Juan Monroy — Outline: Hollywood and the Entertainment Economy

1 Announcements
- 1.1 Summer Session
- 1.2 Course Evaluations
- 1.3 Final Exam
  - Format is similar to the midterm exam
  - Guide available on Course Website
  - Essays posted. Prepare 3/4
2 Megapictures
- 2.1 big money
  - “hitting home runs”
  - “winning the weekend”
  - long runs
  - segue smoothly to home video
  - merchandising
  - licensing
- 2.2 precedent in the 1970s
- 2.3 extremely profitable
  - ET: $400 million
  - Titanic: $600 million
- 2.4 global sales outdraw domestic box office
  - Stallone
  - Schwarzenegger
  - Jurassic Park
  - Independence Day
  - Titanic
- 2.5 films targeted young audiences
  - age 12–29
  - Hollywood genres catered to young tastes
    - science fiction
    - fantasy
    - horror
    - comedy
  - importance of summer movie season
- 2.6 high concept
  - simple ideas
  - elevator pitch
  - three-line slogan
  - “marketing driving moviemaking”
- 2.7 Production
  - high marketing costs
  - computer graphics
  - escalating costs for subsequent franchise films
- 2.8 New Revenue Streams
  - Selling foreign distribution rights
  - Financing arrangements
    - revolving lines of credit
    - tax shelters
    - cash rich investors
  - Runaway Productions
    - Vancouver and Toronto
    - Eastern Europe and former USSR
    - Germany
  - Product Placements and Tie-Ins
    - Back to the Future: Pepsi
    - ET: Reese’s Pieces
    - Josie and the Pussycats
    - Tomorrow Never Dies: Ericsson, Smirnoff, and Heineken
    - Lion King: Toys ‘r’ Us
  - Music Video
3 Packaging
- 3.1 producers with inside connections
  - Joel Silver
  - Jon Peters
  - Peter Gruber
  - Don Simpson
  - Jerry Bruckheimer
  - Michael Ovitz
- 3.2 Packaging
  - actors
  - writers
  - directors
- 3.3 Talent Agencies
  - Creative Artists Agency
  - Endeavor
4 Consolidation
- 4.1 Major Distributors
  - Warner Brothers
  - Columbia
  - Paramount
  - 20th Century Fox
  - Universal
  - MGM/UA
  - Disney
- 4.2 First Wave of Mergers: Diversified Conglomerates
  - Warner: Kinney National
  - Paramount: Gulf + Western
  - Columbia: Coca Cola
  - Universal: MCA
  - MGM/UA: Kirk Kerkorian
  - Disney: Buena Vista
- 4.3 Second Wave of Mergers: Synergy
  - News Corp: 20th Century Fox
  - Sony: Columbia Pictures
  - Viacom: Blockbuster & Paramount
  - Walt Disney: Capital Cities/ ABC
  - Warner Brothers: Time Warner
  - Universal
    - MCA
    - Matsushita
    - Seagram
    - Vivendi
    - General Electric
    - Comcast
5 Satellite Cable Television
- 5.1 1970s
  - Open Skies
  - launch of Satcom I (1973)
- 5.2 increased channel capacity
- 5.3 national cable networks
  - HBO
  - WTBS
  - Showtime
- 5.4 sold rights to films to pay television stations
  - aired movies after theatrical runs
  - financed productions
6 Home Video
- 6.1 format war
  - Sony Betamax (1976)
  - Matushita Video Home System (VHS) (1977)
- 6.2 Hollywood initially skeptical of videocassettes
  - MCA/Universal & Disney sued Sony(1976)
  - copyright infringement
  - additional revenue source to home video
  - second theatrical runs
  - value of older films increased as they were released on video
- 6.3 Popularity of Home Video
  - sales were more profitable than rentals
  - video income eclipsed box office revenues (1987)
  - growth of low budget independent films
- 6.4 Digital Versatile Disk
  - better picture quality
  - consortium: Sony-Philips and Toshiba-Time Warner
  - introduced end of 1997
  - DVD sales were triple of domestic box office
7 Theatrical Exhibition
- 7.1 The Boom
  - popularity of blockbusters and mega pictures
  - new theaters built since the silent era
  - 38,000 screens in the US by 2000
- 7.2 Multiplexes
  - large theaters divided by into two or three auditoriums
- 7.3 Megaplexes
  - Cineplex Odeon
  - Sixteen screens or more
- 7.4 Economies of Scale
  - centralized box office
  - projection booth
  - concessions
  - hits could offset flops
- 7.5 Theater Bust
  - 2000–2001
  - over built theatrical capacity
  - single film playing all over town
  - consolidation and bankruptcy
- 7.6 New Technologies
  - IMAX
  - 3D
  - digital projection