U7 LO1 Ownership in The Film Sector Essay

U7 LO1 Ownership in the Film Sector Essay
For this essay, I am going to be writing about different types of ownership

in the film industry. I will be looking at ways in which companies can play
a part in sectors of the film industry and how certain types of integration
can affect the media.
In the film industry sector, there are several big companies in the UK film
industry that dominate over other smaller companies e.g. Working Title
Films, BBC Films, Film 4 etc. However, the USA house the largest
multinational film companies. The six main film companies in the USA are;
Universal Studios, Warner Bros., 20th Century Fox, Paramount Pictures,
Walt Disney and Columbia Pictures. These3 companies and others tend to
buy a lot of the British film companies. For example, in 1999, Universal
Studios bought out Working Title Films, Working Title Films is still based in
London, however Universal Studios is responsible for distributing all of its
films.
Private Ownership in the Film Sector

Private ownership is when a company is responsible for its own making,
distributing and globalising its films. They can be funded in various ways
including shareholders buying shares of the company, or they can be
funded by advertisements, however they dont allow their company to be
bought by other larger companies.
An example of a privately owned company is Newmarket Films, founded in
1994. Their aim is to independently produce their own diverse films in
order to steer away from the films distributed by larger companies. This
company has previously produced films such as Donnie Darko, Cruel
Intentions, My Big Fat Greek Wedding etc. Newmarket films are based in
Los Angeles, California.
Although Newmarket Films are a privately owned company, they do coown other film companies. For example, they co-own Picturehouse and are
responsible for its distribution. They have also entered a Home
Entertainment Distribution Agreement with Lionsgate which includes the
distributions of DVD, Blu Ray, and On Demand services.
Cross-Media Ownership
Cross-media ownership is when a person or company owns many different
media corporations or businesses. For example, a film company may also
own a business in television, magazine, newspaper radio etc. In the film
industry, big companies tend to use this technique when they have
produced a big Hollywood film that they want to really promote their film
and media market by creating other media products such as games,
merchandise, spin-off TV series to coincide with this particular movie. An
example of this is the UK film company Eon Films produced the popular
James Bond film Casino Royale (2006). This film collectively earn over
$500 Million worldwide. Eon Films then partnered up with Sony
Entertainment to release a Casino Royale game in 2008 for PlayStation 2.
Many different companies have also assisted in producing merchandise for
the film after it was released. Casino Royale is also a good example of
horizontal integration as Sony Entertainment plays a big part in the
distribution and globalisation of the film. As the film was produced by
Columbia Pictures and MGM which are both companies owned by Sony.
When the DVD was distributed, they also released it on Blu Ray, which is a
product made by Sony. And finally, the soundtrack for Casino Royale was
produced by Sony.
Another example of horizontal integration for this film is that it can be
viewed on many Sony made products e.g tablet, television, laptop,
smartphone etc. This is a really common method for large companies to
use in order to sell as many different kinds of products as possible. For
example, if you want to buy Casino Royale on DVD, but you hear that Blue
Ray is much better quality, you may be encouraged to buy a Blue Ray
player, which therefore supplies Sony with much more money then just
buying the DVD alone.
Vertical and Horizontal Integration

Vertical Integration is when a film company like Disney own all mean of
ownership and control the production, distribution and exhibition so that
they can receive all the profit. Disney produce, market, distribute and
produce all the merchandise for all their films and do not include any
other competitors.
A horizontal integration is where a company chooses to expand to other
areas of the film sector. This mean they can expand on their own
company, or choose to buy out that company and work together to
expand. This increases profit, and enables them to go into other media
sectors. Universal Studios use vertical integration as it has bought out
many companies such as DreamWorks and Blumhouse Productions in
order to expand their company further.
Mergers and Takeovers
A Merger is an example of a company that uses horizontal integration, and

a Takeover is an example of a company that uses vertical integration. The
two main goals for both Mergers and Takeovers is to extend both their
Organic Growth and External Growth. Organic Growth means the
companys growth within the business. Fr example, the production of new
products. External Growth describes the uses of Mergers and Takeovers.
An example of this is in 1995, Disney took over ABC INC. As ABC Inc is the
top ranking news and sports programming in the USA which helped
Disney become Vertically Integrated.
Cross Media Integration

