Motion Picture 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

1. Gross revenue as an indicator of performance is useful but has the limitation of being an absolute measure which may not reveal market shifts relative to competition.

A firm has decided through regression analysis that its sales (S) are a function of

o In summary this analysis shows the percent of every dollar in sales that is

The Australian film industry is currently in a point of crisis due to the lack of audiences attending Australian films, hence creating a decline in the revenue received towards our national industry. However, this is not due to the lack of creative talent, it is rather the many underlying issues that don?t allow the Australian public with the awareness and accessibility of these films. These problems are within the distribution, marketing and funding of these Australian films, allowing the national Australian community to not seek for films made by people within their nation due to negative pre-conceived notions and the convenience of going to see a Hollywood Blockbuster. These issues are seen through the poor release of both critically received films, Jennifer Kent?s The Babadook (2014) and Hugh Sullivan?s The Infinite Man (2014), both not gaining a wide audience. Through these issues within the industry, Australian filmmakers have not been able to create the revenue needed for these films to branch out to be easily attained by the public.

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

However, if the difference between the total sales and the total cash received (for the period ending December

4. The bargaining power of buyers: The outlook for the target market isn’t favorable for the movie industry because it will not be growing as fast as the overall population. Buyer power is a strong force because of the target market and several other factors including: the undifferentiated product offered, switching to an alternative is simple and low cost, and customers can stay home and watch movies. The consumers are also complaining about concession and ticket costs, along with the advertisements before the film is shown.

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

Further to the aforesaid points, the greater percentage of revenue was derived from the sale of

Market Concentration Ratio January December 2000 CR Studios Total Revenue Market Share (Market share)^2 CR4 Buena Vista $1,175,600,000 15.5% 0.024025 Universal $1,069,100,000 14.1% 0.019881 Warner Bros. $905,300,000 11.9% 0.014161 Paramount $791,100,000 10.4% 0.010816 Total $3,941,100,000 CR6 Buena Vista $1,175,600,000 15.5% 0.024025 Universal $1,069,100,000 14.1% 0.019881 Warner Bros. $905,300,000 11.9% 0.014161 Paramount $791,100,000 10.4% 0.010816 DreamWorks SKG $777,200,000 10.3% 0.010609 20th

In vertical analysis, it is easier to see elements as a percentage of Revenue. Between 2011-12, the portion that cost of sales takes in revenue has increased however, there is a bigger deterioration in distribution cost. In 2011, 9.21% of revenue remains as profit but in 2012 this figure decreases to 8.14%. Despite reduction in costs is one of the strategies of Ted Baker(part 1.4), analysis illustrates that costs increase each year.

the manager may use a simple analysis of past operating data to obtain a percentage of sales

This equation is solved for the sales volume in units. c. In the graphical approach, sales revenue and total expenses are graphed. The break-even point occurs at the intersection of the total revenue and total expense lines. 8-2 The term unit contribution margin refers to the contribution that

* By stock turnover ratio of the respective product; expenditure for fast selling products and slow selling products.