Lecture One Dr. Melodie R. Phillips

Mediated Entertainment◦ Filmed Entertainment

Movies TV

Recorded EntertainmentLive Performances

◦ Art◦ Concerts◦ Theatre

Destinations or Places◦ Vacation Activities

Sports, GamblingBooks, Magazines, NovelsCollectiblesVideo games

Great % of disposable income spent hereUnique approaches to marketing these products/servicesProsperous economy shows tremendous growth potentialAdvances in technology – video games, InternetIncreasing importance of leisure time

◦Ex: Europe vs. U.S. vacation time

News•PR coverage often involves deals• “News” shows must generate ratings• “News” is no longer objectiveFilm Reviews• Is the quote legitimate?•Press Junkets and trips for criticsRadio – pay for play

Entire industry that has only been around 100 years or soIt is a mixture of art and commerceHas a profound effect on behavior, culture, politics, and economics

Idea is to make movies that attract customers Goal to attract enough customers to cumulatively pay for costs to be recouped Additionally must make enough profit to satisfy investors

Extremely perishable commodity◦Value only as long as it is on people’s minds and is relevant to their frame of reference

Can achieve a level of rejuvenation when enter international and video life cycles

Theatrical exhibition – First Tier• Up to 90% gross to distributor (Ex: The Grey)• 40 - 60% goes from $1.50 theatres, drive ins

2-4 months later – DVD rentals and sales – Second Tier (Ex: DRIVE)• Share based on a % of sales or purchase at “for rent”

priceHome TV Pay Stations (HBO, Showtime, etc.) (9-12

months post b.o.) – Third Tier (Ex: Black Swan)• Based on a fee of % of subscriber fees

Network Television Viewing – Fourth Tier (2-3 years post b.o.)• Negotiated payouts triggered by each run• Made for TV Movies can be sold to local affiliates

or overseas markets for additional revenueExceptions – Rocky Horror and weekends

Similarities◦ Production

encompasses R&D, manufacturing

◦ Distribution can be compared to wholesaling

◦ Exhibition compares to retailing

Differences• No other industry is a

single product manufactured for tens of millions of dollars with no real assurance of purchase

• Public takes away with them a piece of the product in terms of memories

• First dollar deals – stars, directors and producers take % of every revenue dollar even if studio has not recovered production costs

Paid Attendance◦B.O. receipts, concert tickets sold, attendance at political fundraisers, charity giving at celebrity cause

Q Score◦Measures familiarity and appeal

Celebrity, Brand, Athlete, etc. graded by the public on 6 factors• In your opinion indicate: The performer is …•A) One of my favorites•B) Very good•C) Good•D) Fair•E) Poor•Someone I have never heard of or seen

• Score = (responses to A/sum(A through E)) *100

• Yields familiarity and appeal

TVQ rates broadcast television programs Cable Q rates cable television programs

Performer Q rates living celebrities Dead Q rates the current popularity of deceased

celebrities

Sports Q rates sports figures

Cartoon Q rates cartoon characters, video games, toys and similar products

Brand Attachment Q rates brand and company names

Kids Product Q rates children's responses to brand and company names

Polling Research• Assess public’s attitudes regarding

Believability Compatibility with causes and products Overall communications skills Ability to change impressions or attitudes

Ratings Services• TV, radio

Incidental measures such as size of fan base, # letters written to celebrity, posters, calendars, videos/DVD sold, gossip column mentions, covers, log-ins and searches

First Sale Doctrine - retailers have the right to rent any legally purchased copy of a movie. Video stores could go buy copies of movies with these extras at Wal-Mart or Best Buy and then rent them to consumers!

Studios challenged video store owners over this doctrine in the 1980’s

The major player in building and shaping the genre of Science Fiction

30 million copies of his novels in 58 languages

21 Tarzan movies 364 radio programs 212 newspapers

with Tarzan comics◦ 15M circulation

Strategies to improve sales? Rentals too easy and cheap! Profits in sales (not rentals)Cut out bonus features from rentals, offer 2 discs with BluRayGrow BluRay market – cut prices add featurestangible sales fell 5.8% but spending increased 10%

Digital Sales climbing to offset tangible DVD and rentals up 19% and a 30% market sharre

Physical rentals from brick and mortar stores fell 24% in 2012 to $1.2B

Kiosk rentals up 15.9% to $1.9B

Movie Meter◦John Carter986th

◦Hunger Games17th

◦Avengers 26th

John Carter $250-275M

Hunger Games $80M

The Avengers◦$220M

Superman is like John Carter in reverse … ◦ Krypton much

larger and denser◦ Has John Carter

like skills on Earth◦ Differs in that he

protects his anonymity and was not a warrior

After failing to reach an agreement to syndicate John Carter’s adventures on Mars in 1933-1934, King Features releases Flash Gordon.

Flash Gordon Sunday page debuted three days after a delayed response to ERB.

The first 46 Raymond strips indicate Flash Gordon's debt to ERB's John Carter adventures.◦ many of the plot lines are lifted

from ERB's Mars and Venus novels ◦ Flash is described as being a

superb swordsman with powerful earth-man muscles which allow him to make giant leaps.

