feature length film to earn $200 million at the box office. The Lion King was the first animated film to reach the $200 million level. Cost-Cutting Strategies Distribution of movies is a major cost that until recently meant film had to be printed and transported to each movie theater. To control distribution costs and improve revenues from movies, major studios have cut the number of wide release movies. A wide release is a movie released in more than 2,000 theaters at one time. Low-budget movies have little money for advertising so their creators capitalize on the promotional budget of major multimillion movies by using a similar theme in their title. The studios recruit talented unknowns to star or direct to save money. Studios cooperate with other companies to promote and distribute the movie. Profit and Opportunity A film’s profit is the money that’s left after all the bills have been paid. The profit from an American film depends largely on the popularity of that film overseas. To figure profits, movie makers look at the ratio of tickets sold to the cost of production. They also look at income from merchandising, soundtracks, relationships to theme parks, global releases, U.S. ticket sales and global ticket sales. The movie distribution system differs in other countries. Foreign governments might have restrictions that would keep American films from being released in their countries. Ex. India no longer shows dubbed versions of English-language films to prevent corruption of Indian taste. Ex. China’s government must approve the content, filming location, and distribution of any films released in China. The China Film Co-production Corp. is seeking ways to co-produce movies Stock Car racing is financed similar to movies The difference between entertainment and sports is determined by the viewer. Movies are entertainment. Some people consider stock car racing to be entertainment. Stock car racing is one of the fastest growing forms of entertainment. Stock car racers face the same financing problems that film producers do. Racing groups have come up with two primary ways of securing the financing for their expensive form of entertainment. Stock Car Racing as Entertainment A mutual fund was created called StockCar Stocks Index Fund that is made up of stocks in firms that sponsor NASCAR drivers to help in financing. (National Association for Stock Car Auto Racing). In NASCAR, one sponsor works with one individual racer and pays for that racer’s car and its upkeep. Fans are very loyal to NASCAR sponsors and exhibit a high degree of brand loyalty for products from the stockcar sponsors. If the sponsor cancels, the driver is in effect stalled until another sponsor comes along. Tobacco companies have been major sponsors of racing for more than two decades but their recent ban is going to call for more non-tobacco sponsors to replace their huge financial contribution. Lesson 8.2 Distribution of Entertainment GOALS Understand the different kinds of entertainment distribution. Discuss Promotional strategies for motion pictures. Distribution Many methods of entertainment distribution today. – Traditional television network broadcasting – Cable television networks – Satellite television – Theater Movies – Rental Movies – Internet online video Use of the distribution system to maximize promotion of an entertainment event is necessary to the success of the entertainment. The evolution and continued change of the distribution system presents new challenges to the industry. Cable Television Cable technology continues to improve. The quality of transmission as well as the number of channels available continues to expand. Cable channels are becoming more specialized as niche channels by targeting specific demographic markets. Cable programmers promote their newest shows at the Western Cable Show in Anaheim, CA each year to cable operators. Cable viewing has surpassed traditional network viewing. HDTV offers better resolution than a regular analog TV. MOU Major cable industry companies such as Time Warner and Cox Communications reached a mutual Memorandum of Understanding (MOU) with major consumer electronics manufacturers. An MOU is a written agreement that contains voluntary technical standards for high definition programming that is compatible with any cable provider. The MOU encourages the production and distribution of high quality digital content. Satellite Television Satellite TV competes with cable in areas where cable is available, but it is the only way for people in rural areas to receive tv. One drawback of satellite TV is that the dishes often cannot pick up transmissions from local stations. Consumers who want satellite access must buy a dish and then subscribe to a monthly service. Internet Entertainment Selling through the Internet is called e- commerce. The Internet is becoming the most valuable place to advertise. Many web sites blend entertainment, shopping, and news. They offer incentives to members/guests in an effort to entice them back. Data are collected about each visitor. Mega-Distribution Broadcast webs are groups called affiliations of television networks, production