Lionsgate Entertainment Industry

Given our analysis of the motion picture industry, we recommend that Arundel carefully select the major film studios from which they intend to purchase sequel rights. The net present value of hypothetical sequels taken from the available previous years shows not only that the industry is highly volatile, but also that certain production studios are more volatile than others in terms of their recent performance. In addition, some studios are consistently less profitable than others. (See "NPV for Each Production Company" chart in appendix) Since the success of film studios are relatively stable in the short term (see "Rental Shares of Major Film Distributors" table and graph) Because of this stability, it is possible for Arundel to approach more profitable studios with their offer to purchase sequel rights. Out of all the major film studios, only MCA-Universal, Warner Bros., and The Walt Disney Company generate a positive net present value on a per-film basis. However, according to casual inquiries, it is unlikely that any movie studio would enter negotiations with Arundel on a per film price that is less than 1 million. Instead, the film studios seem to

There are basically six technology-driven threats to the traditional rental model: (1) Cable companies offering Video on Demand (VOD), (2) online movie downloads, (3) online movie rentals, (4) disposable DVDs, (5) illegal movie downloads and DVD copying, and (6) Digital (or Personal) video recorders (DVR). (Jackson) One could also consider traditional pay-per-view (PPV) as and additional substitute. Only one of these seven, online movie rentals has proven to be a major competitive substitute for traditional movie rentals. All other areas, except traditional pay-per-view are expanding rapidly, but some face significant challenges.

Numerous failures in planning and monitoring market changes negatively affected profits and decreased customer loyalty. Blockbuster sought utilization of section 11 bankruptcy to significantly decrease the businesses debt. The bankruptcy and acquisition by Dish network provided the opportunity to invigorate a better business solution for moving forward. Blockbuster’s

The Canadian entertainment industry that is served by Cineplex has been recording sustained growth since 2011 where a growth of 5 percent was recorded. PwC’s Global Entertainment and Media Outlook for 2014-2018 (PWC, 2014) indicate that the industry is set for a take-off. The industry has a

Blockbuster used to have so much power in the movie rental industry until Redbox and Netflix have come to the market. One of Porter’s five forces

Blockbuster Entertainment, Inc. was once a highly successful and profitable brick and mortar home movie and video game rental store. At its peak in 2004, Blockbuster had up to 60,000 employees and more than 9,000 stores. The idea behind Netflix came from an unsatisfied, embarrassed customer of Blockbuster, Mr. Reed Hastings, now CEO of Netflix, paid a $40 late fee because he returned the movie Apollo 13 six weeks later (Zarafshar, 2013). He began to contemplate ingeniously about a notion to change the movie-leasing pattern into a more pioneering industry. In 1997 Netflix was started as a DVD rental-by-mail business without subscriptions. In 1999, taking a stride additional in the direction of evolving the industry, Hastings began the subscription-based business mode based on renting DVDs by mail with plans reliant on the quantity of titles taken at a time. Netflix put forward 120,000 titles for limitless monthly DVD rental with free shipping no late and per title fees. Since that time Netflix has become one of the most popular subscription services in the world, and is now valued at over $28 billion and steadily increasing. What factors contributed to the success and failure of these two companies?

Motion pictures are a key driver of the market for entertainment products, one of the largest export markets in US. Motion picture industry consists of three stages: studio production, distribution, and exhibition. The studios produce the lifeblood of the industry, the films that are its content. The biggest players at this level are the majors, big studios which integrate production and distribution, as do the slightly smaller mini-majors. The next stage is distribution. Distributors are the intermediaries between the studios and exhibitors. Distribution entails all steps following a film’s artistic completion including marketing, logistics, and administration. Distributors coordinate the manufacture and distribution of

company. The technology used to film and edit programming impacts the operations and distribution of the company’s original content. Within procurement’s 33% share of revenues, technology makes up the largest share as firms in this industry must invest to compete. The linkages here are vertical; without the newest technologies, it takes longer to produce and edit new series to the standard customers expect. If Disney’s technologies fail to deliver visually high-quality content in a timely manner, consumers will watch elsewhere.

Based on the previous module assessments, NBC Universal’s preliminary focus should be geared toward the film industry. The recent trade deal, between both the U.S. and Chinese Governments, lowered a 20-year-old quota on U.S. films and distribution fees in the Chinese film industry. This signifies productive progression within the film industry, even though small in nature, but nonetheless this could equate to significant profit gains for all the FMO’s within the market.

Entering and transforming the video rental industry was a large undertaking for the start-up company. The first marketing objective the company undertook was the process of building a brand. Netflix’s identity was crucial to future growth and success. Without a strong brand, competitors with deep pockets could have easily duplicated the company’s business model. Secondly, leveraging technology was critical to establishing the business and infrastructure growth. The consumer base was the final objective Netflix sought to achieve. Retaining and growing subscribers were fundamental to revenue and marketing goals.

No longer is box-office the main source of revenue for studios as it was in the early days of Hollywood. Today only 6 conglomerates are responsible for almost all of the world's filmmaking. Lucrative licensing deals, merchandising, spin-offs, television shows and so forth have become more important than the actual box-office generated. According to Jay Epstein "Even though today's system of filmed entertainment shares much of the same physical geography, nomenclature, and mythology as the studio system that preceded it, it did not evolve out of it… it appeared with surprising suddenness, and replaced it." He argues that a handful of aspiring businessmen took the reins of the industry and steered it to where it is today. These 6 conglomerates hold 72% of the total market share and have an average of $26.5 billion revenue, while the total box-office revenue in the U.S. in 2000 was only $7.6 billion8. Film production today is not the expression of the director, writer or producer but more their attempt to capitalize on the medium. Modern films cost an average if $100 million in advertising and production cost, while the average box-office of

1. How might the reward program described in case exhibit 5 affect the movie and event –going behavior of major market segments? At retail, what is the average value of each reward structure for customer’s dollars spent – 5 %, 10%, 15% or 20%? Which reward structure would you choose? Why? (For the sake of simplicity, ignore the one-time fees and rewards)?

Today, digital technology and the Internet are deeply reshaping the motion picture industry with a trend toward the digitalisation and disintermediation (Zhu, 2010). Media streaming services are an example of this current restructuration. Providing an access to a wide collection of entertainment online at a cheap price, they have penetrated the monopoly that cinema once enjoyed (Herberg, 2017). A significant example can be found in the US company ‘Netflix’, source of nearly a third of all North American downstream internet traffic at peak hours (Hallinan & Striphas, 2016). Once a small DVD subscription service created in 1997, it offers today to its subscribers to watch its own produced movies and shows as well as content of other

External environment is very important for managers to make decision about the company’s direction and strategy. In order to gain a deep understanding of Blockbuster’s industry and competitive environment, the following seven questions need to be answered. Q1: What are the industry’s dominant economic features?

Video-on-demand or VOD, a service that allows users to select and watch videos over the internet, will be one of the greatest innovation as stated in the Netflix case study. It will be a great opportunity for Netflix, but it will also be a challenge to integrate or do away with its current business model. Its current business model is one that relies on the internet and the post service to deliver DVDs to its subscribers. Netflix should carefully enter the VOD market without doing away with its current model. This will allow it to maintain its growing position as a giant in this media industry. In order to better understand Netflix and the problems it faces, we must first identify its strengths. What does Netflix offer its customers that its competitors do not? What differentiates it from its competitors?