Interstellar Romance

Space Western Man into

Superman Strange Creatures

◦ Woola/Chewbacca Culture Shock Fighting for Aliens The Princess and

the Rebellion

Business of ERB was not well attended to and became part of the public domain prematurely

Dejah Thoris: Martian Princess◦ By: Normal Bean◦ Used a

pseudonym because concerned about reception of story

Originally product developed just for theatrical releaseLater embraced television, airplane and college viewingsNow the single most lucrative market is videoYear to date spending on DVD purchases is $10.2B flat as compared to last year; rentals up 1%

ProductCast – Dark ShadowsSpecial Effects – Avatar Soundtrack – Saturday Night Fever, The Matrix, O Bro Where art Thou?Plot – Sixth Sense, Fight Club, Donnie Darko, Planet of the ApesCinematography – Inception, Hugo, The Aviator

PriceCost of Production – Avengers $220M) b.o. $1.52BNapoleon Dynamite ($400k) Marketing Expenses – Independence DayBox Office to DateAvatar ($2.78B); Napoleon Dynamite ($44.5M)

PlaceTiming of release – Scorpion King, The Avengers; BattleshipWide (Dark Knight Rises) vs. Tiered Release (Silver Linings Playbook)Rating of the Film – Beverly Hills CopPoor – South Park (R), Dinosaur(PG)

PromotionPR – Beautiful MindEvent marketing – Days of ThunderPromotions – Finding Nemo, Star WarsAds and Trailers – Independence Day, The Dark KnightMerchandising – Lion King

ProductCast –Special Effects –Soundtrack – Plot –Cinematography –

PriceCost of Production –

Marketing Expenses –

Box Office to Date

Place

Timing of release – Wide vs. Tiered Release

Rating of the Film –

PromotionPR –

Event marketing –

Promotions –Ads and Trailers Merchandising –

Movie Companies are now into:

◦ Satellite. Laser, Pay per View licensing – any venue to get the movies exposed to the consumer

◦ Movie theatres, book publishing, theme parks, music, merchandising and real estate

In the late 40’s U.S. Justice Department forced some divestment of vertically integrated firms: lost exhibitionLegal environment changed and now see syndication, home video, music and merchandising in the family of companies

Through 1960’s• Pictures released locally and advertised with a

mix of newspapers and local TV• Distribution company named Sunn Classics

began experimenting with network TV and this has had a major impact on cost increases!

• As studios recognized the cost efficiency of national ads – they had to release nationally so print runs increased fro 500 to 1000 to 2000 or more to maximize audience access.

Massive releases of 2000+ leaves little room for independent distributors

Strategy of the independent is to carve out limited release patterns and then ride a wave of positive WOM and profits (i.e., Blair Witch).

Breakout independents can be hugely profitable because their costs are generally a small percentage of studio products.

Rewrote the economics of the movie businessReleased in 1977 broke upper limits of traditional grossing

◦ $798M WWRedefined worldwide income in books, records and other media

Star Wars: Episode IV - A New Hope 1977 • Budget $13M US Gross $461M WW Gross

$798M Star Wars: Episode V - The Empire Strikes Back 1980

• Budget $18M US Gross $290M WW $534M Star Wars: Episode VI - Return of the Jedi 1983

• Budget $32.5M US Gross $309M WW Gross $573M

Star Wars: Episode I - The Phantom Menace 1999 • Budget $115M US Gross $431M WW Gross

$922M • Rerelease in February 2012 yielded another

$40MStar Wars: Episode II - Attack of the Clones 2002

• Budget $115M US Gross $311M WW Gross $648M

Star Wars: Episode III - Revenge of the Sith 2005 • Budget $113M US Gross $380M WW Gross

$848M Total Budget $406M US Gross $2.18B WW Gross $4.32B

Soundtrack netted 2 top ten radio play hits, the original theme and the Cantina Band song.

Both the Star Wars and The Phantom Menace soundtracks have been certified platinum by the RIAA.

Attack of the Clones and Empire Strikes Back are certified gold by the RIAA.

Over 100 video games spurred from both film material and the Expanded Universe• Games released for almost all platforms

including Sega, PS3, Xbox 360, Nintendo, Wii

Initially released on May 25, 1977Re-released on 7/21/78, 8/15/79, 4/10/81,

8/13/82 and 1/31/97Ad budget of $4 millionGross receipts of $798M worldwideRental $270.92MDVD Box set - $100M first dayBlue Ray release of Star Wars: The Complete

Saga set Blueray record $84M week 1 ($140 set).• 515,000 copies in North America

U.S. TV rights - $11M Spike TV 2008-13Series has grossed over $1.8B (6 films) vs.

