Cinema as industry Main actors: Producers / executives Filmmakers / directors & scriptwriters Cast & crew + post-production Distributors Exhibitors Theatre-owners Audiences (viewer / spectator) Reviewers/critics
Geopolitics of cinema 1914 90% of films shown in the world are French 1928 90% films are American massive exportation total vertical integration (production, distribution & exhibition) becomes an industry of its own Domination of Hollywood cinema with heavy marketing & merchandising strategies Other cinemas Bollywood, European, Asian, South American
Hollywood studio system Hollywood = dream factory 1917 vertical integration (Zukor production company + Paramount-distribution + 1,000 theatres by 1926) 1913-1929: 5 majors (Paramount, Fox Film Corp, MGM, Warners Bros, RKO) + 3 little majors (Universal pictures, United Artists, Columbia) 1930-48: 8 majors controlled 95% USA films - oligopoly Stable of stars, scriptwriters, directors & designers house look Assembly line process 600 films annually (standardisation, genre sophistication) Block-booking & coercion for exhibition Specialisation in types of films = distinctive look criteria for box office success
Depression era: economic difficulties & bankruptcy Wall Street interference emergence of B-movies (double feature production) to supplement programme 1948-51: exhibitors put anti-trust action against majors relinquished theatres (60% of capital investment) emergence of independent films & more foreign imports House of Un-American Activities Committee blacklisting + implicit censorship
The Majors Fox: 1930 s popular musicals + 1950 s Westerns (actors: Temple, Fonda, Brando, Monroe, Peck directors: Kazan, Ford, Mankiewicz) now owned by Murdoch (NewsCorp) Paramount: comedy & light entertainment, epics (actors: Fairbanks, Swanson Dietrich, Marx Bros - directors: B. de Mille, Griffith) now owned by Viacom Warner Bros: gangster films, backstage musicals, social realism & political films no stables but contract directors, actors & crews (Hawks, Bogart, Cagney, Flynn, Dean, Davis, Bergman, Crawford, Bacall) now Time-Warner
The Majors MGM: lavish productions (Wizard of Oz, Gone with the Wind) & special FX high investment in pre-production, tight rein on production (galaxy of star actors: Garbo, Garland, Rooney, Tracey) MGM- UA, Turner, Paretti, Crédit Lyonnais RKO: practice of unit production by contracted independent directors variety of genres: big hits (Astaire & Rogers films, King Kong, Citizen Kane) & B- movies (film noir & horror) bought by Hughes then sold to TV company
The little Majors Universal: Valentino movies, horror movies (Frankenstein, Dracula) - % of profits offered to actors to attract stars (Stewart,Welles, Dietrich, Leigh) post 1948: thrillers, melodramas, Westerns 70/80 s: Jaws, E.T. sold to Matsushita in 1990 (Jurassic Park) United Artists: founded by Chaplin, Fairbanks, Griffith, Pickford against oligarchy (The Gold Rush, Modern Times) - post 1948: became major (James Bond series, Rocky, One Flew over the Cuckoo s Nest, Annie Hall) - sold to MGM in 1981 Columbia: Produced B-movies sold to big 5 in 1930 s contract directors & actors (Capra, Vidor, Hayworth) created TV subsidiary Screen gems in 1950 & backed foreign productions sold studios in 1972 bought by Coca-Cola in 1982 then Sony in 1989
Market evolutions 1960 s : Popularity of television Studios rented space to television companies Involvement in production of TV programmes 1970 s: emergence of blockbusters (Jaws, StarWars) 1980 s: VCR threat became source of additional revenue 1990 s: Studios bought by large conglomerates (= only part of activities) + intro of digital techniques 2000 s: Current practice: independent producers put package together then sell to major studio + lowering costs of filmmaking allows for independent movie making & internet promotion
American vs. European cinema Viewed from USA European cinema construed as global concept 2 meanings: Predominance of art cinema + more sexually explicit Only true rival to Hollywood to be infiltrated & dominated French resistance (exception culturelle) quota on US films (180-200 annually) slow erosion nonetheless 1991-59% films in France from US vs 35% in 1981 UK 80% films shown from US Attempts at national heritage cinemas (Cyrano de Bergerac, Manon des Sources, A Room with a View, Howards End)
American vs. European cinema In 2000: 595 films produced in Europe vs. 460 in US Average cost of US film: $54.8m vs. $7.2m in UK, $5m in France, $2m in Italy US budgets include marketing budgets (promotion, copies, etc.) Distribution larger across member states for European films but more US films achieve box office success (1 to 10 ratio) & dominations of US in market share (73% US, 15% national, 8% non-national European, 4% others)