studios, and related entertainment firms that produce shows inhouse for their group. This kind of business structure in which one company controls several different areas of the same industry is known as vertical integration. Disney affiliates are an example of a vertically integrated broadcast web. Vertical Integration Vivendi Universal SA is a model for vertically integrated media companies in the 21st century. It is a conglomerate of entertainment firms which includes Universal Pictures, USA Network, HSN.com, Ticketmaster.com, Expedia.com, and Hotel Reservations Network and other music and publishing units. Vivendi has the ability to market both advertising and entertainment to the world through movie theaters, television, telephone, and the Internet. This media giant can advertise online and the Internet provider can advertise on the television network. Movie Marketing Movies shown in theaters and movies rented from the video store include advertisements for other movies. These ads are called trailers or previews. Trailers are critical to attracting an audience. When a movie is promoted on TV, on the Internet, on pay-per- view, in retail stores at a point-of-purchase display, and in movie trailers, it helps attract viewers to all the distribution channels including home movie rental. A trend in the “kidvid” promotion is to bypass releasing movies in theaters and go directly to rental and sales of video. Point-of-purchase (POP) displays are set up by the checkout area and are an effective promotional tool. Lesson 8.3 Marketing Music and Theater GOALS Understand the promotion of rap music. Explain two kinds of theater promotion. Discuss the legalities of music distribution. Today’s Top Music Rap and hip-hop are now the top-selling music in the U.S. Today’s hip-hop culture has expanded from its African-American beginnings and now appeals to white, Latino and Asian youth. Rap’s use of sampling as a form of promotion has helped it become a huge commercial success. Sampling is the inclusion on a CD of excerpts from the music of other artists. Mainstream Rap Madison Avenue in New York is the home of American advertising. Madison Avenue marketing firms like the revenue-oriented spirit of rap and have financed rap’s move into mainstream America. Rap artists want mass appeal to lead to larger pay-offs. The original content of the lyrics of rap was rebellious and anti-establishment with sarcastic or political messages. As rap artists focus more on messages that bigger record labels can accept such as entrepreneurship and social activism, they are increasingly touching the hearts and wallets of more consumers. This change in lyrical content has helped hip-hop become more popular. Promoting Theater The principal theater district in Manhattan is located on Broadway, between 42nd Street and 59th Street and is considered the premier sites for theatrical production in the U.S. The top five longest running shows on Broadway are Cats, A Chorus Line, Oh! Calcutta!, Les Miserables, The Phantom of the Opera. Traditional promotional strategies for Broadway theater include advertising on billboards, radio, television, in upscale or theater magazines, word of mouth, posters, university arts appreciation classes. Distributing Music Technology has brought change to music distribution. Concert bookings as well as distribution channels for music are in a state of change. Music promoter, Robert F.X. Sillerman’s company, SFX, now produces almost 98 percent of the major concerts in this country. Music is distributed by concerts, MP3s, CDs, cassettes, CD singles, cassette singles, TV concerts, videos. MP3 A free software program called MP3 (Mpeg Layer 3) can copy music from the Internet. The copyright laws that apply to records, tapes, and CDs apply equally to MP3. Before downloading an MP3 file to listen to it, make sure the owner of the copyright has given permission for listeners to download MP3 versions of the song. Many musicians are bypassing record companies to market directly to their fans through the Internet. The practice has been for musicians to release CDs every year or so with a group of songs. On the Internet, musicians can release one song at a time. Musicians are setting up a new relationship with fans. Making money using this new marketing technique will be the challenge. Lesson 8.4 Awards and Annual Events GOALS Explain the promotional value of entertainment awards. Discuss ways in which entertainment is distributed. Awards Influence Sales Awards ceremonies are a promotional tool for entertainment and a way of recognizing achievement in the profession. In the entertainment industry, recognition also brings money, current acclaim, and increased potential for future success. Annual entertainment award shows on television complete for the attention of the viewers. The Academy Awards was moved to Sunday which is the biggest TV-watching night of the week. The big four are the Grammys for music, the Tonys for Broadway shows, the Emmys for TV, and the Oscars for movies. Other award shows include: The MTV Video Music Awards, VH1 Music Awards, Rock and Roll Hall of Fame inductions, Screen Actors Guild