James Bond (21 films) $1,272B and Harry Potter 1,119.0B (4 films)

• In 1977 movie licensing was hardly a business• No tie-in toys• No fast food promotions

• Star Wars series generated $10.5B in merchandise sales

• 400 licensing agreements worldwide granted for Revenge of the Sith alone

• Merchandise sales to date are 3X box office receipts of the movie franchise

• Studios generally make 10-12% on licensing; Lucas negotiates even better %’s

Composed by John Williams (former maestro of the Boston Pops)

Composed all 6 Star Wars filmsNominated for 45 Oscars; 5 have won

including Star Wars: A New HopeRevived grand symphonic scores in late

1970’sUsed technique called “leitmotif” in which a

melodic cell signifies a character, place or mood

Research shows that consumers that of those willing purchase soundtracks, 50% do so within 1 week of seeing the film

Main theme only used for title crawl in subsequent Star Wars movies

Walt Disney is the only individual to have more academy award nominations than John Williams

Video games TV programming Book publishing 3-D release of the original films (Phantom Menace opened

this month in 3D) Hasbro has toy licensing deal through 2018 and is re-

releasing empty boxes with certificates for the original four action figures from 1977

• Multiple Star Wars fan sitesMultiple Star Wars fan sites• www.rebelscum.com• News on Star Wars collectiblesNews on Star Wars collectibles• www.theforce.net

First 5 films $5.7 billion $10.5 billion in toys and merchandise

$4.3B in DVDs, VHS and video games (video games ongoing as are releases in 3D and Blueray)

TOTAL REVENUE $20 billion +

Solidified the publishing offshoot proving that orchestral movie scores could hit the top of the charts and pop scores would soon top the dayExamples: Saturday Night Fever, Ghost, Batman

ThrillersMysteryFilm NoirComedyAction DocumentaryAdventureWesternWar

HorrorSci-FiDrama RomanceCrime AnimationFantasyMusicalChildren’s

There was once a time that you were not only prohibited from owning a movie – but you couldn’t even see it on TV at your convenienceToday every studio has a home video division – all because of the VCR!Now the customer dilemma if whether or not to leave home to view a film

Dual increases in production budgets and marketing costsProduction increases

◦ rationalized as needed for special effects and complicated physical production

◦ Higher salaries and gross points vs. net

◦ Home VideoMarketing

◦ Further benefiting markets after the theatrical release

Picture Budgets rose by 185% and marketing rose by 169%Home Video/DVD growth has slowed as entered mature stage and now appears to be dropping into decline

The Creators◦ The Producer◦ The Director◦ The Writer◦ Independent

FilmmakerThe Property

◦ The Screenwriter◦ The Literary agent◦ Story Editor◦ Exploiting Book-

Publishing Rights

The Deal◦ The Entertainment

Lawyer◦ Business Affairs◦ Talent Agent

The Selling◦ Distribution and

Exhibition◦ Motion Picture

MarketingThe Audience!

“The producer has one absolutely crucial week on a movie; it may even come down to three days: the Wednesday, Thursday and Friday of the second week of shooting…” David Puttnam

Must option the material to be used – options may go as long as three years to see through to filming

Many producers conceive of the stories used or find them in the newspaper – then hire scriptwriters to fit the material

Primary Goal – to make the project as risk averse as possibleThis may mean taking a strategy of bringing in bargain pictures under budget

◦ American system – bring in a good movie in a timely responsible manner and it bombs, you are not regarded as a failure – are under European system

Do you ever walk away◦ Can’t be made on

studio project◦ Too complex for skills

Once given the green light◦ Avoid fixed release

date◦ Building around one

important cast member’s name

◦ Budget pressure before locations are scouted

◦ Don’t fudge budget to get the ok

Insist that certain budget areas never be cut• Medical, security and fire

Keep aside sequences not necessary to the film and place them at the end of the schedule – if need to cut out can! Also a valuable tool for a tired director

Plan action sequences after crew has had a chance to meet and get accustomed to one another

Tier One◦ Director◦ Writer◦ Composer

Tier Two◦ Production

designer◦ Editor◦ cameraman

The pivotal relationship in the filming process• One of trust about financing, timing, etc.• Communication important

Producer should limit appearances to end, beginning of day or lunchtime

Producer must reserve wrap control! SWAT Team

• Production manager • First AD• Production accountant

Recognize the patterns early – delaysConfer frequently with the director to correctIf truly need the extra week – cut from below the line items

◦ Travel times to locations

◦ Currency – buy up front; no fluctuation

Do not impose ridiculous work hours

Editor’s work begins during shooting and the editor must be truthful with the directorComposer should be brought in early

Two types of Preview◦ Production

Allows to identify strengths and weaknesses of film and make changes◦ Distribution

Addresses marketing issues and positioning Already a finished product Marketing Head

Cut trailers Print ads Release Patterns and theatre dates

Not much control now! Opens stronger than anticipated – chase

with resources to maximize If opens poorly in broad release – not much

to do If opens poorly in platform release can

salvage if:◦Critics and exit polls strong

“Everytime the director says ‘Lets try it this way,’ and not ‘Let’s do it this way,’ money is being spent at enormous rates….” Sydney Pollack

•May identify source material like the producer•Role of Director in Writer’s task–May not want

a lot of input and just present completed script – GAMBLE!!!

Several meetings best prior to beginning the script Present in 50-60 page increments enables changes to be easierOr – the director and writer may work locked up together on the script