International Film Industry Cinema advertising = only 1% of total advertising expenditure in UK & Europe Revenue = direct & indirect charges for access to consumers For some = royalties from merchandising 3 categories of release window: Cinema box office (theatrical) = main source Video (rentals, retail)= grew strongly in 1980s Television = also rapid growth since 1990 s (moviebased subscription channels)
Exhibition window Cinema-going: General upward trend in cinema admissions despite some slumps USA: 1.48b admissions in 1998 1.54b in 2004 (+4%) UK: 139m in 1997 171m in 2004 (+23%) France: 130m in 1995-195m in 2004 (+50%) Heavy investment in cinema screens / multiplex phenomena USA: 31,865 screens in 1997 36,594 in 2004 (+15%) UK: 2,564 screens in 1998 3,474 in 2004 (+35%) France: 4,762 in 1998 5,295 in 2004 (+11%)
Secondary and tertiary windows =Even more lucrative sources of income over last decade But box office performance determining (popularity) Important knock-on effects in later stages of distribution And on price that can be negotiated for rights in subsequent release windows = impact on per-viewer profit Till early 1990s video accounted for majority of film expenditure Now subscription TV movie channels, VOD, DVD
Typical sequence of windows for distribution of feature films US Box- Office Overseas Box- Office Pay-Per-View Video At least 12 months after 1 st release 2-3 months after 1 st release 4-6 months after 1 st release 6-9 months after 1 st release Pay Television At least 2 years after 1 st release Free Television
Merchandising Main earners in ancillary markets = children s films producers E.g. : Disney Character brands exploitation Theme parks Licensing of production of clothing, toys, etc. Time Warner / New Line Cinema: $2.9 billion worldwide box office receipts for all 3 Lord of the Rings films $3 billion+ consumer spending on Lord of the Rings home entertainment & merchandise
International business US domination Bulk of domestic consumer expenditure on films generated by and ploughed back into dominant US industry India only competitor most prolific film-producing nation (1,000 films annually) Main factors favouring Hollywood majors: Size of demand (large domestic market to support output) Size of supply (large scale of productive activity) High budget well-promoted films & risk spreading Structure well integrated production & distribution
Major studios 7 majors today: Paramount Pictures, Universal, 20th Century Fox, Warner Bros, Disney, MGM, Sony/Columbia Pictures Total majors films production: around 140 per yr 90% of domestic box-office Gain top positions in international markets (above 50% of total revenues)
Independent sector Companies within and outside US that develop, finance & distribute films independently from majors In some cases, independence is not absolute some successful firms backed by larger parent corporations with cross-ownership with Hollywood majors (e.g. New Line Cinema owned by Time Warner, Miramax owned by Disney) US independent cinema 3 times more films than majors but less than half gain theatrical release
Film = hit-or-miss business Risky & highly expensive business Constant upward pressure on production budgets (brand-name star fees) Highly speculative Majority lose money Only 2 out of every ten films make profits For majors, virtuous cash-flow circles (revenues from 2 hits support other films)
Funding to be raised in advance for devt, production & marketing Returns only after film is shown (on average 3 yrs or more later) House nut cinema-owner takes cut directly from receipts to cover costs of running the venue Then, rest divided betw exhibitor & distributor (usually 10:90 split) Distributor deducts commission and costs, including advertising & promotion Remainder goes to equity investors or financiers then to producer
New Technologies = Reduction of entry barriers Production - use of digital cameras & editing reduces capital and labour costs Low promotion costs possible (e.g. The Blair Witch Project = use of chat-sites & word-of-mouth across Internet to create hype & draw attention long before critics had access to the film) Distribution subscription TV (extra channel capacity due to digital compression & additional film services enabling consumer selection) + PPV + near VOD Possibility of direct gateway thru Internet (bypass distributors & exhibitors)