Awards, and the Country Music Association Awards, BET Awards, and CableACE Awards. The number of award ceremonies continues to increase because fans continue to watch, sponsors continue to buy ads, they generate lots of publicity and add a level of status to the entertainment receiving the nomination or winning the award. The Oscars The most famous and prestigious of the entertainment awards are the Oscars given by the Academy of Motion Picture Arts and Sciences. An Oscar nomination is a promotional bonanza for a motion picture, director, studio and star. No more than five nominations are made for each category of award each year. Both winning an award and getting a nomination have promotional value that money cannot buy. The Oscars have the second-highest TV viewership after the Super Bowl. The pre-show includes shots of stars arriving and spot interviews. A movie that wins Best Picture is likely to bring in an extra $100Million in ticket sales plus prestigious publicity. The Grammys The National Academy of Recording Arts and Sciences (NARAS) is an association of more than 13,000 musicians, producers, and other recording professionals. Nominated by a committee, the Grammy winners are selected by a vote of the membership in 92 categories. As with the Oscar, the accompanying publicity that comes with winning a Grammy cannot hurt the marketability of the winner. The Emmys The Academy of Television Arts and Sciences presents the Primetime Emmy or excellence in nighttime television, and the National Academy of Television Arts and Sciences presents award for daytime television. Emmy Awards bring significant attention to television shows and the viewing audience can be expected to increase for shows that win or that have winning stars. Ex. Camryn Manhiem won an award for The Practice and dedicated it to “all the fat girls” and picked up new viewers in that category. The Tonys The Tony Awards are named after Antoinette Perry who served as the head of the Board of the American Theatre Wing. The awards are given to professionals in theater for distinguished achievement and not for best in any category. The Tonys are more of a special-interest award because of the travel and expense involved in getting audiences to the Broadway plays in New York. Trade Events Getting potential customers together in one location so they can hear and see promotional information about products is the purpose of trade shows. Trade shows focus on businesses that are related. Seasonal or theme events are centered in geographic areas and they market directly to the people who will attend them. The Fringe Festival in Edinburgh, Scotland is a combination trade show and seasonal event. Producers, agents, directors, and critics attend to see the new artists and productions that shape the direction of international theater for the coming year. As they shop for acts, they plan new products to promote. The actors and playwrights are selling their products. The Fringe has grown into one of the most significant annual promotional events for the world theater stage. Lesson 8.5 Entertainment Marketing Careers GOALS Discuss the preparation needed for a career in the entertainment marketing field. Comprehend the skills needed for specific jobs in entertainment marketing. Marketing Jobs According to the Occupational Outlook Handbook, a publication of the Bureau of Labor Statistics, opportunities for marketers, advertisers, and public relations specialists will be among the fastest growing in the nation through the year 2006. To prepare for a job, gather information about the job, take appropriate courses in school, and market yourself. Public Relations Specialists Public relations specialists build and maintain positive relationships between their employer and the public. They look out for the best interests of another. Their responsibilities include keeping the media and consumers aware of the company or person they represent. In the entertainment business, a specialists might include actors’ agents, or studio press agents. Marketing and Advertising Managers Marketing Managers are people who develop products, sales strategies, and pricing for products. The potential to earn high salaries exists, but long hours, weekends and evenings are common as is the need for substantial travel. Responsibilities include market research, strategic planning, sales, advertising, pricing, and product development. Skill Requirements Marketing demands people who are able to handle multiple tasks at once. Gaining experience in related areas, internships, and volunteering with community groups can lead to job opportunities. The three skills most desired are math, communications, and interpersonal skills. Ability to communicate persuasively, both orally and in writing is vital and the ability to work as part of a team is critical. Other skills needed in marketing are: creativity, initiative, good judgment, problem-solving/research skills, outgoing personality/self confidence, understanding of human psychology, enthusiasm for motivating people, maturity, resistance to stress, flexibility, and decisiveness.
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