However, Cross-media integration has to be regulated. In the UK, there
are very few regulations against cross-media, especially in the film
industry, however big newspaper companies are not able to own more
than 20% of their total circulation. For example, The Murdoch News
Corporation owned by Rupert Murdoch, was capped against owning more
than 20% of the company ITV!
The funding for major film companies usually comes from a number of
different sources. For example, Cinemas across the globe use a number of
money making techniques to ensure maximum profits when showing a
film. As well as being payed by film companies to show their film, they are
also payed to advertise it around the cinema buildings and to sell the
merchandise that comes with the film, tshirts, cups etc. The cinema can
also make its own income by selling food and beverages that people can
eat and drink whilst watching the films. Also, the option for viewers to
watch the film in 3D for a slightly higher price also gives the cinema
business more income, with a good profit market.
Share of Ownership
The sharing of ownership is where more than one organisation in the film
sector including both production and distribution companies share the
ownership of a single organisation/company
Product Diversity
Working with lots of different companies across media sectors can help
with the product diversity. For example, Disney is one of the richest film
companies in the world. This is largely because as well as creating the
films, they are also responsible for many other public attractions. For
example the film Frozen is advertised across the world in many different
ways such as merchandise designed and created by Disney, the
soundtrack available on CD and download, toys sold in the Disney stores.
They also spread the funding away from their films, and they have
Disneyland and World. This generates a massive source of income as
Disneyland made over $87 million last year alone. Since last year, the
entire Disney company has been worth over $140 billion, largely due to its
product diversity.
Disney are also a good example of a company that use vertical
integration. Disney own all of their own merchandise, stores, resorts,
companies etc. they may decide to partner with other companies for
certain projects, and have brought companies e.g Pixar, but never sell
their rights to other companies or allow them to product Disney products.
They also own many other media conglomerates in media sectors such as
radio, television etc . Disney has also been named one of the biggest
media conglomerates worldwide. Owning many other companies like
Marvel Studios, Touchstone Studios etc. as well as multinational
companies across the globe such as Tele-Munich, Miravista Films etc.
Profitability of Product Range

Every production or distribution company needs their own objectives in
order to keep the company growing constantly. For example, the company
Film 4 is to not only produce British feature films, but also develop and
commission them. Film 4s communications is built up of three teams.
These include Programming, Creative Services and Marketing. These three
main teams are in charge of managing the Programming and Marketing of
Film 4s channel that is part of the Channel 4 family.
Independant film companies in the film sector
An independent film company can easily be recognised through the

content and style seen in their films, often the film maker's display
patterns in their films which lead viewers to recognise and therefore know
straight away what independent film company has made this particular
film. However, often independent film companies have a much lower
budget which can reflect in their film styles as well. A popular independent
film company is Warp Films. They are based in the UK and have made
films such as This Is England, Four Lions, Submarine, Kill list etc. Although
the film company itself is not hugely recognised or popular, Many of these
films have been a success in the UK, but little have been recognised wider
than that. For example, Submarine (2010) earned $467,602 in the USA,
plus $3,407,282 outside the USA, for a combined profit of $3,874,884 in
total. These figures compared to the figures of a privately owned company
such as Disney, indicates that an independant type of ownership in the
film sector is not as profitable as other types of ownership.
Each independant film company will have what is known as organisational

objectives. Warp Films organisational objective is to create unique,
original and diverse british films and television. They state that they have
done well to deliver visionary television dramas and films and have been
among named best british producers over the last ten years.
Multinationals & Conglomerates

a multinational company is one that spreads its production services in
many different companies as well as its home country. For example,
Universal Studios is based largely in the USA, there are also studios in
Japan, Singapore etc. and many other offices, factories and businesses in
other parts of the world.
a media conglomerate is a company that owns large numbers of other
companies in various media such as television, radio, publishing, movies,
and the Internet. Universal Studios is also a good example of this as they
are famous for using the studios to produce television adverts and TV
shows such as The Office, Chicago Fire, Parenthood etc.
Licenses and franchises

Licenses are extremely important when a company is producing a film.
This is so that everything being made is legal and you can us in in your
film. Every person being shown in the film including actors and actresses
need to sign a release form in order to use them in the film. When hiring
child actors, they not only have to do this, but the film makers also need a
licence from their local authority before they can be filmed. All producers
need the actors medical forms and actors need to be informed of how
many hours they will be working. Casting directors contracts need to
include a list of their responsibilities, how long they are needed for, how
much they will be paid, and they must be approved by the producer. All
people working on the film also need a location license.
Competitors
There are many different types of competitor that a company may face in
the film industry. Film Festivals are a major competitor for the industry!
Sundance Film Festival held in America is the most popular film festival.
The Sundance Institute is consistently growing as it resources many
independent film makers, in helping them get their films publicised to a
wider audience. Another way for film companies to compete is through
awards ceremonies. BAFTA is the highest ranking UK awards show that
rewards both Film and TV for many different contributions e.g acting,
makeup, production etc. These awards shows also help big blockbuster
films get more publicity as audiences want to watch a film if it has won
awards.
Customers
Customers for a film is anyone who would be interested in buying a film,
therefore there are a very wide range of customers. However the most
popular genre for UK films is comedy. As the telegraph did a survey for
5,000 people and found that not only was this the case, but over a quarter
of these people chose Hot Fuzz as their favourite comedy film. Romantic
films had the other 15% of votes, and Action 2nd with 15%.

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U7 LO1 Ownership in the Film Sector Essay

For this essay, I am going to be writing about different types of ownership

Private Ownership in the Film Sector

Vertical and Horizontal Integration

Mergers and Takeovers

A Merger is an example of a company that uses horizontal integration, and

Cross Media Integration

Profitability of Product Range

Independant film companies in the film sector

An independent film company can easily be recognised through the

Each independant film company will have what is known as organisational

Multinationals & Conglomerates

Licenses and franchises

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